UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




_________________________________________




FORM
10-K


_________________________________________




ANNUAL
REPORT UNDER SECTION 13 OR 15(D) OF THE


SECURITIES
EXCHANGE ACT OF 1934




ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES


EXCHANGE
ACT OF 1934




For
Fiscal Year Ended


December
31, 2008




Commission
File #333-105778




MORTGAGEBROKERS.COM HOLDINGS,
INC.


(Exact
name of registrant as specified in its charter)




Delaware


(State or
other jurisdiction of incorporation or organization)




05-0554486


(IRS
Employer Identification Number)




11-260
Edgeley Boulevard, City of Vaughan, Ontario, L4K 3Y4


(Address
of principal executive offices)(Zip Code)







877-410-4848


(Registrant's
telephone no. including area code)





Securities
registered pursuant to Section 12(b) of the Act: None




Title of
each class Name of each exchange on which registered




_____________________________________________________________




Securities
registered pursuant to Section 12(g) of the Act:




Common Stock, $0.0001 par
value




(Title
of class)




(Former
name, former address and former fiscal year,




if
changed since last report)









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




Yes  o           No           þ




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




Yes  o           No           þ




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.




Yes          þ           No          o




Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K not contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company
filer.  See definition of “accelerated filer” and “large accelerated
filer” in rule 12b-2 of the Exchange Act (Check one):





Large
      accelerated filer
            o
            Accelerated
      filer
            oNon-accelerated
      filer
            o
            Smaller
      reporting company
            þ





Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.





Yes    o        Noþ





Indicate
the number of shares outstanding of the Registrant’s common stock as of the
latest practicable date.





Class
            
            Outstanding
      at April 15, 2009Common
      Stock, $.0001 par value
            
            42,976,548





Revenues
for year ended December 31, 2008: $ 15,802,861.




Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of December 31, 2008 is: $4,727,420.




Transfer
Agent as of April 15, 2009:




Securities
      Transfer Corporation2591
      Dallas Parkway, Suite 102Frisco,
      TX, 75034















TABLE
OF CONTENTS




PART
      IITEM 1.DESCRIPTION OF
      BUSINESS
                1ITEM
      1A.RISK
      FACTORS
                14ITEM
      1B.UNRESOLVED STAFF
      COMMENTS
                14ITEM 2.DESCRIPTION OF
      PROPERTY
                14ITEM
      3.LEGAL
      PROCEEDINGS
                14ITEM
      4.SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                15PART
      IIITEM 5.MARKET FOR COMMON
      EQUITY AND RELATED STOCKHOLDER MATTERS
                16ITEM 6.SELECTED FINANCIAL
      DATA
                21ITEM 7.MANAGEMENT S
      DISCUSSION AND ANALYSIS
                21ITEM
      7A.QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                23ITEM 8.FINANCIAL STATEMENTS
      AND SUPPLEMENTARY DATA
                23ITEM 9.CHANGES IN AND
      DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                24ITEM
      9B.OTHER
      INFORMATION
                26PART
      IIIITEM
      10.DIRECTORS, EXECUTIVE
      OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF
      THE EXCHANGE ACT
                27ITEM
      11.EXECUTIVE
      COMPENSATION
                29ITEM
      12.SECURITY OWNERSHIP
      OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                31ITEM
      13.CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                31ITEM
      13.EXHIBITS AND REPORTS
      ON FORM 8-K
                31ITEM
      14.PRINCIPAL ACCOUNTANT
      FEES AND SERVICES
                31PART
      IVITEM
      15.EXHIBITS AND
      FINANCIAL STATEMENT SCHEDULES
                32SIGNATURES
                33










PART
I




ITEM
1. DESCRIPTION OF BUSINESS




Classified
as a smaller reporting company as defined by rule 229.10 (f)(1), the following
provides a description of our business.




Form
and Year of Organization




MortgageBrokers.com
Holdings, Inc. (the “Company”, “we”, “our” or “us”) was incorporated under the
laws of Delaware on February 6, 2003 as MagnaData,
Inc. (“MagnaData”).  In February 2005, we filed articles of
amendments with the State of Delaware changing the name of our Company to
MortgageBrokers.com Holdings, Inc.




