UNITED STATES
 SECURITIES AND EXCHANGE
COMMISSION
 WASHINGTON,D.C.20549
 ______________________________
  FORM 10-Q
 ______________________________
 
  x
              QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934.
 
 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER
30, 2008
 
 OR
 
 o
              TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
  Commission File
#333-105778
  MORTGAGEBROKERS.COM
HOLDINGS, INC.
 (Exact name of registrant as specified
in its charter)
  DELAWARE
              05-0554486(State or other jurisdiction
      of
                incorporation or
      organization)
              (I.R.S.
      Employer
                Identification
      No.)
  260 Edgeley Boulevard, Suite
11,Concord,OntarioL4K 3Y4
 (Address of principal executive offices
and zip code)
 
 Registrant’s
telephone number, including area code: (877) 410-4848
 
 
 Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15
(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter periods that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
  YesxNoo
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company filer.  See definition of
“accelerated filer” and “large accelerated filer” in rule 12b-2 of the Exchange
Act (Check one):
 
 Large accelerated
      filer
              o
              Accelerated
      filer
              oNon-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 Exchange
Act.
 
 YesoNox
 
 Indicate the number of shares
outstanding of the Registrant’s common stock as of the latest practicable
date.
 
 Class
              
              Outstanding atNovember 18, 2008Common Stock, $.0001 par
      value
              
              42,279,470
 
 
  
  
  TABLE OF CONTENTS
  
 Item 1.
              Financial
      StatementsItem 2.
              Management’s Discussion and
      Analysis of Financial ConditionItem 3.
              Quantitative and Qualitative
      Disclosures About Market RiskItem 4T.
              Control and
      Procedures
   PART II-- OTHER
INFORMATION
  Item
1
              Legal
      ProceedingsItem
    2.
              Unregistered Sales of Equity
      Securities and Use of ProceedsItem
    3.
              Defaults Upon Senior
      SecuritiesItem
    4.
              Submission of Matters to a Vote of
      Security HoldersItem
    5.
              Other
      InformationItem
    6.
              Exhibits and Reports on Form
      8-K
  SIGNATURE
    
  
  PART I:  FINANCIAL
INFORMATION
 
 ITEM 1.  FINANCIAL
STATEMENTS
 
 Basis of
Presentation
 
 The accompanying condensed and
consolidated statements are presented in accordance withU.S.generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q
and Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required byU.S.generally accepted accounting
principles for complete financial statements.  In the opinion of
management, all adjustments (consisting only of normal occurring adjustments)
considered necessary in order to make the financial statements not misleading,
have been included. Operating results for the three months and nine months ended
September 30, 2008 are not necessarily indicative of results that may be
expected for the year ending December 31, 2008.
 
 The financial statements of the Company
appear at the end of this report beginning with the Index to Financial
Statements on page F-1 and ending on F-21.
      1
  ITEM 2.  MANAGEMENT’S
DISCUSSION AND ANALYSIS
 
 The following is management’s discussion
and analysis of the consolidated financial condition and results of operations
of MortgageBrokers.com Holdings, Inc. for the periods ending September 30, 2008
and 2007.  The following information should be read in conjunction
with the reviewed consolidated financial statements for the periods ending
September 30, 2008 and notes thereto appearing elsewhere in this form
10-Q.
 
 Overview
 
 In operation since 2005, our Company is
a mortgage brokerage operation whose national agency sales force service the
borrowing and refinancing needs of individual home buyers.  We have
access to a full range of mortgage lenders and our agents’ source and negotiate
the loan with the best rates, terms and features to meet each customer's unique
needs.  The company acts as broker only and is not a
lender.   The Company has established what it believes to be unique
strategic alliances within the real estate industry for mortgage origination
referrals.
  Our national agency sales force consists
of independent contractors operating exclusively under the Company's licensure
who may operate regionally as individual businesses or they may establish
regional retail offices from which they build agency sales teams leveraging the
Company’s business model.  The primary services that the Company
provides to our national agency sales network are: mortgage brokerage licensure;
a national brand and related marketing initiatives; a regulatory compliance
service associated with our agent’s transactions; a payroll and commission
service reconciling commission fees paid by lenders and insurers and accurate
and timely payroll to our agents and their referral sources; revenue
optimization for our agents through deal flow aggregation; the establishment of
market partnerships to allow our agency sales network to access a greater
portion of the mortgage and refinance market; and, information technology
services.
 
 Our Company generates revenue by placing
mortgages, on behalf of clients, with third party lenders who in return, pay the
Company a commission fee.  The commission fee is a combination of
finder's fees and volume bonus whose aggregate sum fee typically ranges between
75 to 150 basis points (0.75 to 1.5%) of the total mortgage
volume.  We currently earn additional commission revenue through the
referral and placement of creditor insurance with third party insurance
providers.  In general, when a client takes creditor insurance related
to the mortgage transaction originated by the Company, the Company earns a
commission which is estimated to be 20 to 30 basis points of the insurance
sale.
 
 Generally, in the MortgageBrokers.com
model, our licensed agents earn at least 85% of received commission fees. In
addition to earned commission fees, our business model also provides our
mortgage agents with the potential to earn equity in our Company based on their
annual mortgage origination volume. This form of equity participation is
intended to provide our national sales agency network a transparent career exit
strategy for retirement and a retention strategy for team building purposes. It
is our belief that the benefit to the Company is that we are able to build a
sustainable long term operational margin contribution from Canadian operations
and we are able to include our national agency sales force, responsible for
executing the Company's sales strategy, into the ownership of the Company,
theoretically allowing them to benefit from Company growth related directly to
their contribution.
  The Company has also developed strategic
alliances with long-established and dominant real estate brands with a view to
providing our affiliated agents access, on a volume basis, to mortgage
referrals. To this end, the Company has established long-term regional strategic
alliances with RE/MAX in easternCanadaand Maxwell in westernCanada.
  The RE/MAX “Mortgage Solution Program”
was launched on June 1, 2006 and, as of September 30, 2008, 35 RE/MAX franchises
across Ontario and Atlantic Canada, representing in excess of 30% of the RE/MAX
Franchise network sales force, were participating in the referral
program.  RE/MAX isCanada's leading real estate organization with
an estimated CDN $32 billion in sales and over 15,600 sales associates in more
than 610 independently-owned and operated offices.
  The Maxwell “Mortgage Solution Program”
was launched on April 12, 2006.  Maxwell is the largest independent
real estate company inAlberta,Canada.  According to the agreement,
our mortgage agents will service the Maxwell network which, since its inception
in 1999, has grown to over 20 offices with over 650 successful real estate
agents throughout theprovinceofAlberta.  In addition to Maxwell's
sixCalgaryoffices, franchises have been
established in Canmore,Lethbridge,Edmonton,Fort McMurray, Stettler, Airdrie,Medicine Hat,Red DeerandChestermere Lake,Alberta.
 
 Over the reporting period and to-date,
operations were conducted through our subsidiaries inCanadaonly.  The Company is
currently providing mortgage brokerage services in the Canadian provincial
markets ofNewfoundland,Nova Scotia,New Brunswick,Prince Edward Island,OntarioandAlberta.
 
 As at September 30, 2008, we had 414
licensed mortgage agents operating acrossCanadaand our agents had established 42
office locations under the Company brand.  The number of mortgage
agents in our national sales agency at the end of the reporting period
represents a 35% increase over that of the same period in 2007.  As at
September 30, 2008, our Company had 12 full-time staff.
   2
    The Company’s corporate offices are at11-260 Edgeley Boulevard,City of Vaughan,Ontario,CANADA.  Our current contact
information for ourOntariooffice is telephone number: (877)
410-4848 and fax number: (877) 410-4845.  Our internet website can be
found under the domain name:www.mortgagebrokers.com.  The Company also has a
regional corporate office inCalgary,Alberta,Canada.
 
 Results of
Operations
  Three months
ended September 30, 2008 Compared to Three months ended September 30,
2007
  Gross revenue in our third quarter in
2008 increased by 60% from that of 2007 to $5,420,443, which was directly
related to increasing the number of sales agency mortgage agents by 35%,
supporting our existing agent sales force to increase productivity and
negotiating better lender commissions.
 
 The Company’s operating expenses
increased in the third quarter of 2008 by 37% over the same period in 2007 as we
built our growing business.  The primary components that comprise our
operating expenses and contribute to this trend are stock-based compensation,
agent commissions, salaries and benefits, general and administrative expenses,
and occupancy costs:
 
 *     The
Company issued and accrued employee stock-based compensation which was fully
earned and vested during the reporting period and reported an associated
$237,533 charge.    The Company also incurred stock-based
compensation expenses for services associated with our agents, strategic
alliances and consultants and reported a combined $283,409
charge.  Stock-based compensation is a charge that is based on our
stock pricing at the end of the period.  The accrual is valued based
on stock prices at the end of the period, for which the Company has no direct
influence, therefore it is difficult to analyze related trends.  In
aggregate, these charges were 9% of the reported total operating expenses and
were 93% of the recorded Net Loss.  It is the intent of management to
continue using our stock-based compensation programs to maximize working
capital.
 
 *     87% of
the operating expenses in the reporting period were associated with agent
commissions.  Agent commission fees as a percent of revenues decreased
by 4% from the third quarter 2007 as compared to that of
2008.
 
 *     7% of the
operating expenses in the reporting period were associated with salaries and
benefits.  Salaries and benefits increased by 16% from the third
quarter 2007 as compared to that of 2008.
 
