Occidental Development Group, Inc. - FORM 10-K

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EX-23 - CONSENT - Occidental Development Group, Inc.	ex23.htm
EX-32 - CERTIFICATION - Occidental Development Group, Inc.	ex32.htm
EX-31 - CERTIFICATION - Occidental Development Group, Inc.	ex31.htm
EXCEL - IDEA: XBRL DOCUMENT - Occidental Development Group, Inc.	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2011

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-25335

INTELLIGENT LIVING CORP

(Exact Name of Registrant as Specified in Its Charter)


Nevada	88-0409024
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)


Suite 221, 2323 Quebec Street, Vancouver, B.C., Canada		V5T 4S7
(Address of principal executive offices)	(Zip Code)

604-876-7494

Issuer’s telephone number, including area code

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $.001 par value per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

Check whether the issuer (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 o

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. x

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, or a non-accelerated 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 o	Non-Accelerated Filer o	Smaller Reporting Company x

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $109,420

The number of shares of the Registrant’s Common Stock outstanding as of September 13, 2011 105,945,324.

Documents incorporated by reference: None.

Table of Contents

PART I

ITEM 1.

DESCRIPTION OF BUSINESS

ITEM 1A

RISK FACTORS

ITEM 1B

UNRESOLVED STAFF COMMENTS

MARKET FOR THE REGISTRANT'S COMMON EQUITY RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 6.

SELECTED FINANCIAL DATA

ITEM 7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.

FINANCIAL STATEMENTS

ITEM 9.

CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURES

ITEM 9A(T).

CONTROLS AND PROCEDURES

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11.

EXECUTIVE COMPENSATION

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

SIGNATURES

FORWARD LOOKING STATEMENTS

This annual report on Form 10-K and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

the ability of the Company to earn revenues sufficient to pay its expenses;

prevailing economic conditions which may significantly deteriorate, thereby reducing the demand for the Company’s products and services;

regulatory or legal changes affecting the Company’s business; and the Company’s ability to secure necessary capital for general operating or expansion purposes;

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors and Uncertainties”, “Description of the Business” and “Management’s Discussion and Analysis” of this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Furthermore, there is no assurance that the Company’s new line of business will be successfully launched or will be profitable since it depends, among other things, on (a) the ability of the Company to raise funds for this business, (b) the successful development of our products, and (c) the success of those opportunities in the marketplace. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

We qualify all the forward-looking statements contained in this annual report by the foregoing cautionary statements.

PART I

ITEM 1.

DESCRIPTION OF BUSINESS

General

Intelligent Living Corp (“ILC”, the “Company”, “we”, “us”) was incorporated in the State of Nevada in 1998. Through its wholly owned subsidiary MCM Integrated Technologies, Ltd. (“MCM”) the Company specializes in designing, supplying, installing, upgrading and servicing home automation solutions, energy use monitoring and conservation systems including: structured wiring, security and access control systems, lighting, HVAC and environmental controls, energy use monitoring and reduction systems and distributed audio/video systems. The Company offers automation technology for single and multi unit new construction and existing buildings, using both traditional component and Windows based systems. Income is derived

from both equipment sales and the provision of installation, repair and maintenance services. Customers include residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.

MCM has supplied custom IT solutions since 1994 and home automation and energy management solutions since 2003. The Company has offices in Phoenix Arizona and Vancouver British Columbia.

The Company previously engaged in the import and distribution of home décor products for the North American market. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations and recover costs related to the home décor import and distribution business. This process continued through the year ended May 31, 2011.

On August 29, 2008 the Company became eligible for relisting on the NASD Over the Counter Bulletin Board (OTCBB) exchange through the approval of a Form 15C2-11 application by the Financial Industry Regulating Authority (“FINRA”). The application was approved by FINRA on March 17, 2009 and the Company was re-listed on the OTCBB under the symbol ILVC on the same day.

The U.S. credit markets are continuing to experience serious disruption due to deterioration in residential property values, defaults and delinquencies in residential mortgages. These problems led to a protracted and ongoing slow-down in residential construction and sales in the U.S.

In response to the downturn in the U.S. housing market the Company shifted its focus to the western Canadian housing market and initiated technology cooperation on a best efforts basis with Kilia Teknologi, a leading security surveillance group in the Republic of Turkey. The western Canadian housing market, and in particular the greater Vancouver housing market, have remained strong with new construction, price appreciation and inventory levels at historical levels. The Company is actively evaluating opportunities to expand its business activities through expansion vertically within the Company’s current green building, home automation and energy conservation sectors and horizontally within related sectors including: residential redevelopment and home construction for First Nations communities and relief housing.

Employees

As of May 31, 2011, we had a staff of five consisting of three employees: COO, technical applications specialist, administrative assistant, and two contractors: installation specialist and President.

ITEM 1A

RISK FACTORS

Readers should carefully consider the risks and uncertainties described below before deciding whether to invest in shares of our common stock.

Our failure to successfully address the risks and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations, and the price of our common stock may decline and investors may lose all or part of their investment. There is no assurance that we will successfully address these risks or other unknown risks that may affect our business.

Risks Relating to our Company

Our independent auditor has issued an audit opinion which includes a statement describing our going concern status. Our financial status creates a doubt whether we will continue as a going concern.

As described in Note 2 of our accompanying financial statements, our limited revenues generated and our lack of any guaranteed sources of future capital create substantial doubt as to our ability to continue as a going concern. The Company had a working capital deficit of ($1,222,337) at May 31, 2011 and a consolidated net loss of $(578,179) for the twelve months then ended. If the Company does not raise a sufficient amount of capital, it may not have the ability to remain in business until such time, if ever, when it becomes profitable.

Although the Company has continued to restructure its operations the Company’s operating income is not yet adequate to offset the Company’s aggregate overhead expenses. To rectify this shortfall, on an operating basis the Company needs to find further ways to reduce overhead expenses and increase its operating revenue sufficient to offset the Company’s overhead expense. There is no assurance that the Company will be able to do so.

Until such time as the Company becomes sustainable profitable it will be necessary to raise additional capital to support operations. There is no assurance that the Company will be able to raise the required capital under terms acceptable to management, or on a schedule and in amounts required to support continued operations if at all. Our failure to achieve or maintain profitability could negatively impact the value of our stock.

We have not operated profitably and have a limited operating history that you can use to evaluate us; therefore, we may not survive if we meet some of the problems, expenses, difficulties, complications and delays frequently encountered by a company in the early stages of shifting its business activities.

In December 2006 we completed the acquisition of MCM and began a process to phase out of the home décor business. This substantial shift of activity has required management to adapt to a new business environment and also to assume un-anticipated costs and liabilities associated with the un-planned phase out of the home décor business. We have a limited operating history on which to base an evaluation of our current business and prospects. Potential investors must consider our business and prospects in light of the risks and difficulties frequently encountered by companies in the early stages of shifting activities to a new area of business. These risks and difficulties include, but are not limited to residual liabilities associated with the old business and lack of sufficient customers, revenue, cash flow and capital for marketing, product development and inventory associated with current business activity. We cannot be certain that our business strategy will be successful or that we will successfully address these and other risks. Our failure to address and mitigate these risks could harm our ability to operate profitably.

We may change our business plan.

Based on the results of our efforts to develop our current operating concept, we are re-evaluating our business plan and our board of directors may determine that it is in the best interests of the shareholders to change our business plan through vertical diversification within the Company’s current business sector and/or horizontal diversification into related sectors. Any such expansion of operations will entail risks, and such actions may involve specific operational activities which may negatively affect the profitability of the Company. Consequently, shareholders must assume the risk that (i) such expansion may ultimately involve expenditures of funds beyond the resources available to the Company at that time, and (ii) management of such expanded operations may divert management’s attention and resources away from its existing operations, all of which factors may have a material adverse effect on the Company’s present and prospective business activities. In addition, we may need to bring in new investors or raise additional capital, all of which could result in dilution of current shareholders. There is no guarantee that our efforts to diversify will be successful.

We require additional funds to achieve our current business strategy and our inability to obtain additional financing would inhibit our ability to expand or even maintain our business operations.

We need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. This financing may not be available when needed. Even if this financing is available, it may be on terms that we deem unacceptable or are materially adverse to shareholder interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing would inhibit our ability to implement our development strategy, and as a result, could require us or diminish or suspend our development strategy and possibly cease our operations. If we are unable to obtain financing on reasonable terms, we could be forced to delay, scale back or eliminate planned expansion and or introduction of new products and services. In addition, such inability to obtain financing on

reasonable terms could have a negative effect on our business, operating results, or financial condition to such extent that we are forced to restructure, file for bankruptcy, sell assets or cease operations.

We currently have outstanding debt that is convertible into shares of our common stock at below market pricing resulting in significant dilution to our current stockholders.

At May 31 2011 we had a total of $991,881 in debt and accrued interest that is convertible into shares of our common stock at discounts ranging from 0% to 25% of the market price. The conversion of all of this debt could result in significant dilution to our stockholders.

We rely heavily on our management, and the loss of their services could materially and adversely affect our business.

The Company’s business is significantly dependent on the Company’s management team. The Company’s success will be particularly dependent on Michael Holloran, the Company’s Chief Executive Officer, and Murat Erbatur the Company’s Chief Operating Officer and founder of MCM Integrated Technologies. The loss of these individuals would have a material adverse effect on the Company.

The Company may not be able to sustain and develop its customer base and sustain market acceptance of its products and services

Although the Company believes it can continue to develop home automation equipment and technology packages that will maintain and attract a customer base sufficient to support the Company’s activities, the inability of the Company to sustain and develop such a customer base could have a material adverse effect on the Company. There is the possibility that competitors could seize on the Company’s ideas and business model and produce competing product matrices and installations. There is the possibility that the competitors could capture significant market share of the Company’s intended market. No assurance can be given that the Company’s, products and solutions will generate market acceptance and revenues sufficient to achieve and sustain profitable operations.

Recent market events and conditions, including disruptions in the U.S. and international credit markets and other financial systems and the deterioration of the U.S. and global economic conditions, could, among other things, impede access to capital or increase the cost of capital, which would have an adverse effect on our ability to fund our working capital and other capital requirements.