Over the
past three year period, sales operations were conducted through our subsidiaries
in Canada only:




1.
            MortgageBrokers.com
      Inc. - an Ontario Canada provincially incorporated company that currently
      holds our licensure for operating as a mortgage broker in the Province of
      Ontario;




2.
            MortgageBrokers.com
      Financial Group of Companies Inc. - a Canadian federally incorporated
      company, which currently holds our licensure for operating as a mortgage
      broker in the Provinces of Newfoundland, Nova Scotia, New Brunswick,
      Prince Edward Island and Alberta;




We
established MBKR Holdings Inc., a Canadian federally incorporated
company, on November 24, 2008 for the intended centralization of back
office services in Canada.




Bankruptcy,
Receivership or Similar Proceeding




None




Material
Reclassification, Merger, consolidation, or Purchase or Sale of a Significant
Amount of Assets




Lending
Source Canada Inc. (“Lending Source”), an arms length third party company, was a
small mortgage brokerage operating out of Calgary, Alberta. It was owned by
three individuals, two of which were silent partners who financed the company
and provided referral business and one of which was the day to day operating
company partner and mortgage broker of record with respect to
licensure. The two silent partners were also the owners of Maxwell Realty
Inc. After being approached by the operating partner of Lending Source, we
executed a conditional letter of intent to purchase Lending Source Canada Inc.
in September 2005, to provide us with a platform for servicing Maxwell and
launching our business in western Canada. The assets of Lending Source
Canada Inc., in Alberta, Canada were acquired by our Company in exchange for
stock in our Company. The acquisition transaction closed on March 10,
2006. The assets purchased included computer and technology priced at CDN
$16,487, lease hold improvements priced at CDN $3,620, and office furniture and
display materials priced at CDN $47,894 for a total of CDN $68,000. The
Company issued a negotiated total of 100,000 shares of our common stock to the
owners of Lending Source Canada Inc. for the afore-mentioned assets. The
stock issued for consideration in the transaction was ascribed a value of $0.58
(using an exchange rate of 0.8560).  The operating partner and broker
of record for Lending Source Canada Inc. was hired by our Company as a sales
executive servicing western Canada.  No consideration was given to
this employment agreement in recording the asset acquisition.  On
April 12, 2006, our Company executed a three year renewable marketing, referral
and revenue sharing agreement with Maxwell. Maxwell is an unrelated third
party to our Company.




Business
of Issuer




Products
and Services




In
operation since 2005, our Company is a mortgage brokerage operation whose
national agency sales force services the borrowing and refinancing needs of
individual home buyers and owners. We have access to a full range of
mortgage lenders, in excess of 50 banks, trusts and private lender sources, 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 no mortgage lending related ‘on or off
balance sheet’ liabilities in case mortgage financing becomes
default.




-1-




As a
mortgage brokerage, we have access to lenders who lend mortgage funds. In
2008, we funded mortgage volumes with 55 different mortgage lenders with 97% of
the mortgage volumes funded by our top 20 lenders. Outside our top 20
lenders, the remaining lenders serve very niche product offerings which
subsequently results in marginal mortgage origination volumes.




We
typically access most of our lenders through the software platform provided by
Filogix Limited Partnership (“Filogix”), Canada’s leading technology provider to
the mortgage brokerage industry. Through this software, Filogix connects
mortgage brokers with lenders by providing an electronic conduit for submission,
approval and funding of mortgage transactions.




As a
mortgage brokerage, our general obligations to the lender include the
following:




Ø
            provide
      up to date, accurate and complete credit applications for all mortgage
      loans;




Ø
            provide
      all conditions required to fund, which have been reviewed by the mortgage
      originator for accuracy;




Ø
            conduct
      business in a professional and forthright manner, fully disclosing any
      information that may impact the lender’s decision to proceed with the
      transaction;




Ø
            protect
      the confidentiality and privacy of personal information and other
      information provided to, or received by, the mortgage originator in
      connection with any credit application for a mortgage loan;
      and,




Ø
            maintain
      adequate funding ratios on all applications submitted to a
      lender.




Failure
to maintain these general obligations can result in additional documentation
required on a mortgage application, cancellation of a mortgage approval or
termination of the mortgage agent and/or the brokerage relationship with the
lender.




Mortgage
agents are independent subcontracted mortgage consultants who work exclusively
under the Company’s brokerage license to provide consumers with unbiased advice
on mortgage financing.  Our mortgage broker agents will conduct a
needs assessment from the potential borrower and find a suitable mortgage
product from a suite of lenders. Mortgage broker agents will facilitate the
communication between the lender and the borrower from application submission to
financing.