 *     5% of the
operating expenses in the reporting period were associated with general and
administrative expenses.  General and administrative expenses increased by
36% from the third quarter 2007 as compared to that of 2008.
 
 *     Occupancy
costs increased 35% from the third quarter 2007 to $47,527 and is primarily
related to moving into the Company’s current corporate office space which will
meet corporate growth needs for the near future and a nominal rent increase at
our regional corporate offices inCalgary.
 
 
 Nine months
ended September 30, 2008 Compared to nine months ended September 30,
2007
 
 Gross revenue for the nine month period
endingSeptember30, 2008 increased by 69% from the same
period in 2007 to $11,854,060, which is directly related to increasing the
number of sales agency mortgage agents by 35%, supporting our existing agent
sales force to increase productivity and negotiating better lender commission
fees.
 
 The Company’s operating expenses
increased in the nine month period endingSeptember30, 2008 by 38% over the same period in
2007 as we built our growing business.  The primary components that
comprise our operating expenses and contribute to this trend are agent
commissions, salaries and benefits, general and administrative expenses,
occupancy costs and stock-based compensation:
 
 *     84% of
the operating expenses during the nine month period were associated with agent
commissions.  Agent commission fees as a percent of revenues decreased
by 3% from the first nine months in 2007 as compared to that of
2008.
 
 *     9% of the
operating expenses in the first nine months of 2008 were associated with
salaries and benefits.  Salaries and benefits increased by 13% from
the first nine months in 2007 as compared to that of 2008 as the Company built
its growing business over the period.
 
 *     General
and administrative expenses only increased by 1% from the first nine months in
2007 as compared to that of 2008 as the Company focussed on administrative cost
cutting, outsourcing and increasing related productivity.
 
 *     Occupancy
costs increased 66% from the first nine months in 2007 to $123,259 and is
primarily related to moving into the Company’s current corporate office space
which will meet corporate growth needs for the near future and a nominal rent
increase at our regional corporate offices inCalgary.
   3
  
 *     Stock-based compensation, which is a charge that
is based on our stock pricing at the end of the period,  in the first
nine months of 2008, decreased by 43% to $141,006.  Employee
stock-based compensation over the nine month period was a negative charge of
$103,373.  The accrual is valued based on stock prices at the end of
the period, for which the Company has no direct influence, therefore it is
difficult to analyze related trends.  The combined effect was a
positive nominal net charge of $37,633.
 
 Liquidity and Capital
Resources
  As at September 30, 2008, we had
$1,511,873 in cash; $18,909 of referral fees held in trust (which are awaiting
completion of administrative agreements prior to being transferred to a Manulife
administered RRSP account owned by RE/MAX sales agents), $59,095 in prepaid
expenses, $129,538 in equipment and equipment under capital leases for a total
of $1,719,415 in assets.  Comparatively as at December 31, 2007, we
had $830,852 in cash; $44,936 of referral fees held in trust, $148,611 in
prepaid expenses, $157,752 in equipment and equipment under capital leases a
total of $1,182,151 in total assets.
 
 As at September 30, 2008, we had
$1,391,465 in accounts payable, $348,168 in accrued liabilities related to
services received but not invoiced as ofSeptember30, 2008 and employee vacation accrual,
$100,637 in loans payable to a related party, $341,434 in employee tax
deductions payable, $607,700 in accrued stock-based compensation, $141,523 in
bank indebtedness related to an unsecured line of credit, $18,909 in trust
liability associated with RE/MAX agent referral commissions payable awaiting
transfer to the agent’s Manulife RRSP account, capital lease obligations of
$2,549 and $777,853 in accrued expenses associated with a legal judgment for a
total of $3,730,238 in liabilities.  Comparatively as at December 31,
2007 at the beginning of the reporting period, the Company had $791,419 in
accounts payable , $149,601 in accrued liabilities, $170,691 in loans payable to
a related party, $ 434,584 in employee tax deductions payable, $44,936 payable
in a trust liability associated with RE/MAX agent referral commissions payable
awaiting transfer to the agent’s Manulife RRSP account, $4,644 in obligations
under capital leases, $989,145 in stock-based compensation accrual and $151,316
in bank indebtedness related to an unsecured line of credit for a total of
$3,509,994 in liabilities.
 
 Management makes the following comments
regarding the most significant factors affecting Company liquidity and capital
resources and their measured trends over the reporting
period:
 
 *   Cash and cash
equivalents increased by 82% over the reporting period to
$1,511,873.
  *   Accounts payable
increased 76% over the reporting period to $1,391,465.  The bulk of
this payable amount is Work in Progress payable following completion of mortgage
agent origination compliance procedures and this trend should continue as the
Company grows.  Work in Progress mortgage agent commissions payable
typically have an Average Days Payable of 10 business days.
  *   The Company has
accrued in 2007 for the liability of a partial summary judgment to a claim to
which the Company is a party.  The calculated judgment liability along
with interest over the nine month reporting period is, as at the end of the
reporting period, $777,853.  While the full amount of the judgment and
associated interest was accrued, it is the expectation of management that only a
portion, if any, of the liability will be satisfied by the Company in this
multi-party judgment.  See discussion below.
 
 *  Employee tax deductions
payable decreased by 21% over the nine months ending September 30, 2008 as the
Company continues to pay this liability with monthly instalments. Company
management has met with the government agency to whom the amount is payable and
has established a working agreement whereby it is expected that this amount will
be paid in full by July 2009. See discussion below.
 
 *   Stock-based
compensation accruals vary year over year.  The accrual is valued
based on stock prices at the end of the period, for which the Company has no
direct influence, therefore it is difficult to analyze related
trends.  In aggregate for the three month reporting period, these
charges were 9% of the reported total operating expenses and were 93% of the
recorded Net Loss.  The Company anticipates that it will continue to
negotiate stock-based compensation arrangements to maximize working capital
resources.
 
 The Company reported a Net Loss from
operations for the third quarter of 2008, predominately associated with related
stock charges incurred over the three month reporting period which represented
93% of the recorded Net Loss.  If we continue to grow at our current
rate, it is expected by management that we will achieve consistent positive
earnings from operations and should have adequate working capital for the near
future to fund normal operations.  In the event that we grow beyond
our available working capital resources, experience a prolonged market down turn
or experience adverse seasonality, we will rely upon the issuance of common
stock and additional capital contributions from shareholders and/or loans from
shareholders and third-party lenders to meet our working capital
needs.  It is expected by management that the Company will need to
rely upon either new capital contributions or profits from 2009 operations to
pay the employee tax liability described below.
  
 4
 
 Employee Tax Deductions
Payable
 
 The Company is in arrears on the tax
withholdings due to Canada Revenue Agency (“CRA”) related to employee
salaries.  As at the end of the reporting period, the company had a
tax liability with CRA of $341,434.  The Company has negotiated an
agreement with CRA which, if certain conditions are met, allows the Company to
pay down the balance in monthly instalments of $10,000 through to February, 2009
and commencing in March, 2009, monthly instalments of $20,000 through to June,
2009 with the remaining balance due in July, 2009.  In the event that
the Company secures further investment capital, the balance is to be paid off in
full shortly after receipt of the funds.  In addition, CRA is has
registered a Certificate in the Canadian Federal Court and the Property Register
of Ontario for the amount owing to CRA.  The liability currently bears
interest at 9% annually.
 
 Judgment in Lawsuit
 
 On October 3, 2007 a partial summary
judgment from the Ontario Superior Court ordered MortgageBrokers.com Inc., the
Company’s subsidiary, and other parties to pay the sum of CDN$598,636 within 90
days, along with interest in the amount of CDN$136,128 and legal expenses in the
amount of CDN$8,907.  See Item 4 below.  This judgment was
appealed, but the judgment was upheld on appeal by the Ontario Court of Appeal
on March 31, 2008 with costs for the appeal fixed at CDN $5,000.   No
decision has yet been made as to allocation of liability for the judgment among
the parties, who are currently in settlement negotiations with a view to
settling payment of the judgment as well as resolving all other claims
outstanding between the parties.  As at September 30, 2008, the
Company has fully accrued for this lawsuit.
 
 Critical Accounting
Policies
 
 Our financial statements and related
public financial information are based on the application of accounting
principles generally accepted in theUnited States(“GAAP”). GAAP requires the use of
estimates; assumptions, judgments and subjective interpretations of accounting
principles that have an impact on the assets, liabilities, revenue and expense
amounts reported. These estimates can also affect supplemental information
contained in our external disclosures including information regarding
contingencies, risk and financial condition.  We believe our use of
estimates and underlying accounting assumptions adhere to GAAP and are
consistently and conservatively applied.  We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions.  We
continue to monitor significant estimates made during the preparation of our
financial statements.
 