Beginning in 2007 the U.S. credit markets experienced serious disruption due to a deterioration in residential property values, defaults and delinquencies in the residential mortgage market and a decline in the credit quality of banks and borrowers. These problems led to a substantial and ongoing slow-down in residential housing market construction and sales, declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer confidence. These conditions continued and worsened in 2008 and have persisted through 2011, causing a loss of confidence in the broader U.S. and global credit and financial markets and have resulted in the collapse of, and government intervention in, major banks, financial institutions and insurers, and have created a climate of volatility, reduced liquidity, widening of credit spreads, increased credit losses, tighter credit conditions and most recently the downgrading of US credit rating. Notwithstanding various actions by the U.S. and foreign governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions have caused the broader credit markets to further deteriorate and have introduced volatility and a general decline in world stock markets. In addition, general economic indicators have been slow to recover. These include consumer sentiment, unemployment and economic growth and uncertainty about corporate earnings. These unprecedented disruptions in the current credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for us to obtain, or increase our cost of obtaining, capital and financing for our operations. Our access to additional capital may not be available on terms acceptable to us or at all.

The Company’s operating results may vary and may not support ongoing development of the business

The Company’s operating results may fluctuate significantly from period to period as a result of a variety of factors including but not limited to: purchasing patterns of customers, competitive pricing and margins, debt service and principal reduction payments, and general economic conditions. There is no assurance that the Company will be successful in marketing its products and services or that the revenues from the sale of such products and services will be sufficient to offset costs and support ongoing development of the business.

Unanticipated Obstacles to Execution of the Business Plan

The Company’s business plans may change significantly. Many of the Company’s potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes that the Company’s goals and strategies are achievable in light of current economic conditions and regulatory environments with the skills, background, and knowledge of the Company’s principals and advisors. Management reserves the right to make significant modifications to the Company’s stated strategies depending on future events.

Our success in the future may depend on our ability to establish and maintain strategic alliances, and any failure on our part to establish and maintain such relationships would adversely affect our market penetration and revenue growth.

We may be required to establish strategic relationships with third parties in the home automation and energy efficiency industries and service sectors, including in international markets. Our ability to establish strategic relationships will depend on a number of factors, many of which are outside our control, such as the competitive position of our technology know-how and our products relative to our competitors. We can provide no assurance that we will be able to establish and maintain strategic relationships in the future.

In addition, any strategic relationships that we establish, will subject us to a number of risks, including risks associated with sharing and potentially losing control over technical information and know-how, loss of control of operations that are material to developed business and profit-sharing arrangements. Moreover, strategic alliances may be expensive to implement and subject us to the risk that the third party will not perform its obligations under the relationship, which may subject us to losses over which we have no control or expensive termination arrangements. As a result, even if our strategic alliances with third parties are successful, our business may be adversely affected by our exposure to a number of factors that are outside of our control.

No Assurances of Protection for Non-Proprietary Know-How; Reliance on Trade Secrets

In certain cases, the Company may rely on trade secrets to protect the Company’s technology know-how which the Company has developed or may develop in the future and which do not have intellectual property protection. There can be no assurances that others will not independently develop similar or superior technology know-how. The protection of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect trade secrets as well as for competitive reasons even where claims are unsubstantiated. The prosecution of claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. The Company, in common with other firms, may also be subject to claims by other parties with regard to the use of technology information and data which may be deemed proprietary to others.

Risks Related to Our Common Shares

Dividend Record

We have no dividend record. We have not paid dividends on our common shares since incorporation and do not anticipate doing so in the foreseeable future.

The trading market for our common stock is limited.

We are quoted on the Financial Industry Regulatory Authority’s Over-the-Counter Bulletin Board under the trading symbol “ILVC”. The OTCBB is regarded as a junior trading venue. This may result in limited shareholder interest and hence lower prices for our common stock than might otherwise be obtained.

The market price of our common stock may fluctuate significantly.

The market price of our common shares may fluctuate significantly in response to factors, some of which are beyond our control, such as:

the announcement of new products or product enhancements by us or our competitors;

developments concerning intellectual property rights and regulatory approvals;

quarterly variations in our and our competitors’ results of operations;

changes in earnings estimates or recommendations by securities analysts;

developments in our industry; and

general market conditions and other factors, including factors unrelated to our own operating performance.

Further, the stock market in general has recently experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of our common shares, which could cause a decline in the value of our common shares. You should also be aware that price volatility might be worse if the trading volume of our common shares is low.

Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system), in companies continuously in existence for at least three years with net tangible assets of less than $2,000,000. Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities.

These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission (see above for discussions of penny stock rules), the FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the

FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

ITEM 1B

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.

PROPERTIES

We maintain our statutory registered agent’s office in Reno, Nevada and our principal executive offices are located at Suite 221, 2323 Quebec Street Vancouver, BC. We occupy approximately 2,000 square feet of office and technology demonstration space. In addition we are renting storage and warehouse space for surplus equipment and historical records. We do not have leases and are renting all space on a month-to-month basis. The total monthly rent obligation for all space used by the Company is approximately $1,830.

ITEM 3.

LEGAL PROCEEDINGS

We are not currently involved in any litigation, nor do we know of any threatened litigation against us that would have a material effect on our financial condition.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our security holders during the year ended May 31, 2011.

PART II

ITEM 5.

MARKET FOR THE REGISTRANT'S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock traded on the OTC Bulletin Board (“OTCBB”) from October 1999 to September 2007, on the Pink Sheets from September 2007 to March 2009, and from March 2009 to present on the OTCBB. Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions. Prior to August 15, 2007 the name of the Company was Elgrande International Inc. and our trading symbol was “EGDI”. On July 19, 2007 the name of the Company was changed to Intelligent Living Corp and effective August 15, 2007, the trading symbol changed to ILVG. On March 17, 2009, commensurate with re-listing on the OTCBB, the trading symbol changed to ILVC. The following sets forth the range of high and low bid information for the quarterly periods indicated of our last two fiscal years as reported by the National Quotation Bureau:


	CLOSING PRICE ($/SHARE)
	LOW	HIGH
2010
First Quarter	0.01	0.17
Second Quarter	0.02	0.04
Third Quarter	0.01	0.01
Fourth Quarter	0.01	0.005

2011
First Quarter	0.001	0.024
Second Quarter	0.007	0.021
Third Quarter	0.003	0.013
Fourth Quarter	0.002	0.006

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth information with respect to our common stock issued and available to be issued under outstanding options, warrants and rights.


	A	B	C
	Number of securities	Weighted-average	Number of securities
	to be issued upon	exercise price of	remaining available
	exercise of outstanding	outstanding	for future issuance
	options, warrants	options, warrants	under equity
	and rights	and rights	compensation plans
Plan category
Equity compensation plans	NA	NA	NA
approved by security holders

Equity compensation plans not	NA	NA	1,907
approved by security holders
Total	NA	NA	1,907

2007 OPTION PLAN

The 2007 Option Plan was adopted by the board with 30,000,000 shares reserved. The Plan is administered by the Board of Directors of the Company. Subject to the express limitations of the Plan, the Board has

authority in its discretion to determine the eligible persons to whom, and the time or times at which, restricted stock awards may be granted, the number of shares subject to each award, the time or times at which an award will become vested, the performance criteria, business or performance goals or other conditions of an award, and all other terms of the award. The Board also has discretionary authority to interpret the Plan, to make all factual determinations under the Plan, and to make all other determinations necessary or advisable for Plan administration. The Board may prescribe, amend, and rescind rules and regulations relating to the Plan. All interpretations, determinations, and actions by the Board are final, conclusive, and binding upon all parties.

HOLDERS

As of August 29, 2011, the number of holders of record of shares of common stock, excluding the number of beneficial owners, whose securities are held in street name, was approximately 1,600.

DIVIDEND POLICY

We do not anticipate paying any cash dividends on our common stock in the foreseeable future because we intend to retain any positive earnings to finance the expansion of our business. Thereafter, declaration of dividends will be determined by the Board of Directors in light of conditions then existing, including without limitation our financial condition, capital requirements and business condition.

RECENT SALES OF UNREGISTERED SECURITIES

The following table sets for the information with respect to all securities of the Company sold in its fiscal years ended May 31, 2009, 2010 and 2011, and subscription amounts of outstanding debentures, without registration of the securities under the Securities Act of 1933. The securities so sold are believed by the Company to be exempt from registration under either Regulation S or Rule 506 under the Securities Act of 1933.

If we indicate in the following table that we relied on Section 4(2) of the Securities Act, we relied on the following factors in determining the availability of the exemption: (a) the issuance was an isolated private transaction by us which did not involve a public offering; (b) there were only a very limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the stock; (d) the stock was not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offerees and us.

If we indicate in the following table that we relied on Regulation S, (a) the subscriber was neither a U.S. person nor acquiring the shares for the account or benefit of any U.S. person, (b) the subscriber agreed not to offer or sell the shares (including any pre-arrangement for a purchase by a U.S. person or other person in the U.S.) directly or indirectly, in the United States or to any natural person who is a resident of the United States or to any other U.S. person as defined in Regulation S unless registered under the Securities Act and all applicable state laws or an exemption from the registration requirements of the Securities Act and similar state laws is available, (c) the subscriber made his, her or its subscription from the subscriber's residence or offices at an address outside of the U.S. and (d) the subscriber or the subscriber's advisor has such knowledge and experience in financial and business matters that the subscriber is capable of evaluating the merits and risks of, and protecting his interests in connection with an investment in the Company.

If we indicate in the following table that we relied on Regulation D, we relied upon Rule 506 and (a) the subscriber was an Accredited Investor (as defined in Regulation D), (b) the subscriber invested in the Company for his own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (c) the subscriber agreed not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (d) the subscriber represented that he had knowledge and experience in financial and business matters such that he is capable of evaluating the merits and risks of an investment in the Company, (e) the subscriber had access to all documents, records, and books of the Company pertaining to the investment and was provided the opportunity ask questions and receive answers

regarding the terms and conditions of the offering and to obtain any additional information which the Company possessed or was able to acquire without unreasonable effort and expense, and (f) the subscriber had no need for the liquidity in his investment in the Company and could afford the complete loss of the investment.