The
following describes our revenue streams from our offered products and
services:




1)
            For
      approximately 92 % of all mortgage origination deal flow at our Company,
      our subsidiaries generate revenue when our licensed mortgage agents place
      mortgages, on behalf of customers, with third party lenders who in return,
      pay the Company a commission fee, as
follows:




a)
            most
      lenders pay the Company a referral commission fee (“Finder’s
      Fee”).  This Finder’s Fee is generally a fixed percentage of the
      principal amount of the mortgage being placed and varies depending on the
      mortgage term chosen by the
customer.




b)
            In
      addition, most lenders who pay a referral finder’s fee also pay the
      Company a volume bonus (“Volume Bonus”) for the aggregate mortgage volumes
      placed with a particular lender above volume thresholds established from
      time to time.  As the Company’s volume has grown, the Company
      has been able to capitalize on achieving higher Volume Bonus tiers with
      lenders that pay a Volume Bonus.




The
aggregate sum fee for Finder's Fees and Volume Bonus typically ranges between 75
to 150 basis points (0.75 to 1.5%) of the total mortgage volume.




2)
            For
      approximately 8% of all mortgage origination deal flow at our Company,
      commercial, alternative and sub-prime lenders may pay only a nominal
      referral Finder’s Fee.  For these transactions, our mortgage
      agents may charge negotiated brokerage fees to generate
      revenue.




3)
            We
      currently earn 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 gross commission which is,
      on average, estimated to be 14 basis points of the mortgage
      amount.




Markets
Served




Operations
are presently conducted through our subsidiaries in Canada only. The
Company is currently providing mortgage brokerage services in the Canadian
provincial markets of Newfoundland, Nova Scotia, New Brunswick, Prince Edward
Island, Ontario and Alberta.




-2-




Distribution
Methods for our Services




The
Company provides its services to the consumer through a national sales agency
network.  Our national agency sales force are 100% commissioned
subcontractors who are registered as mortgage agents with the appropriate
regulatory government agency to provide mortgage broker services to the public
exclusively under the Company’s brokerage licensure and brand. Our mortgage
agents regionally market themselves under the MortgageBrokers.com brand via the
World Wide Web (www), newspapers, magazines, local promotion, billboards, radio,
and television. Our mortgage agents operate offices or desks within real
estate offices, have their own retail offices established or operate out of
their homes as mobile sales professionals. The Company does not own, nor is
a party to, any retail mortgage agent office leases that are currently
established by our mortgage agents.




Our
national agency sales force, recruited and managed centrally by our senior sales
management staff, may operate regionally as individual businesses or they may
build agency sales teams leveraging the Company’s business model and
brand. Our national sales force is diversified with agents who provide
mortgage broker services to the consumer public on a full time and part time
basis and may also provide their services in association with other related
business initiatives they are involved in outside of mortgage brokerage such as
financial planning or real estate sales.




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
stock-based compensation 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 primary services that the Company provides to our
national agency sales network are:




Ø
            mortgage
      brokerage licensure;




Ø
            a
      national brand and related marketing
  initiatives;




Ø
            a
      regulatory compliance service associated with our agent’s
      transactions;




Ø
              human
      resource services where we perform new agent registration, licensure, and
      insurance coverage on behalf of our managing partners and for new
      agents;
 Ø
                access
      to our corporately arranged group health insurance and benefits
      plan;


Ø
            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 with detailed payroll statements on a weekly
      basis;




Ø
            revenue
      optimization for our agents through deal flow
  aggregation;




Ø
            sales
      training, sales tools and support from our sales management team for
      lender support, team and business building, and consumer
      support;




Ø
            the
      establishment of market partnerships to allow our agency sales network to
      access a greater portion of the mortgage and refinance
    market;




Ø
            information
      technology services; and,




Ø
            the
      opportunity to earn stock-based compensation in our
    Company.




The
Mortgage Brokerage industry is regulated provincially in Canada. For
instance, in the Province of Ontario, we are regulated by the Financial Services
Commission of Ontario under the Mortgage Brokerages Lenders and Administrators
Act, 2006 and in the Province of Alberta, we are governed by the Real Estate
Council of Alberta under the Real Estate Act, 2000.




These
licensing bodies have minimum criteria for licensure of potential mortgage
agents recruited to operate under the Company’s respective Provincial broker
license, which include relevant educational requirements, criminal record checks
and disclosure of any personal bankruptcy or court proceedings.