 Revenue Recognition
 
 Revenue consists of mortgage brokerage
fees and finders fees. The revenue is recognized upon the funding of a
customer’s mortgage and when the collection is reasonably assured which occurs
when the brokerage fee from the bank has been advanced.
  Share-based Payment
 
 The Company adopted the disclosure
requirements of SFAS No. 123R, "Share-Based Payment" ("SFAS No. 123R") for stock
options and similar equity instruments (collectively, "options") issued to
employees. The Company applies the fair value base method of accounting as
prescribed by SFAS No. 123R. Under the fair value based method, compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period. For
stock options, the fair value is determined using an option-pricing model that
takes into account the stock price at the grant date, the exercise price, the
expected life of the option, the volatility of the underlying stock and the
expected dividends on it, and the risk-free interest rate over the expected life
of the option. SFAS No. 123R also applies to transactions in which an entity
issues its equity instruments to acquire goods or services from non-employees.
Those transactions must be accounted for based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable, as described in note
12.
  Going Concern
  The Company’s consolidated financial
statements are presented on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business.  For the three month reporting period endedSeptember30, 2008, the Company incurred a Net
Loss of $562,510 (as compared to Q3 2007, a Net Loss of
$1,060,016).  For the nine month reporting period endedSeptember30, 2008, the Company incurred a Net
Loss of $186,100 (as compared to Q3 2007, a Net Loss of
$1,778,897).  Certain conditions noted below raise doubt about the
Company’s ability to continue as a going concern.
   5
  The Company’s ability to continue as a
going concern is contingent upon its ability to secure additional debt or equity
financing, continue to grow sales of its services and continue to achieve
profitable operations.  Management’s plan is to expand it’s sales
force to increase it’s gross revenue, to carefully manage expenses and capital
investment related to scalability to establish achieve sustainable operational
profitability through our rapid growth and  to secure additional funds
through future debt or equity financings.  Current economic conditions
may impact our ability to recruit mortgage agents or may result in changes by
lenders to our commission fee schedules, both of which would have a negative
impact on our revenue growth.  Also, financing may not be available or
may not be available on reasonable terms to the Company.  The issuance
of additional equity securities by us could result in a significant dilution in
the equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.
 
 The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
 
 Off-Balance Sheet
Arrangements
 
 None.
  ITEM 3.  QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The Company is subject to certain market
risks, including changes in interest rates and currency exchange rates.
 The Company does not undertake any specific actions to limit those
exposures.
  ITEM 4T.  EVALUATION OF
DISCLOSURE CONTROLS AND PROCEDURES
  a)Evaluation of
Disclosure Controls.Our
Chief Executive Officer and Chief Accounting Officer evaluated the effectiveness
of our disclosure controls and procedures as of the end of ourthirdfiscal quarter 2008 pursuant to Rule
13a-15(b) of the Securities and Exchange Act.  Disclosure controls and
procedures are controls and other procedures that are designed to ensure that
information required to be disclosed by us in the reports that we
fileor submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information
required to be disclosed by us in the reports that we file under the Exchange
Act is accumulated and communicated to our management, as appropriate to allow
timely decisions regarding required disclosure. Based on his evaluation, our
Chief Executive Officer and Chief Accounting
Officer concluded that our disclosure controls and procedures were
effective as of September
30, 2008.
  It should be noted that any system of
controls, however well designed and operated, can provide only reasonable,
andnot absolute, assurance
that the objectives of the system are met. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood of
future events. Because of these and other inherent limitations of control
systems, there can be no assurance that
any design will succeed in achieving its stated goals under all potential future
conditions
  (b)Changes in internal
control over financial reporting.There have been no changes in our
internal control over financialreporting that occurred during the last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. Our management
team will continue to evaluate our internal control over financial reporting in 2008 as we implement
our Sarbanes Oxley Act testing.
  6
 
  PART II:  OTHER
INFORMATION
  ITEM 1.  LEGAL
PROCEEDINGS
 
 On October 27, 2006, Trisan Equitable
Corporation (“Trisan”) commenced an action in the Ontario Superior Court inOntario,Canadaagainst several parties, including the
Company, MortgageBrokers.com Inc (“MBI”), ourOntariosubsidiary, and Alex Haditaghi, our
principal shareholder, sole director and chief executive officer, and several
corporate affiliates of Mr. Haditaghi.  The statement of claim filed
by Trisan asserted a number of claims in the aggregate amount of approximately
CDN$1.4 million, arising out of a loan agreement with Trisan dated January 27,
2005 pursuant to which Trisan agreed to loan all of the defendants except the
Company (such defendants referred to hereinafter as the “Borrowing Parties”) the
sum of CDN$750,000, which funds were to be used by Mr. Haditaghi for the purpose
of acquiring the shares of Magna Data, Inc. (the “Magna Data
Shares”).  Trisan alleged in its statement of claim, among other
things, that:
 
 (i)
              it ultimately loaned upwards of
      CDN$550,000 pursuant to the loan
  agreement,
 
 (ii)
              the Magna Data Shares were to be
      pledged as security for repayment of its loan to
      Haditaghi,
 
 (iii)
              it was to have been issued, upon
      certain conditions, upwards of 500,000 shares of the Company’s common
      stock, and
 
 (iv)
              the funds advanced to Mr.
      Haditaghi and/or MBI were never
repaid;
 
 (v)
              Trisan obtained security for such
      repayment of the loan from a number of the Borrowing Parties, but not from
      MBI.
 
 In January 2007, the Company and the
Borrowing Parties filed a statement of defence, cross-claim and counterclaim in
response to Trisan’s statement of claim, in which the defendants alleged breach
of the loan agreement by Trisan.
 
 On October 3, 2007 a partial summary
judgment from the Ontario Superior Court ordered that the Borrowing Parties pay
Trisan the sum of CDN$598,636 within 90 days, along with interest in the amount
of CDN$136,128 and legal expenses in the amount of CDN$8,907.  The
court further ordered the dismissal of the counterclaim filed by the Company and
the Borrowing Parties and ordered that the balance of Trisan’s claims contained
in its statement of claim should proceed to trial. The Court further ordered
that 500,000 unrestricted shares of the Company be deposited by the defendants
with an escrow agent upon payment of the above ordered amounts, pending final
disposition of Trisan’s other claims and that costs of the motion for summary
judgment be fixed at CDN$5,000 payable to Trisan within 90 days.  Upon
payment of the judgment amount, the security provided for the loan would be
released.
 
 The October 3, 2007 partial summary
judgment was appealed by the Company and the Borrowing Parties, but the judgment
was upheld on appeal by the Ontario Court of Appeal on March 31, 2008 with costs
for the appeal fixed at $CDN5,000.
 
 No decision has yet been made as to
allocation of liability for the judgment among the Borrowing
Parties.  As at September 30, 2008, the Company has fully accrued for
this lawsuit.
 
 The Company is party to various other
claims and proceedings arising in the normal course of
business.  Management does not expect the disposition of these matters
to have a material adverse effect on the Company’s results of operations or
financial condition.
 
 
 ITEM 2.  UNREGISTERED SALES OF
EQUITY SECURITIES AND USE OF PROCEEDS
  On September 11, 2008, the Company
issued 490,500 restricted common shares under the terms of its Mortgage Service
Licence Agreement with RE/MAX Ontario-Atlantic Canada Inc, and its franchisee
and broker owners that participated in the private placement offering which closed on June 9,
2006.  The shares were issued at $0.11 per
share.
 On September 11, 2008, the
Company issued 3,272,500 shares of restricted (Rule 144) Company stock to its
employees based upon draft employment agreements that are expected
tobe executed by December
31, 2008.  These shares have not been released and the release is
pending the finalizing and execution of employment agreements.  These
shares were issued under the Company’s Equity Compensation
Plan.  The shares were issued at $0.11 per
share.
   7
    ITEM 3.DEFAULTS UPON SENIOR
SECURITIES
 
 Not Applicable.
 
 ITEM 4:  SUBMISSIONS OF
MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None.
 
 ITEM 5:  OTHER
INFORMATION
 
 None.
 
 ITEM 6:  EXHIBITS AND REPORTS
ON FORM 8-K
 
 (a)         
Exhibits
 
 31.1      Certification
of the CEO and CFO Pursuant to Rule 13a-14(a) under the Securities Exchange Act
of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
  32.1      Certification
of the CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 (b)         
Reports of Form 8-K
  None
 
   8
  
  SIGNATURES
  Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, there unto
duly authorized.
    MORTGAGEBROKERS.COM HOLDINGS,
      INC.
 
  By:/s/ Alex
      HaditaghiAlex HaditaghiPrincipal Executive Officer,Principal Accounting Officer,President, Secretary and
Director
 
 
 Dated:November 18, 2008
 
 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 and on the
dates indicated.
 
 
 NAME
              
              TITLE
              DATE/s/ Alex
      Haditaghi
              
              President,
      Secretary and Director
              November 18,
      2008Alex
    Haditaghi
 
  9
  
   MORTGAGEBROKERS.COM HOLDINGS, INC.
      AND SUBSIDIARIES
                (FORMERLY MAGNADATA,
      INC.)
                