				Number of
				Shares
			Purchase or	Purchased or	Expiration
			Exercise Price	Purchasable	Date (WTS) or
	Date of	Type of	(USD	Upon Exercise	Due date
Name	Issue	Security¹	Per Share)	or Conversion²	(DEB)	Exemption
Private Investors	1/09-5/09	CS	0.02	4,722,218		506
Private Investors	07/09	CS	0.02	6,444,444		506
Private Investors	12/09	CS	0.02	5,800,000		506
Private Investors	7/10-8/10	CS	0.01	16,500,000		506
Private Investors	10/10	CS	0.01	16,000,000		506
Private Investors	3/11	CS	0.01	11,864,407		506
Private Investor	2/02	DEB		$35,000	2/08	S
Private Investors	11/05-2/06	DEB		$555,000	2/14	506
Private Investors	5/06	DEB		$50,000	6/09	506
Private Investor	2/08	DEB		$460,000	6/13	S
Private Investor	6/08	DEB		$326,773	6/13	S

(1)

CS – Common Stock, WAR – Warrant, DEB – Debenture; (2) dollar amount convertible

ITEM 6.

SELECTED FINANCIAL DATA

Not applicable.

ITEM 7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. Forward-looking statements are often identified by words like: "believe", "expect", "estimate", "anticipate", "intend", "project" and similar expressions or words which, by their nature, refer to future events.

In some cases, you can also identify forward-looking statements by terminology such as "may", "will", "should", "plans", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

RESULTS OF OPERATIONS

Overview

Intelligent Living Corp (“ILC”, the “Company”, “we”, “us”) was incorporated in the State of Nevada in 1998. Through its wholly owned subsidiary MCM Integrated Technologies, Ltd. (“MCM”) the Company specializes in designing, supplying, installing, upgrading and servicing home automation solutions, energy use monitoring and conservation systems including: structured wiring, security and access control systems, lighting, HVAC and environmental controls, energy use monitoring and reduction systems and distributed audio/video systems. The Company offers technology for single and multi unit new construction and existing buildings, using both traditional component and Windows based systems. Income is derived from both equipment sales and the provision of installation, repair and maintenance services. Customers include technology consumers, residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.

MCM has supplied custom IT solutions since 1994 and home automation and energy management solutions since 2003. The Company has offices in Phoenix Arizona and Vancouver British Columbia and is active with projects in southwest BC.

The Company previously engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In July 2006, as a result of a breach of the Company’s exclusivity agreement with its principal supplier by its principal supplier and other production related issues the board of directors began an evaluation of alternative business models and opportunities. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations related to the home décor import and distribution business. This process continued through the year ended May 31, 2011 and is expected to wind down in fiscal 2012.

Following the acquisition of MCM in December 2006, the Company expanded its service offerings to include home comfort and energy efficiency solutions integrated with and controlled by home automation applications. In response to the downturn in the U.S. housing market the Company shifted its focus to the western Canadian housing market and initiated technology cooperation on a best efforts basis with Kilia Teknologi, a leading security surveillance group in the Republic of Turkey. The western Canadian housing market, and in particular the greater Vancouver housing market, have remained strong with new construction, price appreciation and inventory levels at historical levels. The Company is actively evaluating opportunities to expand its business activities through expansion vertically within the Company’s current green building, home automation and energy conservation sectors and horizontally within related sectors including: residential redevelopment and home construction for First Nations communities and relief housing.

Results from ongoing operations reported for the year ending May 31, 2011 and 2010 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support. Results from discontinued operations relate to the Company’s phase out activities in the home décor sector and include costs of renting space for surplus equipment and furniture, depreciation of surplus assets, third party legal and professional time related to eliminating and reducing liabilities and pursuing legal recourse against the Company’s home décor supplier.

Foreign currency translation

MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entity’s functional currency are translated into the entity’s functional currency at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized in the statement of income for the period.

On consolidation, the results of operations and cash flows whose functional currency is other than the US dollar are translated into US dollars at the average exchange rate for the period and their assets and liabilities are translated into US dollars at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized within other comprehensive income as a separate component of shareholders’ equity. In the event that such an operation is sold, the cumulative currency translation differences that are attributable to the operation are reclassified to income.

During the 12 month period June 1, 2010 through May 31, 2011, the US dollar to Canadian Dollar exchange rate has varied from a low of 0.9404 on July 6, 2010 to a high of 1.0576 on May 1, 2011. The closing exchange rate was 1.0236 and the average exchange rate over the year ended May 31, 2011 was 0.9941 resulting in a comprehensive loss of $45,230 for the year ended May 31, 2011.

Comparison of the Years Ended May 31, 2011 and May 31, 2010.

For the year ended May 31, 2011, revenues from continuing operations were $344,538 compared to $234,419 in the same period ending last year. These revenues are a result of the sale of smart home products and services. The 47% revenue increase is due to overall improvements in the strength and activity of the Greater Vancouver home construction market.

For the year ended May 31, 2011, gross profit from continuing operations was $221,216 compared to $140,479, an increase of 57% compared to the same period in the prior year. Gross margin (gross profit as a percent of revenue) was 64% for the year ended May 31, 2011, 7% higher than the prior year. The increased gross profit and gross margin reflects more efficient operations and higher margins on equipment sales, system design, installation and servicing.

Operating expenses associated with ongoing operations for the year ended May 31, 2011, were $369,580 versus $193,164 for the same period in the prior year. The increase in operating expenses reflects the net of increased consulting fees and depreciation expense and reduced salary, office and administration costs.

The Company recorded an operating loss from continuing operations of ($148,364) for the year ended May 31, 2011 compared to an operating loss of ($52,685) for the same period in the prior year. This represents a year-on-year 182% increase in operating loss.

Total other expenses for the year ended May 31, 2011 were $252,638 compared to $129,024 for the comparable period in the prior year. The 96% year-on-year increase reflects an increase in other expense of $49,415 for the creation of a reserve for inventory purchased prior to May 31, 2010, a decrease in interest expenses as a result of more favorable operating loan terms and reduced debt, reduced amortization expenses associated with beneficial conversion and fee discounts and an accrual for potential tax penalties associated with delayed foreign filings of $110,000.

The net loss from continuing operations for the year ended May 31, 2011 was ($401,002) compared to a net loss of ($181,709) for the comparable period in the prior year. This is a 121% increase in the year-on-year net loss from continuing operations.

During the year ended May 31, 2011 the Company incurred expenses associated with its discontinued operations. Expenses include costs for renting space for warehouse equipment, third party legal and professional fees related to eliminating and reducing liabilities associated with discontinued operations. The net loss from discontinued operations was ($177,177) compared to a net loss of ($29,990) for the comparable period in the prior year. The increased expense was due to third party legal and professional expenses, interest charges and rental of storage space associated with the Company’s effort to recover costs associated with the closure of the Company’s home décor operations.

The consolidated net loss for the year ended May 31, 2011 was ($578,179) compared to ($211,699) for the comparable period in the prior year. A loss of ($45,680) was realized due as a result of foreign currency translation compared to a loss of ($8,684) in the comparable period of the prior year. The resulting

comprehensive loss for the period ending May 31, 2011 was ($623,859) compared to ($220,383) for the corresponding period in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

As of May 31, 2011, our principal sources of liquidity included cash and cash equivalents, cash flow from our operating subsidiaries, and loans from related parties. At May 31, 2011, cash and cash equivalents totaled $3,475 compared to $3,931 at May 31, 2010.

Our business continues in transition and our liquidity must be considered in light of the risks, expenses and difficulties frequently encountered by companies in our stage of re-development. The Company operates in both the U.S. and Canadian home automation markets. The transition to the home automation sector through the acquisition of MCM Integrated Technologies occurred at the same time that the U.S. housing market entered a protracted period of substantially reduced home construction and renovation activity, declining home prices, extensive mortgage foreclosures and a contraction in the availability of consumer credit. The ongoing impairment in the U.S. and Canadian economies and financial markets has and will continue to impact the Company’s sales and liquidity for the foreseeable future. The forced decision to withdraw from the home décor sector resulted in significant un-anticipated costs and has resulted in a substantial negative impact on expenses and cash flow. Risk factors relevant to these events and management decisions include, but are not limited to: the Company’s ability to secure ongoing product supply, foreign exchange fluctuations, continued acceptance of the Company’s products and services, changes in technology and consumer adoption of technology, the strength of the North American housing market and consumer economy in general, and cannot be credibly quantified by the Company at this time.

Internal and External Sources of Capital

For the year ending May 31, 2011 the Company realized a loss on operations of ($148,364) and a net loss of ($578,179). As of May 31, 2011 the Company had a working capital deficit of $1,222,337 and limited assets to sell in order to create short or long term liquidity. Therefore, we are dependent on external sources for funding until such time as the Company develops positive net cash flow to maintain liquidity. Until such time as we have positive cash flow on a sustained basis, the dependence on external capital will remain. There are no guarantees that we will be able to raise external capital in sufficient amounts or on terms acceptable to us.

Investing Activities

Investing activities for the year ended May 31, 2011 consisted of $13,979 lease buy out of a company vehicle. There were no investing activities during the fiscal years ended May 31, 2010.

Financing Activities

Since inception, we financed operations through proceeds from the issuance of equity and debt securities and loans from shareholders and others. To date, we raised approximately $13.04 million from the sale of common stock and as at May 31, 2011 we have borrowings of approximately $1.22 million from investors and shareholders. Funds from these sources were used as working capital to fund the development of the Company.

The Company executed a securities purchase agreement dated as of December 7, 2005 (the "Purchase Agreement") with certain accredited investors under which we agreed to sell to these investors our convertible Debentures due three years from the final Closing Date under the Purchase Agreement in the aggregate principal amount of up to $600,000 bearing interest at the rate of 6% per annum and convertible into restricted shares of our Common Stock at a conversion price for each share of Common Stock equal to 75% of the lowest closing bid price per share (as reported by Bloomberg, LP) of our Common Stock for the fifteen trading days immediately preceding the date of conversion. The number of shares being issued not to exceed a total holding of 4.99% of the issued and outstanding shares for each debenture holder. At the close of the offering the company the company completed the sale of an aggregate of $555,000 in Debentures under the Purchase Agreement which resulted in net proceeds of $424,850. In February 2011 the debenture

holders extended the maturity date of the debentures to February 28, 2014. The Company secured additional debenture financing from an accredited investor in the amount of $50,000 under terms similar to the December 7, 2005 purchase agreement.

For the fiscal year ended May 31, 2011 net proceeds from financing activities totaled $48,533 from related party loans.

FUTURE PLAN OF OPERATIONS

Through 2011 the U.S. housing market continued to experience recession due to deteriorated residential property values, defaults and delinquencies in the residential mortgage market, impairment in consumer and business loans, increased unemployment, fiscal contraction a downgrade in the US credit rating.