In
addition to these regulatory requirements, MortgageBrokers.com reviews the
applicant’s tenure and experience in the industry, credit bureau history and a
minimum of 2 reference checks.  Those mortgage agents that have
minimal experience are obligated to work as a mortgage agent under a more senior
mortgage agent (referred to within MortgageBrokers.com as a Managing Partner)
who will supervise and train the inexperienced agent.  Inexperienced
agents must find a sponsoring Managing Partner who must agree to supervise
them.




-3-




Internally,
we also have an approval process for recruitment. Our Regional Sales Vice
Presidents are able to approve the hiring of those agents working under a
Managing Partner but all Managing Partner originated recruits must be authorized
by our President of Canadian Sales.  It is our sales management team’s
responsibility to recruit, mentor and support the mortgage broker sales force
across Canada.




To
integrate a mortgage agent into our network, we make mandatory the licensure
with the appropriate provincial regulatory body, application for membership with
the Canadian Association of Accredited Mortgage Professionals (CAAMP), our
national mortgage brokerage industry association, and application to our Errors
and Omissions insurance plan we hold corporately.




The
Managing Partners and mortgage agents are all licensed as contractors (not
employees) working as mortgage broker agents exclusively under our provincial
brokerage licensure.  Within each province we operate, we have a
‘broker of record’ or ‘principal broker’ under whose license we operate our
business.




The
following table outlines our recruitment efforts over the past three
years:




YEAR
                        AGENT
      COUNT2006
                        1802007
                        3202008
                        387




As at
March 31, 2009, we had 416 licensed mortgage agents operating across
Canada. In an attempt to improve overall productivity, it should be noted that
the Company has initiated  reviews of mortgage agent production levels
of all of our agents and periodically will terminate our contractual agreement
if mortgage agents are unable to demonstrate the ability to increase their
production levels.




The
Company has also developed strategic alliances with long-established and
dominant real estate brands with a view to providing our licensed mortgage
agents access, on a volume basis, to mortgage referrals. To this end, the
Company has established long-term regional strategic alliances with RE/MAX
Ontario-Atlantic CANADA Inc. (“RE/MAX”) in eastern Canada and Maxwell Realty
Inc. (“Maxwell”) in western Canada.  Our mortgage agents are able to
provide mortgage services to our alliances such as RE/MAX and Maxwell under the
terms of the Company’s agreements with RE/MAX and Maxwell.




The
RE/MAX “Mortgage Solution Program” was launched on June 9, 2006 and, currently,
37 RE/MAX franchises across Ontario and Atlantic Canada are participating in the
referral program. RE/MAX is Canada'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. For referrals to our
mortgage agents leading to funded mortgages, RE/MAX receives 40 to 60% of the
our Finder’s Fee commission as well as stock-based compensation from the
Company based on the aggregate volume of funded referrals.




The
Maxwell “Mortgage Solution Program” was launched on April 12, 2006. Maxwell
is the largest independent real estate company in Alberta, Canada. The
Maxwell network, since its inception in 1999, has grown to over 20 offices with
over 650 successful real estate agents throughout the province of
Alberta. For referrals to our mortgage agents leading to funded mortgages,
Maxwell receives 25 to 40% of our Finder’s Fee commission as well as stock-based
compensation from the Company based on the aggregate volume of funded
referrals.




2008
Business Activities and Status of Publicly Announced Products and
Services




Expanding
upon a basic business model infrastructure, the Company’s focus through 2008 was
towards recruitment and servicing of mortgage agents across Canada and growing
our real estate referral relationships with RE/MAX and
Maxwell.  Regional recruitment activities included introducing and
selling the Company’s value proposition to mortgage agents via direct
presentations, trade shows and arranged meetings.  Regional servicing
of existing agents includes team building, marketing support and services with
signage and advertising, facilitating lender product training, realtor referral
relationship development, consumer business development and sales training,
lender relations management, and consumer servicing support.  The
Company also made investments in information technology to support our mortgage
agents including developing a mortgage agent back office sales support
environment.  The following provides further details highlighting our
2008 business activities and their status:




Ø
            At
      the beginning of 2008, we had five full time senior sales executives
      strategically servicing sales territories across Canada, who divided their
      time between servicing existing agents in their territory, recruiting new
      books of business and promoting the Company.  Our sales
      management team serviced one of the following Canadian
      regions: Alberta & the Prairies out of Calgary, Alberta; central
      and eastern Ontario out of Ottawa, Ontario; the Greater Toronto Area from
      Toronto; south western Ontario out of Windsor, Ontario; and , Atlantic
      Canada out of Halifax, Nova Scotia.  At the end of 2008, the
      Company had five full time senior sales executives regionally servicing
      our national sales agency and centrally managed by our Canadian sales
      President.