                CONDENSED CONSOLIDATED INTERIM
      FINANCIAL STATEMENTS
                
                
                FOR THE THREE MONTH AND NINE MONTH
      PERIOD ENDED SEPTEMBER 30, 2008
                
                UNAUDITED
   
 
 
 
 
 
  
  
    MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
  CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
  SEPTEMBER 30, 2008
  CONTENTS
  
 Condensed Consolidated Balance
      Sheets
              F3Condensed Consolidated Statements
      of Operations and Comprehensive Loss
              F4Condensed Consolidated Statements
      of Cash Flows
              F5Notes to Condensed Consolidated
      Financial Statements
              F6 -
  F21
   
 
 
  
 F-2
 
 
 
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Condensed Consolidated Balance
Sheets
 September 30, 2008 and December 31,
2007
  September
      30,
              
              
              December
31,2008
              
              
              2007ASSETS
              
              (Unaudited)
              
              
              (Audited)Current
    AssetsCash and cash
      equivalents
              
              $
              1,511,873
              
              
              $
              830,852Referral fees held in trust (note
      3)
              
              
              18,909
              
              
              
              44,936Prepaid
      expenses
              
              
              59,095
              
              
              
              148,611Total Current
      Assets
              
              
              1,589,877
              
              
              
              1,024,399Equipment,
      net(note
      4)
              
              
              126,437
              
              
              
              153,474Equipment Under
      Capital Leases(note
    5)
              
              
              3,101
              
              
              
              4,278Total
Assets
              
              $
              1,719,415
              
              
              $
              1,182,151LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      LiabilitiesBank indebtedness (note
      6)
              
              $
              141,523
              
              
              $
              151,316Accounts
      payable
              
              
              1,391,465
              
              
              
              791,419Accrued
      liabilities
              
              
              348,168
              
              
              
              149,601Employee tax deductions payable
      (note 7)
              
              
              341,434
              
              
              
              434,584Accrued legal judgment (note
      8)
              
              
              777,853
              
              
              
              773,658Advances from related party (note
      9)
              
              
              100,637
              
              
              
              170,691Trust liability (note
      3)
              
              
              18,909
              
              
              
              44,936Obligation under capital leases -
      current portion (note 10)
              
              
              507
              
              
              
              2,602Stock-based compensation accrual -
      current portion (notes 11a and 11c)
              
              
              181,604
              
              
              
              102,066Employee stock-based compensation
      accrual (note 11b)
              
              
              193,912
              
              
              
              657,260Total Current
      Liabilities
              
              
              3,496,012
              
              
              
              3,278,133Obligation
      Under Capital Leases(note 10)
              
              
              2,042
              
              
              
              2,042Stock-based
      Compensation Accrual(note
      11c)
              
              
              232,184
              
              
              
              229,819Total
      Liabilities
              
              
              3,730,238
              
              
              
              3,509,994Commitments and
      Contingencies(note
      18)STOCKHOLDERS'
      DEFICITCapital
    StockPreferred stock, $0.0001 par
      value; 5,000,000 shares
                authorized, none
      issued
              
              
              -
              
              
              
              -Capital stock, $0.0001 par value;
      100,000,000 shares
                authorized; 42,279,470
      (2007: 38,466,470) issued and
                outstanding(note 12)
              
              
              4,228
              
              
              
              3,847Additional Paid-in
      Capital
              
              
              3,980,331
              
              
              
              3,424,264Additional
      Paid-in Capital - Warrants(note 13)
              
              
              489,243
              
              
              
              622,211Subscription for
      Stock
              
              
              64,786
              
              
              
              64,086Subscription
      Receivable(note
      14)
              
              
              (228,240
              )
              
              
              (227,540
              )Treasury
      Stock(note
      15)
              
              
              (25,234
              )
              
              
              (25,234
              )Accumulated Other Comprehensive
      Income (Loss)
              
              
              46,631
              
              
              
              (33,009
              )Accumulated
      Deficit
              
              
              (6,342,568
              )
              
              
              (6,156,468
              )Total Stockholders'
      Deficit
              
              
              (2,010,823
              )
              
              
              (2,327,843
              )Total Liabilities and
      Stockholders' Deficit
              
              $
              1,719,415
              
              
              $
              1,182,151
 2
 (The accompanying notes are an
integral part of these condensed consolidated financial
statements.)
  F-3
 
 
 
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Condensed Consolidated Statements of
Operations and Comprehensive Loss
 For the Three and Nine Months Ended
September 30, 2008 and 2007
 Unaudited
 Three
                Months
                Ended
                2008
              
              
              Three Months
                Ended
                2007
              
              
              Nine
                Months
                Ended
                2008
              
              
              Nine
                Months
                Ended
                2007Revenues
              
              $
              5,420,443
              
              
              $
              3,379,632
              
              
              $
              11,854,060
              
              
              $
              7,015,870ExpensesCommission and agent
      fees
              
              
              4,693,203
              
              
              
              3,033,587
              
              
              
              10,002,003
              
              
              
              6,127,554Salaries and
      benefits
              
              
              395,106
              
              
              
              340,587
              
              
              
              1,098,199
              
              
              
              968,005General and administrative
      expenses
              
              
              309,360
              
              
              
              228,086
              
              
              
              732,268
              
              
              
              725,280Employee stock-based compensation
      (note 11b)
              
              
              237,533
              
              
              
              651,041
              
              
              
              (103,373
              )
              
              
              561,331Stock based compensation (note 18c
      ii)
              
              
              53,750
              
              
              
              (10,373
              )
              
              
              12,112
              
              
              
              45,709Stock based compensation (note
      18a, 18b, and 18c i)
              
              
              227,271
              
              
              
              51,796
              
              
              
              123,747
              
              
              
              120,384Stock based compensation for
      services (note 12)
              
              
              2,388
              
              
              
              37,720
              
              
              
              5,147
              
              
              
              79,140Occupancy
    costs
              
              
              47,527
              
              
              
              35,243
              
              
              
              123,259
              
              
              
              74,098Depreciation
      expense
              
              
              9,724
              
              
              
              10,197
              
              
              
              25,812
              
              
              
              22,552Total Operating
      Expenses
              
              
              5,975,862
              
              
              
              4,377,884
              
              
              
              12,019,174
              
              
              
              8,724,053Loss from
      Operations
              
              
              (555,419
              )
              
              
              (998,252
              )
              
              
              (165,114
              )
              
              
              (1,708,183
              )Other
    Expenses
              
              
              (7,091
              )
              
              
              (61,764
              )
              
              
              (20,986
              )
              
              
              (70,714
              )Loss Before Income
      Taxes
              
              
              (562,510
              )
              
              
              (1,060,016
              )
              
              
              (186,100
              )
              
              
              (1,778,897
              )Provision for income taxes (note
      17)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net Loss
              
              
              (562,510
              )
              
              
              (1,060,016
              )
              
              
              (186,100
              )
              
              
              (1,778,897
              )Foreign Currency Translation
      Adjustment
              
              
              47,861
              
              
              
              (6,003
              )
              
              
              46,631
              
              
              
              23,429Comprehensive
      Loss
              
              $
              (514,649
              )
              
              $
              (1,066,019
              )
              
              $
              (139,469
              )
              
              $
              (1,755,468
              )Basic and Diluted Loss Per
      Share
              
              $
              (0.01
              )
              
              $
              (0.03
              )
              
              $
              (0.00
              )
              
              $
              (0.05
              )Weighted Average Number of
      SharesOutstanding During the Periods
      -Basic and
      Diluted
              
              
              39,293,611
              
              
              
              37,998,524
              
              
              
              38,771,386
              
              
              
              36,738,708
  (The accompanying notes are an integral
part of these condensed consolidated financial statements.)
 
 F-4
  
  
 
 
 
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Condensed Consolidated Statements of
Cash Flows
 Nine Months Ended September 30, 2008 and
2007
 Unaudited
 2008
              
              
              2007Cash Flows from Operating
      ActivitiesNet loss
              
              $
              (186,100
              )
              
              $
              (1,778,897
              )Adjustments to reconcile net loss
      to net cash used in operating activities:Depreciation
              
              
              25,812
              
              
              
              22,522Stock issued for
      services
              
              
              440,577
              
              
              
              1,135,899Employee stock-based
      compensation
              
              
              (463,348
              )
              
              
              (169,669
              )Stock-based
      compensation accrual
              
              
              81,903
              
              
              
              (34,667
              )(Increase) decrease in net
      assets:Referral fees held in
      trust
              
              
              (26,027
              )
              
              
              (34,777
              )Prepaid
      expense
              
              
              72,419
              
              
              
              8,249Accounts
      payable
              
              
              600,046
              
              
              
              121,671Accrued
      liabilities
              
              
              198,567
              
              
              
              216,844Employee tax deduction
      payable
              
              
              (93,150
              )
              
              
              -Accrued legal
      judgment
              
              
              4,195
              
              
              
              -Trust
      liability
              
              
              26,027
              
              
              
              34,777Net Cash Provided by (Used in)
      Operating Activities
              
              
              680,921
              
              
              
              (478,048
              )Cash Flows from Investing
      ActivitiesDisposal (Purchase) of
      equipment
              
              
              2,402
              
              
              
              (29,995
              )Net Cash Provided by (Used in)
      Investing Activities
              
              
              2,402
              
              
              
              (29,995
              )Cash Flows from Financing
      ActivitiesRepayments of obligation under
      capital leases
              
              
              (2,095
              )
              
              
              (485
              )Repayment of advances from related
      party
              
              
              (70,054
              )
              
              
              (59,461
              )Proceeds from issuance of common
      stock
              
              
              -
              
              
              
              10,199Purchase of treasury
      stock
              
              
              -
              
              
              
              (7,455
              )(Decrease) increase in bank
      indebtedness
              
              
              (9,793
              )
              
              
              51,318Net Cash Used in Financing
      Activities
              
              
              (81,942
              )
              
              
              (5,884
              )Net Increase (Decrease) in Cash
      and Cash Equivalents
              
              
              601,381
              
              
              
              (513,927
              )Foreign Exchange on
      Balances
              
              
              79,640
              
              
              
              32,169Cash and Cash Equivalents -
      Beginning of Period
              
              
              830,852
              
              
              