The Company has shifted its focus to the western Canadian housing market, and in particular the greater Vancouver housing market which has remained strong with new construction, price appreciation and inventory levels at close to historical levels. The Company is actively evaluating opportunities to expand its business activities through expansion vertically within the Company’s current green building, home automation and energy conservation sectors and horizontally into home construction and development.

The Company realized increased year-on-year revenue in its traditional service sector, a trend that is expected to continue through fiscal 2012. Efforts to fully wind down all activity associated with the Company’s discontinued operations are expected to be complete within the first half of fiscal 2012.

The Company is actively evaluating opportunities to expand its business activities through both vertical expansion within the Company’s current green building, home automation and energy conservation sectors and horizontally within related sectors including home construction and development.

Beginning in the second quarter of FY 2011 the Company began discussions with a local specialty builder and entered into a non-binding letter of intent to explore joint opportunities for property development within the greater Vancouver area, design build housing specific to the needs of First Nations communities and small economical fast erecting relief housing. The Company initially favored a joint venture approach to these markets; however, after detailed analysis of structural and financial cost benefits, the Company is pursuing these opportunities as the prime contractor/developer.

This effort has led to eco and energy friendly designs for single family housing, multi-suite elder’s residence and small footprint relief housing. The designs capitalize on modular construction techniques, advanced building systems. The Company is currently in negotiation with a coastal First Nations band for turnkey design build housing. The opportunity within First Nations communities is extensive and the Company plans to focus effort on developing this market over the coming year. The Company has also undertaken extensive pro-forma analysis of multi-strata development opportunities within greater Vancouver communities that have zoning approval for building multi-units on single family residential lots. The Company is actively looking at ways and means of securing development funding and is examining the need for equity re-structuring as a pre-requisite for funding.

The far eastern European and west Asian areas of Turkey are experiencing growth supported by export sales of manufactured products and Middle Eastern oil revenue related investment. The Turkish economy has recorded strong growth in recent quarters and has remained relatively buoyant through the ongoing global credit crisis and Euro zone debt crisis. The Company has historical ties to this area and plans to continue to pursuing technology cooperation and marketing activities within Turkey and the Middle East on an opportunistic and best efforts basis.

Cash flow from ongoing MCM business activities combined with the availability of as needed loans from related parties are estimated to be sufficient to sustain the current level of operations and planned activities through to the end of the 2012 fiscal year.

OFF BALANCE-SHEET ARRANGEMENTS

During the year ended May 31, 2011 the Company did not engage in any off-balance sheet arrangements as defined in Item 303(a) of the SEC's Regulation S-K.

ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our bank credit facility because borrowings under the facility are variable rate borrowings. At the current time all of the borrowings under our credit agreements accrue interest at bank prime rate plus applicable margins. Assuming that the balance on our line of credit as of May 31, 2011, was the same throughout the entire year, each 1.0% increase in the prime interest rate on our variable rate borrowings would result in an increase in annual interest expense and a decrease in our cash flows and income before taxes of approximately $3,851 per year.

Foreign Currency Exchange Risks

Our home automation subsidiary (MCM) and discontinued home décor subsidiary (Cardinal Points) have operations in Canada, both have assets and liabilities in Canadian dollars and both use the Canadian Dollar as a functional currency. Each financial period, all assets, including goodwill, and liabilities of MCM and Cardinal Points are translated into U.S. Dollars, our reporting currency, using the closing rate method. In addition, we occasionally purchase goods in Canadian dollars for resale in US dollars and routinely purchase goods in US dollars for resale in Canadian dollars. Recently, we have purchased goods in both US dollars and Canadian dollars for resale in Euros.

There are principally two types of foreign exchange risk: transaction risks and translation risks. Transaction risks may impact the results of operations and translation risks may impact comprehensive income. These are discussed more fully below.

Transaction risks

Transactions in currencies other than the functional currency are translated at either an average exchange rate used for the reporting period in which the transaction took place (to approximate to the exchange rate at the date of transactions for that period) or in some cases the rate in effect at the date of the transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is settled or translated, are recognized in the consolidated statements of operations as foreign exchange transaction gains and losses.

MCM’s and Cardinal Points’ cash balances consist of Canadian Dollars and U.S. Dollars. This exposes us to foreign currency exchange rate risk in the Statement of Operations. The change in exposure from period to period is related to the change in the balance of the bank accounts based on timing of event receipts and payments. For the period ended May 31, 2011, the Company purchased goods and services of approximately $54,000 for sale in Canadian dollars. During the 12 month period June 1, 2010 through May 31, 2011, the US dollar to Canadian dollar exchange rate has varied from a low of 0.9404 on July 6, 2010 to a high of 1.0576 on May 1, 2011. Assuming that the majority of the goods and services were priced in U.S. dollars at their point of origin and that the goods and services were purchased at the extremes of the observed swing in the U.S. Dollar exchange rate against the Canadian Dollar, with all other variables held constant a shift of approximately CAD 10,975 in the cost of goods and services would be realized.

Translation risks

The financial statements of MCM and Cardinal Points, with a functional currency of Canadian dollars, are translated into U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated at period-end exchange rates while revenue, expenses and cash flows are translated at reporting period

weighted average exchange rates. Adjustments resulting from these translations are accumulated and reported as the principal component of other comprehensive loss in stockholders’ equity. The magnitude of the adjustment resulting from application of the current rate method is directly related to the difference between the average exchange rate and closing exchange rate for the period.

The fluctuation in the exchange rates resulted in foreign currency translation gains reflected in comprehensive loss in stockholders’ equity of $45,680 for the year ended May 31, 2011. Future changes in the value of the U.S. dollar to Canadian dollar could have a material impact on our financial position.

ITEM 8.

FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

THE BOARD OF DIRECTORS AND SHAREHOLDERS OF INTELLIGENT LIVING CORP. AND SUBSIDIARIES

VANCOUVER, BRITISH COLUMBIA

We have audited the accompanying consolidated balance sheet of Intelligent Living Corp. and Subsidiaries as of May 31, 2011 and the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Intelligent Living Corp. and Subsidiaries as of May 31, 2011 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC

September 21, 2011

Houston, TX

www.mkacpas.com

[ilc10ksep2911002.gif]


INTELLIGENT LIVING CORP.
CONSOLIDATED BALANCE SHEETS
				May, 31		May, 31
				2011		2010
CURRENT ASSETS
	Cash and cash equivalents		$	3,475	$	3,931
	Accounts receivable, net			16,934		14,673
	Accounts receivable related party			20,078		-
	Prepaid expenses			3,617		3,921
	Inventory, net			9,582		64,486
	GST/PST tax refundable			782		196
	TOTAL CURRENT ASSETS		$	54,468	$	87,207

	PROPERTY & EQUIPMENT, NET			19,300		39,463

OTHER ASSETS
	Deposits			-		849
	Goodwill			243,701		242,048
	Other assets, net			-		14,469
	TOTAL OTHER ASSETS			243,701		257,366
	TOTAL ASSETS		$	317,469	$	384,036

LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
	Line of credit			48,253		45,268
	Accounts payable			92,371		96,298
	Accrued liabilities			296,067		8,582
	Accrued interest			232,279		257,582
	Short term notes			103,533		960,267
	Short term loans - related party			424,302		375,769
	Current liabilities related to discontinued operations
		Accrued liabilities		80,000		-
	TOTAL CURRENT LIABILITIES		$	1,276,805	$	1,743,766

LONG-TERM LIABILITIES
	Debentures			693,253		-
	TOTAL LONG TERM LIABILITIES			693,253		-
	TOTAL LIABILITIES			1,970,058		1,743,766

	COMMITMENTS & CONTINGENCIES			-		-

STOCKHOLDERS' (DEFICIT)
	Common stock, 800,000,000 shares authorized, $0.001 par value; 105,945,324 and 61,580,917 issued and outstanding respectively			105,944		61,580
	Additional paid in capital			13,041,747		12,755,111
	Accumulated deficit			(14,691,501)		(14,113,322)
	Accumulated other comprehensive (loss)			(108,779)		(63,099)
	TOTAL STOCKHOLDERS' (DEFICIT)		$	(1,652,589)	$	(1,359,730)
	TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	317,469	$	384,036

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


INTELLIGENT LIVING CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
			For the 12 Months Ended
			May 31,
			2011		2010

REVENUES
	Intelligent Home: Equipment & Services	$	344,538	$	234,419
COST OF REVENUES
	Intelligent Home: Equipment & Services		123,322		93,940
GROSS PROFIT			221,216		140,479

EXPENSES
	Consulting fees		180,000		-
	Selling expense		121		1,347
	Salaries		54,254		63,593
	Depreciation		39,284		29,751
	Office & Administrative		95,921		98,473
	TOTAL OPERATING EXPENSES		369,580		193,164

(LOSS) FROM OPERATIONS			(148,364)		(52,685)

OTHER INCOME (EXPENSE)
	Other expense		(469)		-
	Inventory reserve expense		(49,415)		-
	Beneficial conversion and fee discount expense		(13,945)		(41,301)
	Interest expense		(78,809)		(87,723)
	Tax foreign filing reserve expense		(110,000)		-
	TOTAL OTHER EXPENSE		(252,638)		(129,024)

(LOSS) FROM CONTINUING OPERATIONS			(401,002)		(181,709)

(LOSS) FROM DISCONTINUED OPERATIONS			(177,177)		(29,989)

CONSOLIDATED NET (LOSS) BEFORE INCOME TAX			(578,179)		(211,698)
	Income Tax Expense		-		-
NET (LOSS)			(578,179)		(211,698)
	EARNINGS PER SHARE BASIC AND DILUTED
	Gain (Loss) income per share from continuing operations		(0.00)		(0.00)
	(Loss) per share from discontinued operations		(0.00)		(0.00)
	Net (Loss) per share		(0.01)		(0.00)
	Weighted average number of common stock shares outstanding, basic and diluted		86,225,914		57,588,352

OTHER COMPREHENSIVE (LOSS)
	Foreign currency translation (loss)		(45,680)		(8,684)

COMPREHENSIVE (LOSS)		$	(623,859)	$	(220,382)