-4-




Ø
            Through
      2008, the Company further developed its back-office technology platform
      called “My MBKR” which provides exclusive support to our mortgage
      agents.  Initiatives launched
include:




o
            the
      ability for each mortgage agent to customize their mortgagebrokers.com
      provided website;




o
            the
      ability for each mortgage agent to update their business
      profile;




o
            the
      development and launch of a “My Ownership” pilot to a segment of our
      mortgage agents where mortgage agents can log-on and view stock-based
      compensation accruals that they are on their way towards
      earning.  This system requires further agent data population
      with some additional back office deal flow data management before being
      launched across the remainder of our agent
  network;




o
            the
      ability for our mortgage agents to view assigned on-line mortgage leads
      that have been received centrally and disseminated by the
      Company;




o
            the
      development and launch of “MBLOOP”, an agent blog and bulletin board where
      our mortgage agents can network with each other, share knowledge and share
      expertise;




o
            the
      development and launch of “MBKRCampus”, where our mortgage agents can
      access a current listing of courses offered with applicable credits that
      can be earned to facilitate licensure compliance, video courses that can
      be purchased, as well as log-in to the on-line training systems that we
      have made available nationally to our mortgage agents free of charge
      through an agreement we established with Kendrick
  Canada;




o
            the
      development and launch of “MBKnowledge”, a listing of www-based reference
      library;




o
            the
      development and launch of “MBDiscount”, a listing of corporately
      negotiated preferred rates and prices for third party service provider
      such as car rentals, hotels,
etc.;




o
            the
      development, contract negotiation, and launch of “ConnectMBKR”, an
      exclusive arrangement we negotiated within our industry for our mortgage
      agents where our agents can save as much as 80% on cellular calls via a
      down-loaded software patch;




o
            a
      lender listing with current mortgage rate term sheets and related lender
      specific information;




o
            the
      development and launch of “ShopMBKR”, where our mortgage agents can
      purchase on-line print quality customizable rate sheets, event posters,
      advertisement banners, team building recruitment posters, contest flyers,
      strategic alliance customized referral posters, postcards and flyers to
      assist our mortgage agents in connecting with our customers;
      and




o
            the
      development and launch of “MBRecruit”, an environment dedicated to helping
      our mortgage agents build regional
teams;




Ø
            On
      May 27, 2008, the Company announced the appointment of Gary Laughlin as
      the Company’s Vice President of sales.  With over 25 years
      experience in the financial services and mortgage industry, Mr. Laughlin
      brings to MortgageBrokers.com a successful track record of building and
      leading sales teams. Most recently, Mr. Laughlin lead the Mobile Mortgage
      Sales team in Ontario for the Royal Bank of
  Canada.




Ø
            On
      September 15, 2008, the Company was recognized in Profit Magazine’s 9th
      annual “PROFIT HOT 50” as Canada’s No. 1 Emerging Growth
      Company.  The Company’s ranking was based on reported growth of
      3,993% over a two year span (from reported revenue of $250,000 in 2005 to
      $10.3 million in 2007).




Ø
            In
      November of 2008, the Company hired Diana Soloway as our chief strategy
      officer responsible for assisting the CEO with creating, communicating,
      executing, and sustaining strategic initiatives within our
      organization.  Ms. Soloway’s immediate goals are to establish a
      centralized mortgage investment fund for the Company, as well as to
      establish a central services office supporting our mortgage agents with
      difficult deals in the alternative and sub-prime markets.  Ms.
      Soloway brings with her 18 years of mortgage experience from operating her
      own mortgage brokerage firm to working within large financial
      institutions. Prior to MortgageBrokers.com Ms. Soloway spent 8 years at
      Home Trust company as VP Marketing and
Sales.