              1,238,357Cash and Cash Equivalents - End of
      Period
              
              $
              1,511,873
              
              
              $
              756,599Supplemental Cash Flow
      InformationInterest
    paid
              
              $
              20,986
              
              
              $
              7,049Income taxes
      paid
              
              $
              -
              
              
              $
              -
  (The accompanying notes are an integral
part of these condensed consolidated financial statements.)
  F-5
  
  MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
 1.
              Nature of Business and Going
      Concern
  Nature of Business
  MortgageBrokers.com Holdings, Inc.,
which registered a change of name with the state ofDelawarein February 2005
and  Subsidiaries (the “Company”) was formerly known as MagnaData,
Inc. and organized under the laws of the State ofDelawareon February 6,
2003.
  Mortgage brokerage operations are
presently conducted through the Company’s subsidiaries, Mortgagebrokers.com Inc.
(anOntario,Canadacompany) and MortgageBrokers.com
Financial Group of Companies, Inc. (Canadian federal company), inCanadaonly.   The planned
operations of the Company consist of becoming a financial services company
centered around mortgage finance, brokerage, sales and consulting inCanada, theUnited Statesand the European Union
(“E.U.”).
  Going Concern
  The Company’s consolidated financial
statements are presented on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business. For the nine month period ended September 30, 2008, the Company
generated a net loss of $186,100 (2007 a loss of -
$1,778,897).  Certain conditions noted below raise substantial doubt
about the Company’s ability to continue as a going concern.
  The Company’s ability to continue as a
going concern is contingent upon its ability to secure additional debt or equity
financing, continue to grow sales of its services and achieve profitable
operations.  Management’s plan is to secure additional funds through
future debt or equity financings.  Such financings may not be
available or may not be available on reasonable terms to the
Company.  The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash
commitments.
 
 The Company has devoted substantially
all of its efforts to establishing its current business. Management continues to
developed and execute its business model, business plans and strategic marketing
plans which includes: organization of the Company and divisions; identification
of the Company’s sales channels and associated supply chain; development of
marketing strategic plans and sales execution strategies; preparation of a
financial plan, risk and capital structure planning models, and mortgage
origination ‘book of business’ models; hiring mortgage sales agents to build its
national sales force and continuing to develop our referral relationship;
developing cash flow forecasts and an operating budget; identifying markets to
raise additional equity capital and debt financing; embarking on research and
development activities; performing employment searches and preparing agent
contracts; and, recruiting and hiring technicians, management and industry
specialists.
  F-6
 
 
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
  1.
                Nature of Business and Going
      Concern (cont'd)
 Going Concern
(cont'd)
   The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
  2.
                  Summary of Significant Accounting
      Policies
 The accounting policies of the Company
are in accordance with accounting principles generally accepted in theUnited States of
America, and their basis of
application is consistent. Outlined below are those policies considered
particularly significant:
 
 a)         Interim
Financial Statements
 
 The accompanying interim unaudited
financial information has been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in theUnited States of Americahave been condensed or omitted pursuant
to such rules and regulations, although management believes that the disclosures
are adequate to make the information presented not misleading. The interim
financial statements should be read in conjunction with the Company's annual
financial statements, notes and accounting policies included in the Company's
annual report on form 10 KSB for the year ended December 31, 2007 as filed with
the SEC. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, are necessary to present fairly the financial
position of the Company as of September 30, 2008 and the related operating
results and cash flows for the interim periods presented have been made. The
results of operations of such interim period are not necessarily indicative of
the results of the full year.
 
 b)         Basis
of Consolidation and Presentation
 
 The accompanying consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in theUnited
States of Americaand
include the accounts of the Company, its wholly-owned subsidiaries
Mortgagebrokers.com Inc. and Mortgagebrokers.com Financial Group of Companies,
Inc.  All significant inter-company transactions and balances have
been eliminated upon consolidation.
 
 c)         Cash
and Cash Equivalents
 
 Cash and cash equivalents consist of
cash on account and short-term investments with remaining maturities at
acquisition of three months or less.
 
 d)         Equipment,
net
  Equipment is stated at cost.
Depreciation is calculated using the following annual rates and methods based on
the estimated useful lives of the assets:
  Furniture and
      equipment
              20%
    decliningComputer
      equipment
              30%
    decliningComputer
      software
              30%
    decliningLeasehold
      improvements
              20% straight
      line
  F-7
 
 
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
   2.
                    Summary of Significant Accounting
      Policies (cont'd)
  e)    Revenue
Recognition
  Revenue consists of mortgage brokerage
fees and finders fees. The revenue is recognized upon the funding of a
customer’s mortgage and when the collection is reasonably assured which occurs
when the brokerage fee from the bank has been advanced.
 
 f)    Use of
Estimates
  Preparation of financial statements in
accordance with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and related notes to financial
statements. These estimates are based on management’s best knowledge of current
events and actions the Company may undertake in the future. Actual results may
ultimately differ from estimates, although management does not believe such
changes will materially affect the consolidated financial statements in any
individual year.
 
 g)    Financial
Instruments
  In accordance with Statement of
Financial Accounting Standards ("SFAS") SFAS No. 107, "Disclosures About Fair
Value of Financial Instruments" ("SFAS No. 107"), the estimated fair value of
financial instruments has been determined by the Company using available market
information and valuation methodologies. Considerable judgment is required in
estimating fair value. Accordingly, the estimates may not be indicative of the
amounts the Company could realize in a current market exchange. As of September
30, 2008, the carrying value of accounts payable and accrued liabilities,
advances from related party, and all other current liabilities and long term
debt approximate their fair value because of the limited terms of these
instruments.  The Company is exposed to interest rate risk on its bank
loan as the interest charged on the loan fluctuates with the bank’s prime
rate.
 
 In accordance with Statement of
Financial Accounting Standards ("SFAS") SFAS No. 157, “Defining Fair Value
Measurement”("SFAS No. 157"), the Company adopted
the standard which defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles and expands disclosures
about fair value measurements.
 
 h)         Impairment
of Long-lived Assets
  In accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", long-lived
assets to be held and used are analyzed for impairment whenever events or
changes in circumstances indicate that the related carrying amounts may not be
recoverable. The Company evaluates whether events and circumstances have
occurred that indicate possible impairment. If there are indications of
impairment, the Company uses future undiscounted cash flows of the related asset
or asset grouping over the remaining life in measuring whether the assets are
recoverable. In the event such cash flows are not expected to be sufficient to
recover the recorded asset values, the assets are written down to their
estimated fair value. Long-lived assets to be disposed of are reported at the
lower of carrying amount or fair value of asset less cost to sell. As described
in note 1, the long-lived assets have been valued on a going concern basis,
however, substantial doubt exists as to the ability of the Company to continue
as a going concern. If the Company ceases operations, the asset values may be
materially impaired.
  F-8
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
   2.
                      Summary of Significant Accounting
      Policies (cont'd)
 i)         Share-based
Payment
  The Company adopted the disclosure
requirements of SFAS No. 123R, "Share-Based Payment" ("SFAS No. 123R") for stock
options and similar equity instruments (collectively, "options") issued to
employees. The Company applies the fair value base method of accounting as
prescribed by SFAS No. 123R. Under the fair value based method, compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period. For
stock options, the fair value is determined using an option-pricing model that
takes into account the stock price at the grant date, the exercise price, the
expected life of the option, the volatility of the underlying stock and the
expected dividends on it, and the risk-free interest rate over the expected life
of the option. SFAS No. 123R also applies to transactions in which an entity
issues its equity instruments to acquire goods or services from non-employees.
Those transactions must be accounted for based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable, as described in note
12.
  j)         Income
Taxes
  The Company accounts for income taxes in
accordance with SFAS No. 109, “Accounting for Income Taxes”. Deferred tax assets
and liabilities are recorded for differences between the consolidated financial
statement and tax basis of the assets and liabilities that will result in
taxable or deductible amounts in the future based on enacted tax laws and rates.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is recorded for
the amount of income tax payable or refundable for the period increased or
decreased by the change in deferred tax assets and liabilities during the
period.
 
 k)         Earnings
or Loss Per Share
  The Company accounts for earnings per
share pursuant to SFAS No. 128, Earnings per Share, which requires disclosure in
the financial statements of basic and diluted earnings (loss) per share. Basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding for the
period.  Diluted earnings (loss) per share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding plus
common stock equivalents (if dilutive) related to stock options and warrants for
each period.
  l)         Foreign
Currency Translation
  The Company accounts for foreign
currency translation pursuant to SFAS No. 52, “Foreign Currency Translation”.
The Company’s functional currency is the Canadian dollar. All assets and
liabilities are translated intoUnited Statesdollars using the exchange rates
prevailing at the end of the period. Revenues and expenses are translated using
the average exchange rates prevailing throughout the period.
 
 Unrealized foreign exchange amounts
resulting from translations at different rates according to their nature are
included in accumulated other comprehensive income.
 