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


INTELLIGENT LIVING CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
								Accumulated
	Common Stock							Other		Total
	Number				Additional		Accumulated	Comprehensive		Stockholders'
	of Shares	Amount			Paid-in Capital		Deficit	Income (Loss)		Deficit
Balance, May 31, 2009	49,336,473	$	49,336	$	12,539,357	$	(13,901,623)	$	(54,415)	$	(1,367,345)
Stock issued for conversion of debt at an average of
$0.02 per share	12,244,444		12,244		215,756						228,000
Net loss for the 12 months ended May 31, 2010							(211,699)				(211,699)
Foreign currency translation gain (loss)									(8,684)		(8,684)
Balance May 31, 2010	61,580,917		61,580		12,755,113		(14,113,322)		(63,099)		(1,359,728)
Stock issued for conversion of debt at an average of
$0.01 per share	44,364,407		44,364		286,634						330,998
Net loss for the 12 months ended May 31, 2011							(578,179)				(578,179)
Foreign currency translation gain (loss)									(45,680)		(45,680)
Balance, May 31, 2011	105,945,324	$	105,944	$	13,041,747	$	(14,691,501)	$	(108,779)	$	(1,652,589)

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


INTELLIGENT LIVING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
					12 Months Ended May 31,
					2011		2010

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(578,179)	$	(211,699)
	Adjustments to reconcile net loss
		to net cash provided by operating activities:
			Amortization of debt discount		13,945		41,302
			Depreciation / Amortization		49,376		47,883
			Inventory reserve		50,881		-
		Decrease (increase), net of acquisition, in:
			Accounts receivable		(2,261)		26,196
			Accounts receivable related party		(20,078)		-
			Prepaid expenses		304		1,839
			Inventory		4,023		3,120
		Increase (decrease), net of acquisition, in:
			Accrued liabilities and interest		493,781		60,667
			Employee advance receivable		-		2,626
			Accounts payable		(3,927)		(11,520)
			GST tax refundable		(586)		(196)
			Deposits		849		-
	Net cash provided by / (used in) operating activities				8,128		(39,781)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of fixed assets				(13,979)		-
	Net cash used in investing activities				(13,979)		-

CASH FLOWS FROM FINANCING ACTIVITIES:
	Bank Line of Credit				2,985		(3,346)
	Proceeds of loans				-		35,000
	Proceeds of loans, related party				48,533		18,960
	Repayment of loans, related party				-		(1,240)
	Net cash provided by financing activities				51,518		49,374

Net increase in cash					45,667		9,593

	Effect of foreign exchange on cash				(46,123)		(8,684)

Cash, beginning of period					3,931		3,022

Cash, end of period				$	3,475	$	3,931

SUPPLEMENTAL DISCLOSURES:
	Cash paid for interest and income taxes:
		Interest		$	26,013	$	24,108
		Income taxes		$	-	$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES:
	Shares issued for accounts payable			$	70,000		-
	Common stock issued for debt and interest			$	261,000	$	228,000

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

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Intelligent Living Corp (“ILC”, the “Company”, “we”, “us”) was incorporated in the State of Nevada in 1998. Through its wholly owned subsidiary MCM Integrated Technologies, Ltd. (“MCM”) the Company specializes in designing, supplying, installing, upgrading and servicing home automation solutions, energy use monitoring and conservation systems including: structured wiring, security and access control systems, lighting, HVAC and environmental controls, energy use monitoring and reduction systems and distributed audio/video systems. The Company offers technology for single and multi unit new construction and existing buildings, using both traditional component and Windows based systems. Income is derived from both equipment sales and the provision of installation, repair and maintenance services. Customers include technology consumers, residential home owners, developers and builders of single family and multi-unit developments and commercial businesses.

Results from ongoing operations reported for the year ending May 31, 2011 and 2010 relate to sales of home automation and energy efficiency products and services including system design, equipment supply, installation and support. Results from discontinued operations relate to the Company’s phase out activities in the home décor sector and include the cost of renting space for surplus equipment and furniture, depreciation of surplus assets, third party legal and professional time related to eliminating and reducing liabilities, and pursuing legal recourse against the Company’s home décor supplier.

The Company’s year-end is May 31.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Intelligent Living Corp. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Accounting Method

The Company’s financial statements are prepared using the accrual method of accounting.

Accounts Receivable

The Company carries its accounts receivable at net realizable value. Because of the small customer base, direct contact with customers and relatively small number of transactions, the Company uses the direct write off method to account for doubtful accounts. The Company estimates bad debt based on management’s ongoing review and assessment of accounts and creation of reserves for the full amount of doubtful accounts. At May 31, 2011 and 2010, there were accounts receivable allowances of NIL and $27,764 respectively.

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

Advertising and Marketing Expenses

Advertising expenses consist primarily of costs incurred in the design, development, and printing of Company literature and marketing materials. The Company expenses all advertising expenditures as incurred. The Company incurred advertising and marketing expenses of $121 and $1,347 for the years ending May 31, 2011 and 2010 respectively.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. At May 31, 2011 and 2010, the Company did not have cash equivalents.

Commitments and Contingencies

We record estimated commitments for future obligations and estimate contingencies when information is available that indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount can be reasonably estimated. When no accrual is made for a loss contingency because one or both of these conditions are not met, or if an exposure to loss exists in excess of the amount accrued, we disclose such contingencies when there is at least a reasonable possibility that a loss or an additional loss may have been incurred. Determining the likelihood of incurring a liability and estimating the amount of the liability involves significant judgment. If the outcome of the liability is more adverse to us than management currently expects, then we may have to record additional charges in the future. See Note 6 for details on commitments and contingencies

Comprehensive Income

The Company accounts for Comprehensive Income in accordance with ASC Topic 220. ASC Topic 220 establishes standards for reporting and displaying comprehensive income, its components and accumulated balances. For the year ending May 31, 2011 the Company reported a comprehensive loss of $45,680 resulting from the conversion of Canadian dollar subsidiaries into US dollars. For the year ending May 31, 2011 the accumulated comprehensive loss due to the conversion of Canadian dollar subsidiaries into US dollars was $108,329.

Costs Associated with Exit or Disposal Activities

The Company accounts for exit or disposal activities in accordance with ASC Topic 220, “Accounting for Costs Associated with Exit or Disposal Activities” ASC 220 establishes standards for the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities. There has been no impact on the Company’s financial position or results of operations from adopting ASC 220.

Earnings per Share

The Company has adopted ASC 260 “Earnings Per Share”. Basic loss per share is computed using the weighted average number of common shares outstanding. Diluted net loss per share is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive.

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011


	For the Year Ended May 31,
(in thousands)	2011		2010
Gain (Loss) from continuing operations	$	(385.8)	$	(181.7)
Gain (Loss) from discontinued operations	(177.2)		(30.0)
Net gain (loss) income	$	(563.1)	$	(211.7)

Weighted average shares outstanding:

Basic	86,225,914		57,588,352
Effect of dilutive securities:
Stock options and warrants	—		—
Convertible loans	—		—
Basic and diluted	86,225,914		57,588,352

Gain (Loss) per share from continuing operations: basic and diluted	$	(0.00)	$	(0.00)
Gain (Loss) per share from discontinued operations: basic and diluted	$	(0.00)	$	(0.00)
Net (loss) income per share: basic and diluted	$	(0.01)	$	(0.00)

The following potential common shares have been excluded from the computation of diluted net income per share for the years ended May 31, 2011 and 2010 because their inclusion would have been antidilutive:


	For the Year Ended May 31, 2011	For the Year Ended May 31, 2010
Outstanding common stock options and warrants	Nil	Nil
Convertible loans	211,853,250	329,127,353

Fair Value of Financial Instruments

On July 1, 2008, the Company adopted Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“Topic 820”). Topic 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The adoption of this standard did not have a material effect on the Company’s financial position, results of operations or cash flows.

Software Development Costs

Software development costs include direct costs incurred for internally developed products classified under Other Assets. We account for software development costs in accordance with ASC 350-40. All capitalized software costs are amortized on a straight line basis over an estimated useful life and are reviewed for impairment annually. As of May 31, 2011, all software costs were fully amortized.

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

Foreign Currency Translation

MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. both use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entity’s functional currency are translated into the entity’s functional currency at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized in the statement of income for the period.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As shown in the accompanying financial statements, at May 31, 2011 the Company has an accumulated deficit of $14,691,501, and current liabilities in excess of current assets by $1,222,337. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Commencing in July 2006 and continuing through the year ended May 31, 2011 management has systematically continued to phase out of the home décor sector. Commencing in Q3 2007 the Company began reporting all home décor activity under the category of discontinued operations. In December 2006 the Company moved into the home automation sector with the acquisition of MCM Integrated Technologies. The transition has substantially reduced the Company’s financial obligations with respect to overheads, cost of inventory, cost of sales and need for support services. The Company recorded positive operating income for the year ended May 31, 2007 and loss on operations for the years ended May 31, 2008 through 2011.

Goodwill

Goodwill is calculated as the excess of the fair value of consideration paid over the fair value of tangible and intangible assets acquired and liabilities assumed. Goodwill will be tested for impairment annually according to ASC 350-20. An impairment test would also be performed in any period in which events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment would be recognized at that time, to the extent that the carrying amount exceeds the undiscounted future net cash flows expected from its use. The Company recorded goodwill in the amount of $243,701 related to the acquisition of MCM Integrated Technologies, Ltd. Management reviewed Goodwill and found that there was no impairment for the year ended May 31, 2011 and no expense has been recognized.

Impairment of long-lived assets

We have adopted ASC 350 for the assessment of impairment of goodwill and indefinite life intangibles on an annual basis. The potential impairment of finite life intangibles is assessed whenever events or a change in circumstances indicate the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

significant underperformance relative to historical or expected projected future operating results;

significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

significant negative industry or economic trends;

significant decline in our stock price for a sustained period of time; and

our market capitalization relative to net book value.

When we determine that the carrying value of goodwill and indefinite life intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any potential impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.

Inventory

The Company has adopted ASC 330: Inventory at May 31, 2011 consisted of a variety of home automation equipment and at May 31, 2010 consisted of a variety of home automation equipment and discontinued operations home décor products. Inventories are recorded using the specific identification method and valued at the lower of recorded cost or market value. The recorded cost of inventory was $60,463 at May 31, 2011, and $164,462 at May 31, 2010. To eliminate ongoing storage and disposal costs, all home décor inventory was disposed without cost recovery in May 2011 and the recorded cost was written off against the full value of the reserve. Reserves of $NIL at May 31, 2011 and $99,976 at May 31, 2010 were recorded to cover the full recorded cost of home décor product. For the year ended May 31, 2011 a reserve of $50,881 was recorded for home automation inventory purchased prior to May 31, 2010.