 Realized foreign currency transaction
gains and losses are recognized in operations.
  F-9
  
  MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
  2.
                      Summary of Significant Accounting
      Policies (cont'd)
 m)         Comprehensive
Income or Loss
  The Company adopted SFAS No. 130,
“Reporting Comprehensive Income.” SFAS No. 130 establishes standards for
reporting and presentation of comprehensive income and its components in a full
set of financial statements. Comprehensive income is presented in the statements
of stockholders’ deficit, and consists of net loss and unrealized gains (loss)
on available for sale marketable securities; foreign currency translation
adjustments and changes in market value of future contracts that qualify as a
hedge; and negative equity adjustments recognized in accordance with SFAS No.
87. SFAS No. 130 requires only additional disclosures in the financial
statements and does not affect the Company’s financial position or results of
operations.
  n)         Concentration
of Credit Risk
  SFAS No. 105, “Disclosure of Information
About Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentration of Credit Risk”, requires disclosure of any
significant off-balance sheet risk and credit risk concentration. The Company
does not have significant off-balance sheet risk or credit
concentration.
  o)         Recent
Accounting Pronouncements
 
 In December 2007, the FASB issued SFAS
No. 141 (R) “Business Combinations” (SFAS 141R). SFAS 141R establishes
principles and requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree. SFAS 141R
also provides guidance for recognizing and measuring the goodwill acquired in
the business combination and determines what information to disclose to enable
users of the financial statements to evaluate the nature and financial effects
of the business combination. The guidance will become effective as of the
beginning of the Company’s fiscal year beginning after  December 15,
2008. Management believes the adoption of this pronouncement will not have a
material impact on the Company's consolidated financial
statements.
  In December 2007, the FASB issued SFAS
No. 160 “Non-controlling Interests in Consolidated Financial Statements—an
amendment of ARB No. 51” (SFAS 160). SFAS 160 establishes accounting and
reporting standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. The guidance will become effective as of the
beginning of the Company’s fiscal year beginning after December
15,  2008. Management believes the adoption of this pronouncement will
not have a material impact on the Company's consolidated financial
statements.
 
 In March 2008, the FASB issued SFAS
No. 161, “Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133”  (SFAS  161).
This statement is intended to improve transparency in financial reporting by
requiring enhanced disclosures of an entity’s derivative instruments and hedging
activities and their effects on the entity’s financial position, financial
performance, and cash flows.  SFAS 161 applies to all derivative
instruments within the scope of SFAS 133, “Accounting for Derivative Instruments
and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated
derivatives, and non-derivative instruments that are designated and qualify as
hedging instruments. Entities with instruments subject
to  SFAS  161 must provide more robust qualitative
disclosures and expanded quantitative
disclosures.  SFAS  161 is effective prospectively for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application permitted. We are currently
evaluating the disclosure implications of this statement.
  F-10
 
  MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
  
 3.
                      Referral Fees Held in Trust
      and Trust Liability
 Pursuant to service agreements, a
portion of RE/MAX referral fees charged to the Company will be payable to RE/MAX
agents and will be paid into a Registered Retirement Savings Plan ("RRSP")
account on behalf of the respective agent, administered as the RE/MAX Agent
Retirement Plan by Manulife Financial. The aforementioned referral fees to date
have been deposited into a temporary in-trust account that has signing officers
from both the Company & RE/MAX, until the Manulife Financial administered
program is fully established for new entrants to the program. It is expected
that these funds will be deposited into the respective agents' RRSP throughout
2008.
  4.
                        Equipment,
      net
 Net Book
              
              Net BookValue
              
              ValueAccumulated
              
              Sept.
    30,
              
              December
31,Cost
              
              Depreciation
              
              2008
              
              2007Furniture and
      equipment
              
              $
              163,097
              
              
              $
              64,548
              
              
              $
              98,549
              
              
              $
              122,251Computer
      equipment
              
              
              27,202
              
              
              
              13,524
              
              
              
              13,678
              
              
              
              13,058Leasehold
      improvements
              
              
              19,461
              
              
              
              5,251
              
              
              
              14,210
              
              
              
              18,165$
              209,760
              
              
              $
              83,323
              
              
              $
              126,437
              
              
              $
              153,474
  5.
                          Equipment Under Capital
      Leases
 September
    30,
              
              
              December
31,2008
              
              
              2007Computer
      equipment
              
              $
              6,724
              
              
              $
              7,189Less: accumulated
      depreciation
              
              
              (3,623
              )
              
              
              (2,911
              )$
              3,101
              
              
              $
              4,278
 
 The equipment under the capital leases
is depreciated on a 30% declining balance.
  6.
                            Bank
      Indebtedness
 On November 22, 2005, the Company
obtained a line of credit in the amount of $150,000 CDN. The line of credit
bears interest at Royal Bank ofCanada's prime plus 0.5% per annum, is due on
demand and is secured by a general security agreement in all assets except real
property. At September 30, 2008 $0 (December 31, 2007 - $0) was available on the
line of credit.
 
 F-11
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
 7.
                              Employee Tax Deductions
      Payable
 The Company is in arrears on the tax
withholdings due to Canada Revenue Agency (“CRA”) related to employee
salaries.  The Company has negotiated an agreement with CRA which, if
certain conditions are met, allows the Company to pay down the balance in
monthly payments of $10,000 between February 28, 2008 and February 1, 2009, and
by $20,000 between March 1, 2009 and June 1, 2009 with the remaining balance due
in July, 2009.  In the event that the Company secures funding, the
balance is to be paid off in full shortly after receipt of the funds. In
addition, CRA has registered a Certificate in the Canadian Federal Court and the
Property Register of Ontario for the amount owing to CRA.  The
liability currently bears interest at 9% annually.
  8.
                                Accrued Legal
      Judgment
 On October 27, 2006, Trisan Equitable
Corporation (“Trisan”) commenced an action in the Ontario Superior Court inOntario,Canadaagainst several parties, including the
Company, MortgageBrokers.com Inc (“MBI”), ourOntariosubsidiary, and Alex Haditaghi, our
principal shareholder, sole director and chief executive officer, and several
corporate affiliates of Mr. Haditaghi.  The statement of claim filed by
Trisan asserted a number of claims in the aggregate amount of approximately
CDN$1.4 million, arising out of a loan agreement with Trisan dated January 27,
2005 pursuant to which Trisan agreed to loan all of the defendants except the
Company (such defendants referred to hereinafter as the “Borrowing Parties”) the
sum of CDN$750,000, which funds were to be used by Mr. Haditaghi for the purpose
of acquiring the shares of Magna Data, Inc. (the “Magna Data Shares”). 
Trisan alleged in its statement of claim, among other things,
that:
 
 (i)
              it ultimately loaned upwards of
      CDN$550,000 pursuant to the loan
  agreement,
 
 (ii)
              the Magna Data Shares were to be
      pledged as security for repayment of its loan to
      Haditaghi
 
 (iii)
              it was to have been issued, upon
      certain conditions, upwards of 500,000 shares of the Company’s common
      stock, and
 
 (iv)
              the funds advanced to Mr.
      Haditaghi and/or MBI were never repaid;
  and,
 
 (v)
              Trisan obtained security for such
      repayment of the loan from a number of the Borrowing Parties, but not from
      MBI.
 
 In January 2007, the Company and the
Borrowing Parties filed a statement of defense, crossclaim and counterclaim in
response to Trisan’s statement of claim, in which the defendants alleged breach
of the loan agreement by Trisan.
 
 On October 3, 2007 a partial summary
judgment from the Ontario Superior Court ordered that the Borrowing Parties pay
Trisan the sum of CDN$598,636 within 90 days, along with interest in the amount
of CDN$136,128 and legal expenses in the amount of CDN$8,907.  The court
further ordered the dismissal of the counterclaim filed by the Company and the
Borrowing Parties and ordered that the balance of Trisan’s claims contained in
its statement of claim should proceed to trial. The Court further ordered
that  500,000 unrestricted shares of the Company be deposited by the
defendants with an escrow agent upon  payment of the above ordered amounts,
pending final disposition of Trisan’s other claims and that costs of the motion
for summary judgment be fixed at CDN$5,000 payable to Trisan within 90
days.  Upon Payment of the judgment amount, the security provided for
the loan would be released.
 
 The October 3, 2007 partial summary
judgment was appealed by the Company and the Borrowing Parties, but the judgment
was upheld on appeal by the Ontario Court of Appeal on March 31, 2008 with costs
for the appeal fixed at $CDN5,000.  Please see note 18 and for further
details.
 
 No decision has yet been made as to
allocation of liability for the judgment among the Borrowing
Parties.
  9.
                                  Advances from Related
      Party
 As of September 30, 2008, the
controlling shareholder and Chief Executive Officer of the Company had advanced
$100,637      (December 31, 2007 - $170,691) to
fund the working capital of the Company. The advances are non-interest bearing,
due on demand and unsecured.
 
 F-12
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
   10.
                                    Obligation Under Capital
      Leases
 The obligation under capital leases bear
interest at approximately 30% per annum. Future minimum lease payments under the
capital leases expiring December 31, 2009 together with the balance of the
obligation under capital leases is as follows:
  September
    30,
              
              
              December
31,2008
              
              
              20072008
              
              $
              895
              
              
              
              3,5782009
              
              
              2,212
              
              
              
              2,212Total minimum lease
      payments
              
              
              3,107
              
              
              
              5,790Less: amount representing interest
      at approx. 30%
              
              
              (558
              )
              
              
              (1,146
              )Total obligation under capital
      leases
              
              
              2,549
              
              
              
              4,644Less: current
      portion
              
              
              (507
              )
              
              
              (2,602
              )Long-term
      portion
              
              $
              2,042
              
              
              
              2,042
  11.
                                      Stock-based Compensation
      Accrual
 The Company has accrued expenses for
stock-based compensation:
  a)
              As of September 30, 2008, the
      Company has accrued, as stock-based compensation payable, 245,808
      (December 31, 2007 – 340,220) common shares at a price of $0.245 (December
      31, 2007 - $0.30) per share for a total of $60,223 (December 31, 2007 -
      $102,066) payable to the parties referred to in note
      18c(ii).
  b)
              As of September 30, 2008, the
      Company has accrued, as employee stock-based compensation,
      $193,912      (December 31, 2007 - $657,260)
      under its Equity Compensation Plan referred to in note
      12.
 
 c)
              As of September 30, 2008, the
      Company has accrued, as stock-based compensation, 1,443,125 common shares
      at a price of $0.245 per share for a total of $353,565 payable to the
      parties referred to in note 18a, 18b, and 18c(i).
  F-13
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
 
 12.
                                        Capital
      Stock
 Preferred Stock
  The Company has 5,000,000 shares
authorized of preferred stock with a par value of $0.0001. The Company has
issued none of these shares as of September 30, 2008.
  Common Stock
  On June 9, 2006, the Company completed
an offering in which it issued a total of 2,112,470 shares of its common stock
to accredited investors including RE/MAX Ontario-Atlantic Canada Inc., its
executives and franchisees, at a price per unit of $1.00 for an aggregate
offering price of $2,112,470. Purchasers of these securities receive the
following additional rights and privileges:
  i)
              the purchaser received a warrant
      (1 warrant = 1 share) to further purchase up to the total number shares of
      common stock purchased through the private placement exercisable at a rate
      of 20% each year following the anniversary date of the private placement
      closure. The warrants are exercisable at a price 30% below the 30 day fair
      market price preceding the date such warrants are exercised. Warrants
      expire if not exercised within 30 days of such anniversary date;
      and
  ii)
              further, pursuant to the execution
      of a service level agreement, on the anniversary date of the private
      placement closure, the Company has agreed to issue a number of shares of
      common stock equal to 25% of the number of common shares purchased in the
      private placement for ten consecutive anniversary dates. The receipt of
      such shares is dependent on the execution and maintenance in good standing
      of the terms of a service level agreement for each of the ten years. The
      service level agreement included the provisions of marketing, servicing
      and promotional services.
  On July 7, 2007, the Company issued
125,000 restricted common shares at a price of $1 per share and having similar
rights and obligations pursuant to the terms of the 2006 Private Placement
offered to executives and franchisees of RE/MAX Ontario-Atlantic Canada Inc.
  These shares rights were assigned to the new subscribers by the initial
subscribers of the 2006 PPM.   These shares were issued in
anticipation of the initial participants shares being
cancelled.
  Equity Compensation
Plan
  On February 6, 2003 and as amended on
February 14, 2003, the Company adopted the 2003 Equity Compensation Plan
to attract and retain high quality personnel. The adequacy of this plan is
evaluated annually by Company management. As of September 30, 2008, no
options had been issued under this plan. The disclosures made in the 2005
Audited Financial Statements (10-KSB - Item 10. Executive Compensation) and
the `Amendment to License Agreement between RE/MAX and Mortgagebrokers.com
Holding Inc.' dated May 25, 2006 (8-K - Schedule `A' 1. Outstanding
Options) documenting the equity compensation of employees has not been
implemented as of October 31, 2008. The company is currently in the process
of amending the existing employment agreements which are expected to be executed
in 2008. Until the new employment contracts have been formally and legally
executed, the existing employment contracts of the Company are still in
effect.
  F-14
 
  MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
   12.
                                          Capital Stock
      (cont'd)
 Service Compensation
Plan
  On March 1, 2005 the Board of Directors
approved the Service Compensation Plan ("the Service Plan"), the purpose of
which is to enhance the Company’s stockholder value and maximize the available
capital resources of the company through allowing non monetary transactions
whereby the issuance of stock is granted for services rendered. This program is
expected to support the Company in building a long term sustainable revenue
pipeline, a national sales agency and referral program as well as provide
incentive to service providers to establish long term relationships with the
Company and to encourage stock ownership by such individuals by providing them
with a means to acquire a proprietary interest in the Company’s success through
stock ownership. Under the Service Plan, service providers, consultants,
mortgage agents and strategic alliance partners who provide services to the
Company may be granted options or warrants to acquire restricted stock of the
Company. The total number of shares reserved for issuance under the Service Plan
is 5,000,000, the adequacy of which will be evaluated
annually.
  Non Monetary
Transactions
  The following non monetary transactions
were completed by the Company on a service for stock basis. It is the Company’s
accounting policy that in certain circumstances, stock, generally valued at the
5 day moving average price of the trading value of the stock at the time the
associated agreement was executed, might be issued for the procurement of
assets, provision of advisory and other services.
  On February 5, 2008, the Company issued
50,000 common shares at a price of $0.191 per share for total amount of $9,550
to vFinance, Inc. based on the execution of an investment banking service
agreement. vFinance, Inc. is an arm’s length third party consultant. vFinance
Inc. provided advisory services with respect to the review of financing term
sheets and investment banking matters.
 
 On September 11, 2008, the Company
issued 490,500 restricted common shares under the terms of its Mortgage Service
Licence Agreement with RE/MAX Ontario-Atlantic Canada Inc, and its franchisee
and broker owners that participated in the private placement offering which
closed on June 9, 2006.  The shares were issued at $0.11 per
share.
 
 On September 11, 2008, the Company
issued 3,272,500 shares of restricted (Rule 144) Company stock to its employees
based upon draft employment agreements that are expected to be executed by
December 31, 2008.  These shares have not been released and the
release is pending the finalizing and execution of employment
agreements.  These shares were issued under the Company’s Equity
Compensation Plan.  The shares were issued at $0.11 per
share.
  13.
                                            Additional Paid-in Capital -
      Warrants
 On June 9, 2006, accredited investors
including RE/MAX Ontario-Atlantic Canada Inc., its executives and franchisees
purchased 2,112,470 units of the Company for aggregate proceeds of $2,112,470 as
a part of private placement (note 12). Each unit consisted of one common share
and one common share purchase warrant. The warrants are exercisable at a price
30% below the 30 day fair market price preceding the date such warrants are
exercised. One-fifth of such warrants must be exercised (executed to purchase
shares) within 30 days following each successive anniversary date of the private
placement closing of the offering. Warrants expire if not exercised within 30
days of such anniversary date. The warrants were relatively valued at $732,605.
The fair value of the warrants was estimated using the Black-Scholes
option-pricing model with the following weighted average assumptions: expected
dividend yield of 0%, expected stock volatility of 64.7%, risk-free interest
rate of 4.00% and an expected warrant life of 1 year.  The expiry date
of the warrants was extended for the first year only, to September 30,
2007.  As of September 30, 2008, 233,078 of the warrants were
exercised at an average price of $0.28.  As of September 30, 2008,
628,910 warrants expired, 233,078 warrants were exercised and 1,250,482 warrants
remain outstanding and exercisable.
 
 
 
 F-15
 
 
 
 
 
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
 14.
                                              Subscription
      Receivable
 On June 9, 2006, the Company completed
an offering in which it issued a total of 2,112,470 shares of its common stock
to accredited investors including executives and franchisees of RE/MAX
Ontario-Atlantic Canada Inc., at a price per unit of $1.00 for an aggregate
offering price of $2,112,470. Payment of $1,870,169 was received during the year
ended December 31, 2006 and promissory notes were executed for the balance of
$242,301.  As of September 30, 2008, $155,000 of the original
promissory notes remains outstanding.  Due to the lack of fulfilling
the terms of the promissory notes, two of the original participants’ shares, for
a total of 125,000 shares, are in the process of being cancelled.  As
of March 31, 2008 two new participants subscribed for 125,000 shares under the
private placement and as of June 30, 2008, $60,000 of the new participants’
promissory notes have been paid and $65,000 remains outstanding.  In
addition, as of September 30, 2008, 233,078 warrants issued under the private
placement were exercised for a total value of $64,786, see note
13.  The stock has not been issued on the exercise of these warrants
and is included in subscription for stock in the equity section of the balance
sheet.  As of September 30, 2008, $8,240 receivable on the exercise of
the warrants was outstanding and is included in subscriptions receivable in the
equity section of the balance sheet.
  15.
                                                Treasury
    Stock
 During 2007, the Company acquired 12,500
common shares of the Company at an average price of $0.60 per share for a total
of $7,455.  In 2006, the Company acquired 31,600 common shares of the
Company at an average value of $0.56 per common share, for a total of
$17,779.
  16.
                                                  Occupancy Costs - Related
      Party
 For the period of September 2006 to
March 2007, the Company operated from a property owned by a related party and
did not incur any rent expenses during this period.
 
 On August 1, 2007, the Company’s current
office space was sold to a related party of the Chief Executive Officer, the
Company`s majority shareholder. The Company’s lease agreement obligation was
extended from two to five years.
 