Inventory	May 31 2011	May 31 2010
	Recorded Cost
Home automation equipment	$60,463	$64,486
Home décor products	-	$99,976
Total Recorded Cost	$60,463	$164,462
	Reserve
Home automation equipment	$50,881	-
Home décor products	-	$99,976
	Net of Reserve
Total Inventory net of reserve	$9,582	$64,486

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. References herein to the Company include the Company and its subsidiaries, unless the context otherwise requires.

Property and Equipment

Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years (see note 3). Property and Equipment held by MCM are pledged as security for the Company’s line of credit.

Provision for Taxes

We account for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that we recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

Accounting guidance now codified as FASB ASC Topic 740-20, “Income Taxes – Intra-period Tax Allocation,” clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets. We would recognize interest and penalties related to unrecognized tax benefits in income tax expense.

At May 31, 2011, the Company had net deferred tax asset calculated at an expected rate of 34% of approximately $4,200,000 principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at May 31, 2011. The significant components of the deferred tax asset at May 31, 2011 and May 31, 2010 were as follows:


		May 31, 2011		May 31, 2010
Net operating loss carryforward	$	12,233,858	$	11,719,000
Deferred tax asset - NOL	$	4,159,552	$	3,984,500
Deferred tax asset valuation allowance	$	(4,159,552)	$	(3,984,500)
Net deferred tax asset	$	-	$	-

At May 31, 2011, the Company had net operating loss carryforwards of approximately $12,234,000 which expire in the years 2020 through 2029. The change in the allowance account from May 31, 2010 to May 31, 2011 was $175,052.

The components of current income tax expense as of May 31, 2011 and 2010 respectively are as follows:


	As of May 31,
		2011		2010
Current federal tax expense	$	-	$	-
Current state tax expense	$	-	$	-
Change in NOL benefits	$	175,052	$	72,000
Change in valuation allowance	$	(175,052)	$	(72,000)
Income tax expense	$	-	$	-

For the period ended May 31, 2011, other than a reserve of $110,000 for potential federal tax penalties associated with late filing of disclosures, the Company did not record any liabilities for uncertain tax positions.

Revenue Recognition

The Company generates revenues designing and installing, integrating and servicing automation solutions and energy use monitoring and conservation systems for commercial and residential new construction and renovation projects. The Company generates revenues in three primary ways: first, the Company offers a complete turnkey solution with products and services to contractors and end users; second, the Company sells only products to its contractors and end users; and third, the Company will only sell services to its contractors and end users. Revenue on product sales and service agreements is recognized when there is evidence of an arrangement, title and risk of ownership have passed (generally upon delivery) or the service has been provided, the price to the buyer is fixed or determinable and collectability is reasonably assured. Revenue on

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

turnkey contracts that offer both products and services are recognized as multiple deliverable contracts and when the deliverable items are provided.

The Company evaluated their revenue transactions to determine if there were multiple deliverable items present, and if revenue for these deliverables should be recognized separately pursuant to ASC 605‐25‐5. The Company determined that some of their sales consisted of multiple deliverable items, and these deliverables had stand alone value separable from all items to be provided within their respective contracts. The fair values of these deliverables were estimable as a market for each deliverable exists. Due to this, these sales transactions met the criteria to be accounted for as multiple deliverable contracts in accordance with ASC 605‐25‐5.

Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current year presentation. These reclassifications had no material impact on the financial position, results of operations, or cash flows in the periods presented.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment for purposes of computing depreciation are three to seven years. The following is a summary of property, equipment, and accumulated depreciation:


Property and Equipment		May 31, 2011		May 31, 2010
Computer hardware and software	$	825,159	$	821,608
Furniture, fixtures, vehicles, leaseholds		362,777		324,834
Book value of property and equipment		1,187,936		1,146,442
Less accumulated depreciation		(1,168,636)		(1,106,974)
Property and equipment - net	$	19,300	$	39,463
Other assets [Proprietary automation software]	$	15,250	$	14,469
Less accumulated depreciation		15,250		-
Other assets net	$	-	$	14,469

The total depreciation expenses for the year ended May 31, 2011 and 2010 were $49,376 and $47,883 respectively. For the year ended May 31, 2011 and 2010 depreciation expenses on continuing operations were $39,284 and $29,751 respectively and on discontinued operations were $10,092 and $18,132 respectively. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

NOTE 4 – COMMON STOCK

During the year ended May 31, 2010 the Company issued 12,244,444 shares of common stock for conversion of debentures valued at $228,000.

During the year ended May 31, 2011, the Company issued 44,364,407 shares of common stock for conversion of debentures, accrued interest and loans payable valued at $330,998. All stock issued was within terms of the underlying agreements.

NOTE 5 – RELATED PARTIES (NOTES PAYABLE RELATED PARTY)

During the year ended May 31, 2010 loans from the Company’s officers increased $29,967. The Company had short-term loans outstanding to corporate officers at May 31, 2010 in the amount of $375,769. They are unsecured, due on demand and bear interest at an average rate of 7.1%. Accrued interest to May 31, 2010 was $4,750. The total outstanding related party debt [principal plus accrued interest] for the period ended May 31, 2010 was $380,519.

During the year ended May 31, 2011 loans and accounts payable due to the Company’s officers increased $48,533. The Company had short-term loans and accounts payable outstanding to corporate officers at May 31, 2011 in the amount of 424,302. They are unsecured, due on demand and bear interest at an average rate of 7.4%. Accrued interest to May 31, 2011 was $8,651. The total outstanding related party debt [principal plus accrued interest] for the period ended May 31, 2011 was $432,953.

The following table summarizes the position of notes, and amounts due to related parties at May 31, 2011 and May 31, 2010:


Related Parties		Principal Outstanding on May 31, 2011	Interest Accrued to May 31, 2011	Principal Outstanding on May 31, 2010	Interest Accrued to May 31, 2010
Short term notes	$	424,302	8,651	375,769	4,750
Total	$	424,302	8,651	375,769	4,750

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Lease Commitments

For the year ending May 31, 2011 the Company did not have any lease or other long term commitments and management was not aware of any contingencies not already provided for. The Company rents office, warehouse, and storage space on a month-to-month basis. This arrangement is expected to continue for the foreseeable future.

NOTE 7 – CONCENTRATION OF CREDIT RISK

Cash

The Company maintains cash balances at two banks. Accounts at each institution are insured by the Canadian Depository Insurance up to $60,000 in Canadian funds. At May 31, 2011 and 2010, no account exceeded this limit.

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

Revenue and Accounts Receivable

The Company had two significant customers during the year ended May 31, 2011. For the year ended May 31, 2011 revenue was $122,390 from customer A and $100,313 from customer B. On May 31, 2011 the accounts receivable was $12,628 from customer A and $20,078 from customer B.

NOTE 8 – THIRD PARTY NOTES AND DEBENTURES PAYABLE

During the twelve months ended May 31, 2009 the Company secured short term third party non-interest bearing loans in the amount $14,661. Total outstanding short term third party non-interest bearing loans outstanding at May 31, 2009 was $26,275

During the twelve months ended May 31, 2010, the Company secured a short term third party non-interest bearing loan in the amount $35,000. The total short term third party non-interest bearing loans outstanding on May 31, 2010 were $61,959.

In the 12 months ended May 31, 2011 the Company converted a $35,000 non-interest bearing short term loan into 6,500,000 shares of the Company’s common stock. The number of shares issued on conversion was determined using the fair market value of the Company’s shares at the time of conversion. The total short term third party non-interest bearing notes outstanding on May 31, 2011 were $28,533.

Debenture principal, debenture balance sheet liability net of discounts and accrued interest outstanding at May 31, 2009 was $1,140,253, $1,085,007 and $189,216 respectively.

In the 12 months ended May 31, 2010 the Company converted $228,000 of debenture principal into 12,244,444 shares of the Company’s common stock. All conversions were within terms of the underlying agreements. Debenture principal, debenture balance sheet liability net of discounts and accrued interest outstanding at May 31, 2010 was $912,253, $898,308 and $252,832 respectively.

In the 12 months ended May 31, 2011 the Company converted $70,000 of third party professional fees payable, $179,000 of debenture principal and $82,000 of debenture accrued interest into 44,364,407shares of the Company’s common stock. All conversions were within terms of the underlying agreements.

$693,253 of debenture principal due in FY 2011 was extended as follows: $232,480 due February 28, 2011 was extended to February 28, 2014 and $460,773 due June 1, 2010 was extended to June 1, 2014. The total $768,253 debenture principal outstanding on May 31, 2011 consists of: $75,000 in short term debentures and $693,253 in long term debentures.

The outstanding notes and debentures were evaluated for embedded derivatives in accordance with ASC 815 and were found to not include any embedded derivatives.

The following table summarizes the outstanding principal and discounts associated with debentures and principal amounts of notes outstanding at May 31, 2011.


Debentures			Notes	Total
Principal at end of period	Remaining Discounts	Balance Sheet Amount net of discounts	Principal at end of period	End of Period Balance Sheet Amount
$768,253	NIL	$768,253	$28,533	$796,786

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

The principal and accrued interest on notes and debentures as at May 31, 2010 are summarized in the following table:


Notes and Debentures		Principal Amount at May 31, 2011	Weighted Average Interest Rate		Accrued Interest to May 31, 2011
Third Party Notes	$	28,533	NIL	$	NIL
Third Party Debentures		693,253	6.4%		223,628
Total	$	796,786	6.0%	$	223,628

Principal payments on loans and debentures payable in the years ending May 31, 2012 through 2016 are as follows:


Fiscal Year	Principal
2012	$103,533
2013	-
2014	$232,480
2015	$460,773
2016	-
Total	$796,786

NOTE 9 – DISCONTINUED OPERATIONS

At May 31, 2011, the Company had disposed of all discontinued inventory and fully depreciated all plant and equipment assets. Assets and liabilities from discontinued operations consisted of:


Description	May 31, 2011

Professional fees	$	80,000
Total liabilities related to discontinued operations	$	80,000

The loss from discontinued operations, recorded for the year ended May 31, 2011, include the cost of renting space for equipment and furniture, depreciation, third party legal and professional time related to eliminating and reducing liabilities associated with discontinued operations and pursuing legal recourse against the Company’s home décor supplier.

NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued Accounting Standards Codification Topic 810 (ASC Topic 810) “Accounting for Transfers of Financial Assets”. Topic 810 requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. Topic 810 must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date. The adoption of this pronouncement did not have a material impact on the financial statements

In June 2009, the FASB issued Accounting Standards Codification Topic 810 (ASC Topic 810) “Amendments to FASB Interpretation No. 46(R)”. Topic 810 requires an additional reconsideration event when determining whether an entity is a variable interest entity when any changes in facts and circumstances occur such that the holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

investments to direct the activities of the entity that most significantly impact the entity’s economic performance. It also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity. Topic 810 shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company does not expect the adoption of this pronouncement to have a material effect on its financial statements.

In January 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash, which clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The Company’s adoption of this ASU did not have a material impact on its consolidated financial statements.

In January 2010, the FASB issued ASU No. 2010-02, Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification, which affects accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit activity. This ASU also affects accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity. The amendments in this update are effective beginning in the period that an entity adopts ASU 810-10, Consolidations. If an entity has previously adopted ASU 810-10 as of the date the amendments in this update are included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted ASU 810-10. The Company’s adoption of this ASU did not have a material impact on its consolidated financial statements.

In January 2010, the FASB issued updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the interim and annual reporting period beginning January 1, 2011. We will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on our Consolidated Financial Statements.

In April 2010, the FASB issued ASU 2010-13, Compensation-Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. This update provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial porting of the entity’s equity securities trades should not be considered to contain a condition that is not a

INTELLIGENT LIVING CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2011

market, performance or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company’s adoption of this ASU did not have a material impact on its consolidated financial statements.

In December 2010, the FASB issued Accounting Standard Update 2010-28, Intangibles—Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. This ASU modified Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. For public entities, the amendments in the ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The Company`s adoption of this ASU is not expected to have a material impact on its consolidated financial statements.

In December 2010, the FASB issued Accounting Standard Update 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations. This ASU specifies that, if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 is effective prospectively for business combinations where the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company`s adoption of this ASU is not expected to have a material impact on its consolidated financial statements.

The Company does not believe that any other recently issued, but not yet effective, accounting standards will have a material on the Company’s consolidated financial position, results of operations or cash flow.

ITEM 9.

CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

On August 26, 2011, Mark Bailey & Company Ltd. (“MB&C”) notified the Company that effective as of that date, the firm was not going to stand for re-election as its independent auditor. Effective the same date, the Company appointed M&K CPAS PLLC as its new auditor and the decision to change the auditor was approved by the Company's Board of Directors.

MB&C issued its auditor’s report on the Company's financial statements for the year ended May 31, 2010 which included an explanatory paragraph as to the Company’s ability to continue as a going concern.

Other than the going concern uncertainty described above, MB&C’s audit report on the Company’s financial statements for the year ended May 31, 2010 did not contain an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles.

During the year ended May 31, 2010 and any subsequent interim period through August 26, 2011, the date of resignation of MB&C, there were no disagreements with MB&C on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to MB&C’s satisfaction, would have caused MB&C to make reference to the subject matter of the disagreements in connection with their report on the Company’s consolidated financial statements for such years; and there were no reportable events, as listed in Item 304(a)(l)(v) of Regulation S-K.

During the year ended May 31, 2010 and through to the date of the Company’s decision to engage M&K CPAS PLLC, the Company did not consult M&K CPAS PLLC. with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, or any other matter or reportable events listed in Items 304(a)(2)(i) and (ii) of Regulation S-K.

ITEM 9A(T).

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by our management, with the participation of the Chief Executive and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of May 31, 2011. The evaluation concluded that there was a material weakness in our internal control over financial reporting as of May 31, 2011. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the issuer’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness related to the lack of monitoring or review of work performed by our management and lack of segregation of duties. As of May 31, 2011, in the preparation of audited financial statements, footnotes and financial data, all of our financial reporting was carried out solely by our chief financial and accounting officer and we did not have an audit committee to monitor and review the work performed. The lack of segregation of duties resulted from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control. Based on this evaluation the Chief Executive and Principal Financial Officer has concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective for the reasons stated below.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management's Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that (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 generally accepted accounting principles, and that 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 our assets that could have a material effect on the interim or annual consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness in 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 design and operation of the Company’s internal control over financial reporting as of May 31, 2011 based on the criteria set forth by the Committee of Sponsor Organizations of the Treadway Commission (COSO) in the Internal Control-Integrated Framework.

Based upon its evaluation, our management concluded that there was a material weakness in our internal control over financial reporting as of May 31, 2011. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the issuer’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness related to the lack of monitoring or review of work performed by our management and lack of segregation of duties. As of May 31, 2011, in the preparation of audited financial statements, footnotes and financial data, all of our financial reporting was carried out solely by our chief financial and accounting officer and we did not have an audit committee to monitor and review the work performed. The lack of segregation of duties resulted from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during fourth quarter of the period covered by this yearly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

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.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

ITEM 9B.

OTHER INFORMATION.

Not applicable.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our executive officers and directors and their ages as of September 14, 2011 are as follows:


NAME	AGE	POSITION
Michael F. Holloran	63	President, CEO and Director
Murat Erbatur	61	COO, Director

MICHAEL F. HOLLORAN, PRESIDENT AND CEO

Michael Holloran was elected a director and accepted the position of President & CEO of ILC in 2000. He brings to ILC a wealth of senior management experience spanning 37 years, including 22 years with the Beak International Group and long-term involvement spearheading strategic corporate expansion into key international markets, primarily within Southeast Asia. He has served as a technical advisor to the Asian Development Bank, the governments of Indonesia, Malaysia and the Philippines. He has held outside Directorships, Advisory Board and committee memberships at several prominent North American institutions. He has a Masters Degree in Chemical and Environmental Engineering from McMaster University, a Bachelor of Science (Honors) degree in Applied Mathematics and Chemistry from the University of Waterloo and a Management Studies diploma from Sheridan College.

MURAT ERBATUR, DIRECTOR

Murat F. Erbatur was elected a director in February 2004 and accepted the position of COO in December 2006. Mr. Erbatur founded and is currently President and CEO of MCM Integrated Technologies Ltd and ScanTech Imaging Corp. MCM is one of the leading providers of information technology products and services. ScanTech Imaging Corp. is the market leader in fillable and linkable forms for the mutual fund industry. Mr. Erbatur has held the positions in MCM Integrated Technologies and Scantech Imaging Corp. for the past 15 years and 13 years respectively. Mr. Erbatur has spent most of his 36-year professional career in computers and their applications in technical and business environments. His career includes 11 years with Swan Wooster Engineering, three years as Vice President of Engineering Software Development Corp, two years as Director of Marketing with REBIS Industrial Work Group Software and six years with Simons International as Manager, Computer Applications. Mr. Erbatur received a B.Sc. degree in Civil Engineering from Robert College (Istanbul, Turkey) in 1972 and a Masters degree in Engineering from University of British Columbia in 1973.

Directors are elected by the stockholders at annual meetings. Between annual meetings vacancies in our board of directors may be filled by the board itself. There are currently two vacancies on our board of directors. Directors hold office until the next annual meeting of stockholders and until their successors are elected and qualified. Officers are appointed by our board of directors and hold office until their successors are appointed and qualified. Neither of our current directors would qualify as “independent” under NASDAQ rules.

Except as disclosed under Item 12, the Registrant knows of no transactions involving the Registrant during the last two years in which our directors had a direct or indirect interest.

None of our executive officers or key employees is related by blood, marriage or adoption to any other director or executive officer.

To our knowledge, there is no arrangement or understanding between any of our officers and any other person pursuant to which the officer was selected to serve as an officer.

Nominating Committee

We do not have a separate Nominating Committee. Our full Board of Directors performs the functions usually designated to a Nominating Committee.

There have been no changes to the procedures by which security holders may recommend nominees to the board of directors.

Audit Committee

We do not have a separate Audit Committee. Our full Board of Directors performs the functions usually designated to an Audit Committee. We do not have an Audit Committee financial expert.

Corporate Code of Conduct

In June 2007 we adopted a Code of Ethics for senior financial management to promote honest and ethical conduct and to deter wrongdoing. This Code applies to our President, Chief Executive Officer and Principal Financial Officer, Directors, controller, and other employees performing similar functions. The obligations of the Code of Ethics supplement, but do not replace, any other code of conduct or ethics policy applicable to our employees generally.

Under the Code of Ethics, all members of the senior financial management shall:

Act honestly and ethically in the performance of their duties at our company,

Avoid actual or apparent conflicts of interest between personal and professional relationships,

Provide full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submits to, the SEC and in other public communications by our company,

Comply with rules and regulations of federal, state and local governments and other private and public regulatory agencies that affect the conduct of our business and our financial reporting,

Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing the member’s independent judgment to be subordinated,

Respect the confidentiality of information acquired in the course of work, except when authorized or legally obtained to disclosure such information,

Share knowledge and maintain skills relevant to carrying out the member’s duties within our company,

Proactively promote ethical behavior as a responsible partner among peers and colleagues in the work environment and community,

Achieve responsible use of and control over all assets and resources of our company entrusted to the member, and Promptly bring to the attention of the Chief Executive Officer any information concerning:

significant deficiencies in the design or operating of internal controls which could adversely to record, process, summarize and report financial date or

II.

any fraud, whether or not material, that involves management or other employees who have a significant role in our financial reporting or internal controls.

We will provide a copy of the Code of to any person without charge, upon request. Requests can be sent to Intelligent Living Corp. Suite 221, 2323 Quebec Street, Vancouver BC V5T4S7.

There are no family relationships between any of our executive officers and/or directors.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

We believe that during the fiscal year ended May 31, 2011, Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were satisfied.


	Number	Transactions	Known Failures
	Of late	Not Timely	To File a
Name and principal position	Reports	Reported	Required Form
Michael F. Holloran, President & CEO and Principal Financial Officer	0	0	0
Thomas A. Simons	0	0	0
Murat Erbatur, COO	0	0	0

ITEM 11.

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding the annual compensation for services in all capacities to us for the years ended May 31, 2011 and 2010:

SUMMARY COMPENSATION TABLE


Name and Principal Position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards [issued and pending] ($) (e)	Option Awards ($) (f)	Non-Equity Incentive Plan Compensation ($) (g)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)	All Other Compen- sation (s) (i)	Total ($) (j)
M Holloran	2011	$0	$0	$0	$0	$0	$0	$0	$0
M Holloran	2010	$0	$0	$0	$0	$0	$0	$0	$0
M Erbatur	2011	$0	$0	$0	$0	$0	$0	$0	$0
M Erbatur	2010	$0	$0	$0	$0	$0	$0	$0	$0

OPTION/SAR GRANTS IN LAST FISCAL YEAR

No options/SARs were granted in the fiscal year ended May 31, 2011.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

No officer or Director hold or exercised any options in the fiscal year ended May 31, 2011.