 
 
 F-16
 
 
 
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
  17.
                                                    Income
  Taxes
 The Company has paid no federal or state
income taxes. As of September 30, 2008, the Company had net operating loss carry
forwards for federal income tax reporting purposes of $3,742,079 which, if
unused, will expire in various years. The tax effect of the operating loss carry
forwards and temporary differences at September 30, 2008 and 2007 are as
follows:
 
 2008
              
              
              2007Deferred
      Income Tax Assets:Net
      Operating loss carry forward
              
              $
              1,272,307
              
              
              $
              1,080,042Net
      book value and tax value differences
              
              
              (35,434
              )
              
              
              -Valuation
      allowance for deferred income tax assets
              
              
              (1,236,873
              )
              
              
              (1,080,042
              )Total deferred tax
      effect
              
              $
              -
              
              
              $
              -
  The following is a reconciliation of the
income tax benefit computed using the combined Canadian federal and provincial
statutory rate of 34% (2007 - 34%) rate to the provision for income
taxes:
 
 2008
              
              
              2007Deferred Tax
      Provision:Expected income tax
      benefit
              
              $
              50,479
              
              
              $
              357,501Valuation
      allowance
              
              
              (50,479
              )
              
              
              (357,501
              )Provision for income
      taxes
              
              $
              -
              
              
              $
              -Current Tax
      Provision:Federal
      and Provincial income tax
              
              $
              -
              
              
              $
              -
  Due to the losses incurred since
inception and expected future operating results, management has determined that
the Company does not meet the 'more likely than not' criteria that the deferred
tax assets resulting from the tax losses available for carry forward and the
differences in tax bases of assets will be realized through the reduction of
future income tax payments, accordingly a 100% valuation allowance has been
recorded for deferred income tax assets.
 F-17
 
 
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
   18.
                                                      Commitments and
      Contingencies
 Commitments
  The Company has entered into agreements
with various parties, whereby the Company is committed to issue compensatory
warrants and stock as part of the “Service Compensation Plan” to mortgage agents
and strategic alliance partners.
  The effective date (“Effective Date”),
when mentioned below, is the date the independent mortgage agent entered into a
Mortgage Agent Agreement with the Company; or, is the date the RE/MAX
Ontario-Atlantic Canada Inc. (“RE/MAX”) or Maxwell Realty Inc. (“Maxwell”)
Franchisee entered into a Service Level Agreement with the Company and is also
the date that the strike price (“Strike Price”) of the warrants is established.
The strike price is the greater of $1 per share or the twenty day average
closing price following the Effective Date.
  Since the conversion ratio of dollar
value of warrants into shares is fixed, but the share price fluctuates, the
accrual to expense the value of the warrants earned by the mortgage agents and
strategic alliance partners will fluctuate with the share price at the end of
each period.
  The Company has entered into agreements
with the following parties:
  a)         Independent
Mortgage Agents/Loan Officers
  Pursuant to a 5 year Mortgage Agent
Agreement, the Company is committed to issuing warrants, at no cost, for common
stock of the Company in two series to mortgage agents licensed with the Company
based on their annual mortgage origination sales volume, which are summarized as
follows based on current formulae:
  Series I Warrants
  “Average
      Volume”:
              defined as the average best three
      out of five years in funded mortgage origination
    volume
  Number of
      Warrants:
              $8,257 worth of warrants divided
      by the Strike Price, per CDN $10 million in Average Volume, adjusted on a
      pro rata basis, no minimum or maximum thresholds. The warrants are
      convertible in common shares on a 1:1
  basis.
  Earnings
      Period:
              Series I warrants are earned in
      the first 5 years following the Effective
  Date;
  Additional
      Vestment:
              all SERIES I warrants are fully
      vested on the 5th anniversary of the Effective
  DateDetermination
      Date:
              5 year anniversary of Effective
      Date
  F-18
 
 
 
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
 18.
                                                        Commitments and Contingencies
      (cont'd)
 Commitments (cont’d)
  a)    Independent
Mortgage Agents/Loan Officers (cont'd)
  Series II Warrants
  “Annual
      Volume”:
              defined as the total mortgage
      origination volume executed per 12 month period following the Effective
      Date and subsequent 12 month periods following the anniversary dates of
      the Effective Date
  Number of
      Warrants:
              $1,651 worth of warrants divided
      by the Strike Price per CDN $10 million in Annual Volume, adjusted on a
      pro rata basis, no minimum or maximum thresholds. The warrants are
      convertible in common shares on a 1:1
  basis.
  Earnings
      Period:
              Series II warrants are earned in
      the first 5 years following the Effective
  Date
  Additional
      Vestment:
              All SERIES II Warrants fully vest
      3 years following the Determination
Date
  Determination
      Date:
              The Annual Volume is determined on
      the fifth year anniversary of the Effective
  Date
  b)    Maxwell Realty
Inc.
  Per a three year renewable agreement
dated April 12, 2006 and pursuant to the execution of a service level agreement
by the Maxwell Franchisee, the Company is committed to issuing to Maxwell at no
cost, warrants for common stock of the Company based on referrals leading to
funded mortgage origination volume. The Maxwell Warrant-Based Compensation
Program, which issues warrants (“SERIES III Warrants”) that are divided amongst
the Maxwell Franchisor, Franchisee and referring Sales
Agent.
  Annual
    Volume:
              defined as the total funded
      mortgage origination volume from Maxwell lead referral executed per 12
      month period following the Effective Date and subsequent 12 month periods
      following the anniversary dates of the Effective
    Date
  Number of
      Warrants:
              $3,000 worth of warrants divided
      by the Strike Price per CDN $10 million in Annual Volume, adjusted on a
      pro rata basis, no minimum or maximum thresholds. The warrants are
      convertible in common shares on a 1:1
  basis.
  Earnings
      Period:
              Series III warrants are earned in
      the first 5 years following the Effective DateAdditional
      Vestment:
              SERIES III warrants are fully
      vested on the fifth anniversary of the Effective
      Date
 
  F-19
  
  MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
 18.
                                                          Commitments and Contingencies
      (cont'd)
 Commitments (cont’d)
  c)    RE/MAX
  i)
              Pursuant to a ten year licensing
      agreement dated January 30, 2006 and amended May 25, 2006, and pursuant to
      the execution of a one year renewable service level agreement by the
      RE/MAX Franchisee, the Company is committed to issuing to RE/MAX at no
      cost, warrants for common stock of the Company based on referrals leading
      to funded mortgage origination volume. The RE/MAX Warrant-Based
      Compensation Program issues warrants (“SERIES IV Warrants”) as follows
      based on current formulae:
  Annual
    Volume:
              defined as the total funded
      mortgage origination volume from RE/MAX lead referral executed per 12
      month period following the Effective Date and subsequent 12 month periods
      following the anniversary dates of the Effective
    Date
  Number of
      Warrants:
              $3,000 worth of warrants divided
      by the Strike Price per $10 million dollars CDN in Annual Volume, adjusted
      on a pro rata basis, no minimum or maximum thresholds. The warrants are
      convertible in common shares on a 1:1
  basis.
 
 Earnings
      Period:
              Series IV warrants are earned in
      the first 3 years following the Effective
  Date
 
 Additional
      Vestment:
              SERIES IV warrants are fully
      vested on the 5th anniversary of the Effective
  Date
 
 
 ii)
              Pursuant to the ten year licensing
      agreement dated January 30, 2006 and amended May 25, 2006, the Company has
      committed to issuing, at no cost, an aggregate of 528,118 common shares of
      the Company on each of the 10 year anniversary dates of the licensing
      agreement to those RE/MAX executives and franchisees that participated in
      the company’s private placement which closed on June 9,
      2006.
  d)    The Company
has signed lease agreements for computer and office equipment. Committed annual
payments are as follows:
  2008
              
              $
              9,2472009
              
              $
              6,8022010
              
              $
              5,8162011
              
              $
              4,1402012
              
              $
              3,662
  e)    On February 8,
2007, the Company entered into a lease to rent office space inCalgary,Alberta,Canadafor maintaining the Company's westernCanadaoperations. The agreement is effective
commencing May 1, 2007 for a five year term.
  Annual minimum lease payments (excluding
utilities, taxes and common area maintenance expenses) are as
follows:
  2008
              
              $
              8,8102009
              
              $
              8,8102010
              
              $
              9,9852011
              
              $
              10,5722012
              
              $
              3,524
 
 F-20
 
  
  
 MORTGAGEBROKERS.COM HOLDINGS, INC. AND
SUBSIDIARIES
 (FORMERLY MAGNADATA,
INC.)
 Notes to Condensed Consolidated
Financial Statements
 September 30, 2008
 Unaudited
 
 18.
                                                          Commitments and Contingencies
      (cont'd)
 Commitments
(cont’d)
  f)    On March 27,
2007, the Company entered into a lease to rent office space inConcord,Ontario,Canadafor maintaining the Company's Canadian
head office. The agreement was effective commencing April 1, 2007 for a two year
term.
  The Company had the option to renew this
lease, for amounts to be determined, for two additional one year terms. The
Company also had the option to purchase the office space, by May 31, 2007, for
$986,815.  The Company did not exercise its option to purchase the
office space.  On August 1, 2007 the office space was sold (note 16)
and the lease commitment period was extended from 2 to 5
years.
  Annual minimum lease payments (excluding
utilities, taxes and common area maintenance expenses) are as
follows:
  2008
              
              $
              105,9382009
              
              $
              105,9382010
              
              $
              105,9382011
              
              $
              105,9382012
              
              $
              61,797
  Contingencies
  Note 8 describes a series of events
which results in a continuing legal matter.  Given that the judgment
further allows additional matters in the original Statement of Claim to proceed
to trial the company may incur additional costs and liabilities.  An
estimate of the contingent liability to which the Company is party to by way of
this continued action cannot reasonably be determined at this time and could be
as much as the difference between partial summary judgment and the original
claim amount plus interest.
  19.
                                                          Comparative
      Figures
 Certain figures for the period have been
reclassified to conform to the current period’s financial statement
presentation.
 
 F-21