LONG TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR

We have not awarded any stock options, stock appreciation rights or other form of derivative security or common stock or cash bonuses to our executive officers and directors.

COMPENSATION OF DIRECTORS

The members of our Board of Directors are reimbursed for actual expenses incurred in attending Board meetings.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of September 28, 2011, information concerning the beneficial ownership of the our Common Stock by (i) each person who is known by us to own beneficially more than 5% of our Common Stock, (ii) each of our directors and officers, and (iii) all of our directors and executive officers as a group.


Title of	Name and Address	Amount and Nature		% of
Class	of Beneficial Owner	of Beneficial Ownership		Class⁽¹⁾

Common	Michael F. Holloran	7,875,570	Direct	7%
Stock	c/o Suite 221, 2323 Quebec St.
	Vancouver, B.C. V5T 4S7

	Thomas A. Simons	24,726,947	Direct	23%
	c/o Suite 221, 2323 Quebec St.
	Vancouver, B.C. V5T 4S7

	Murat Erbatur	60,000	Direct	<1%
	c/o Suite 221, 2323 Quebec St.
	Vancouver, B.C. V5T 4S7

	All officers and directors
	as a Group (2 persons)	7,935,570 shares		8%

(1)

Percentage ownership based on 105,945,324 shares issued and outstanding.

Changes in Control

There are no arrangements that may result in a change in control of the Registrant.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Our By-Laws include a provision regarding related party transactions which requires that each participant to such transaction identify all direct and indirect interests to be derived as a result of the Company's entering into the related transaction. A majority of the disinterested members of the board of directors must approve any related party transaction.

Except for the transactions described below, none of our directors, senior officers or principal shareholders, nor any associate or affiliate of the foregoing have any interest, direct or indirect, in any transaction, since the beginning of the fiscal year ended May 31, 2011, or in any proposed transactions, in which such person had or is to have a direct or indirect material interest.

On August 24, 2006, we entered into a preliminary non-binding Letter of Intent (“Letter of Intent”) with MCM Integrated Technologies Ltd. (“MCM”), a Vancouver based company wholly owned by Murat Erbatur, one of our directors. The Letter of Intent provided for the acquisition of all of the assets and ongoing contracts of MCM for a price based on an independent third party evaluation of the fair market value of the acquired assets including current assets, liabilities and future value based on the pro forma three year business plan of MCM.

On December 8, 2006 ILC acquired all of the outstanding capital stock of MCM for $280,695, which included 10,000,000 shares of ILC valued at $150,000 and $130,695 in the form of a loan payable.

During the year ended May 31, 2008, the Company’s CEO loaned the Company $58,484 which was uncollateralized and due on demand. The Company repaid $8,041 to its CEO in cash and $4,093 of accrued interest in cash during the year ended May 31, 2008. The Company paid $45,000 of accrued interest in restricted common shares to related parties during the year ended May 31, 2008.

During the year ended May 31, 2009, the Company’s CEO loaned the Company $18,261 and the Company’s COO loaned the Company $103,618 which are uncollateralized and due on demand. The Company repaid $572 in principal to the Company’s CEO and $19,750 in interest to its COO in cash, accrued $9,385 of interest on related party loans and recorded an expense to Paid in Capital of $7,716 on subscription deposit imputed interest. The Company converted $1,119,883 in loans, subscription deposit and debenture principal and paid $144,058 of accrued interest in restricted common shares to Mr. Simons and transferred $300,000 of principal and $26,773 of accrued interest due Mr. Simons to a third party debenture during the year ended May 31, 2009. All share issuances were at fair market value on the date of issuance.

During the year ended May 31, 2010, the Company’s CEO loaned the Company $19,054 which was uncollateralized and due on demand. The Company repaid $1,250 to its COO in cash during the year ended May 31, 2010.

During the year ended May 31, 2011, loans from the Company’s CEO increased by $41,581 and loans from the Company’s COO increased by $6,952. The loans are unsecured and due on demand.

Total outstanding related party debt (principal plus accrued interest) for the year ended May 31, 2011 was $432,953.

The Company shares office space and administrative costs in Vancouver with ScanTech Imaging Corp. (ScanTech”), a company controlled by the Company’s COO Murat Erbatur. The Company provides technical consulting services to ScanTech on an as required basis. For the year ended May 31, 2011 the total value of services provided was $100,313.

Director Independence

The Company’s Board of Directors has determined that none of its directors are independent based on the standards for director independence for the NYSE Amex Equities.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(1)

Audit related fees for audit Year ended May 31, 2011: $18,000

(2)

Audit related fees for audit Year ended May 31, 2010: $18,000

(3)

All other fees: N/A

(4)

Audit committee pre-approval processes, percentages of services approved by audit committee, percentage of hours spent on audit engagement by persons other than principal accountant’s full time employees: N/A.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following financial statements have been filed with this Annual Report on Form 10-K and are presented in Item 8, herein.

1. Report of Independent Registered Public Accounting Firm

2. Consolidated Balance Sheets

3. Consolidated Statements of Operations and Other Comprehensive Loss

4. Consolidated Statements of Cash Flows

5. Condensed Notes to the Consolidated Financial Statements

(b) The following Exhibits are filed by attachment to this Annual Report on Form 10-K:


EXHIBIT NUMBER	DESCRIPTION
23.1(2)	Consent of Mark Bailey & Co Ltd.
31(2)	Certification of Michael F. Holloran Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32(2)	Certification of Michael F. Holloran Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101.INS(1)(2)	XBRL Instance Document
101.SCH(1)(2)	XBRL Taxonomy Extension Schema Document
101.CAL(1)(2)	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF(1)(2)	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB(1)(2)	XBRL Taxonomy Extension Label Linkbase Document
101.PRE(1)(2)	XBRL Taxonomy Extension Presentation Linkbase Document

(1)

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

(2)

Filed herewith.

In addition to those Exhibits shown above, the Company incorporates the following Exhibits by reference to the filings set forth below:


EXHIBIT
NUMBER	DESCRIPTION
3.1	Articles of Incorporation	3.1 in Form 10-SB dated Feb 2, 1999
3.11	By-Laws	3.11 in Form 10-SB dated Feb 2, 1999
3.2	Certificate of Amendment	3.2 in Form 10K/A dated August 18, 2010
4.2	Form of 12% Convertible debenture	4.2 in Form 10-KSB dated Aug 21, 2001
4.3	Form of Stock Purchase Warrant	4.3 in Form 10-KSB dated Aug 21, 2001
4.4	Stock Purchase Agreement, between	4.4 in Form SB-2 dated May 17, 2002
	Company and IFG Private Equity LLC
4.5	Commitment Warrant to IFG	4.5 in Form SB-2 dated May 17, 2002
	Private Equity LLC
4.6	Registration Rights Agreement, between	4.6 in Form SB-2 dated May 17, 2002
	Company and IFG Private Equity LLC
4.7	1998 Directors' & Officers' Stock Option Plan	99.1 in Form S-8 dated Feb 29, 1999
4.8	1999 Stock Option Plan	99.2 in Form S-8 dated Feb 29, 1999
4.9	2001 Stock Option Plan	4.7 in Form S-8 filed November 27, 2001
4.10	2003 Stock Option Plan	4.8 in Form S-8 filed October 25, 2002
4.11	2005 Stock Option Plan	4.8 in Form S-8 filed July 28, 2005
4.12	2006 Stock Option Plan	4.8 in Form S-8 filed April 28, 2006
4.13	2007 Stock Option Plan	4.8 in Form S-8 filed April 13, 2007
10.3	M. Page-Consulting Agreement	10.3 in Form 10-SB dated Feb 2, 1999
10.4	C. Parfitt-Consulting Agreement	10.4 in Form 10-SB dated Feb 2, 1999
10.6	Office lease dated Aug 27, 1998	10.6 in Form 10-SB dated Apr 21, 1999
10.7	Office lease dated Dec 22, 1998	10.7 in Form 10-SB dated Apr 21, 1999
10.8	Wolnosc International-Consulting Agreement	10.8 in Form 10-SB dated Aug 29, 2000
10.9	Office lease dated Jan 1, 2000	10.9 in Form 10-SB dated Aug 29, 2000
10.10	Capital Lease Agreement	10.10 in Form 10-SB dated Aug 29, 2000
10.11	Michael F. Holloran - Consulting Agreement	10.11 in Form 10-KSB dated Aug 21, 2001
10.12	Sublease Agreement of Company's offices dated August 7, 2001	10.12 in Form 10-QSB dated Oct 15, 2001
10.13	Addendum to the Sublease dated August 22, 2001	10.13 in Form 10-QSB dated Oct 15, 2001
10.14	Paul Morford Consulting Agreement	10.14 in Form 10-QSB dated Oct 15,
		2001
10.15	8% Secured Convertible Promissory	4.7 in Form 8-K dated January 4,
	Note due December 31, 2006	2005
10.16	Securities Purchase Agreement, dated	10.15 in Form 8-K dated January 13,
	December 7, 2005, by and among the	2006
	Company and the holders of the Company’s
	6% Convertible Debentures, with the form
	of Debenture attached
10.17	Registration Rights Agreement, dated	10.16 in Form 8-K dated January 13, 2006
	December 7, 2005, by and among the
	Company and the Holders of the 6%
	Convertible Debentures
10.18	Walther-Glas Investment Agreement	10.16 Form 10-KSB/A2 dated July 18, 2008
10.19	Agreement and Plan of Reorganization	10.18 in Form 8-K dated Dec 15, 2006
21	List of Subsidiaries	21 in Form 10-SB dated Aug 29, 2000

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf the undersigned, thereto duly authorized.

Dated: September 29, 2011

Intelligent Living Corp

By: /s/ Michael F. Holloran

________________________

Michael F. Holloran,

President, Chief Executive Officer, Principal Financial and Accounting Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on September 29, 2011.

SIGNATURE CAPACITY

________________________________________________________________________

/s/ Michael F. Holloran

President, Chief Executive Officer, Principal Financial and Accounting Officer and Director

_____________________

Michael F. Holloran

/s/ Murat Erbatur

_____________________

Chief Operating Officer and Director

Murat Erbatur

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