-5-




Ø
            On
      November 5, 2008, the Company hired Mr. Daniel Putnam as the President of
      MortgageBrokers.com Financial Group of Companies to lead our Canadian
      sales operations and launch a new franchisor business unit in
      Canada.  With over 22 years of experience in the Canadian
      mortgage industry, Mr. Putnam was formerly President of Mortgage Centre
      Canada – a Division of CIBC Mortgages Inc. and more recently was President
      of Originations for Macquarie Financial.  Mr. Putnam currently
      has the responsibility for planning and executing all sales operations in
      Canada.




Ø
            We
      experienced a 21 percent increase in 2008 over 2007 in the number of
      licensed agents registered with the Company.  As at December 31,
      2008, we had 387 licensed mortgage agents operating exclusively under the
      Company’s licensure.  Our newly recruited mortgage agents were
      recruited throughout 2008 by our sales management team.  The
      Company also regularly reviews the production level of all of our agents
      and periodically will terminate our contractual agreement if mortgage
      agents are unable to demonstrate the ability to increase their production
      levels.




One of
our senior sales executives was tasked in 2008 with expanding our penetration
within our referral alliance franchise network, placing qualified mortgage
agents within alliance franchise locations, and working towards making the
referral relationship a success.  The following summarizes some of the
highlights from the 2008 year:




Ø
            On
      March 19, 2008, the Company announced that our strategic alliance RE/MAX
      Ontario-Atlantic Canada Inc. launched a new website (www.remaxrsp.com)
      fully dedicated to its unique and exclusive referral program with
      us.  By participating in this program, RE/MAX sales
      professionals mortgage referral fee commissions are deposited into a
      registered Retirement Savings Account managed by ManuLife Financial where
      they might obtain all the benefits thereof as described and explained on
      the new website.




Ø
            By
      the end of 2008, approximately 37 Service level Agreements were executed
      between the Company and RE/MAX franchisees for the provision of mortgage
      referral and mortgage services on a commission basis. Some of these
      RE/MAX franchisees operated several real estate offices within their
      respective franchisee territories.




Ø
            By
      the end of 2008, we had approximately 70 of our mortgage agents servicing
      RE/MAX franchisee offices, representing a 100% increase of those number of
      mortgage agents that serviced RE/MAX in 2007. Of this number,
      approximately 35 of our agents were in-house mortgage agents who operated
      an office inside the respective RE/MAX franchisee real estate offices,
      which represents a 20% increase over the number of in-house agents
      established in 2007.  This translated to a 15% increase in
      mortgage origination volumes that originated from a RE/MAX referral in
      2008 over 2007.




Competitive
Business Conditions and our Market Positioning




The
following describes our market’s competitive business conditions and our market
positioning through describing existing market conditions, competitive market
conditions, our business model market positioning.




Market
Conditions




To-date,
all of our operations are conducted through our subsidiaries in Canada
only. The deterioration of the mortgage industry in general in the United
States in the latter part of 2007 and through 2008 has been a deterrent for
management to consider entering the U.S. market as a mortgage brokerage at this
time. As such, we are primarily affected operationally by market conditions
in Canada.




The
Canadian Association of Accredited Mortgage Professionals (“CAAMP”) Chief
Economist reported in November 2007 that as of August 2007, there was CDN $787
billion of outstanding residential mortgage credit in Canada. It is
estimated that this figure would be $815 billion by the end of 2007. It is
estimated that the market is growing approximately 8.5% per year which
represents an estimated 2008 mortgage origination market volume of CDN $70
billion.




While the
Canadian mortgage market is expected to continue to grow in 2009 and 2010, it is
forecasted to grow to a lesser degree than that leading up to 2008. The
economic factors driving an expected Canadian economic slowdown and thus this
forecast include: a strong Canadian dollar which is hurting exporters; the
credit crunch is making it more difficult for businesses to expand; and, Canada
is expected to see little job creation and possibly job losses in
2009.




-6-




The 2008 Observer, CMHC’s
flagship publication (Canada Mortgage and Housing corporation, Government
Agency), reveals 84.6 per cent of urban Canadians were able to access
housing that was in good condition, suitable and affordable between 2002 and
2004.




Other key
findings in 2008 Observer
include:




·
            Strong
      employment and income growth continued to bolster homeownership demand in
      Canada. The rate of homeownership in Canada rose to
      68.4 per cent in 2006, the largest increase between censuses
      dating back to 1971.




·
            In
      2007, housing-related spending contributed close to $300 billion to the
      Canadian economy.




·
            Mortgage
      arrears in Canada remain low. In 2007, slightly more than a quarter of
      one per cent of Canadian households (0.26 per cent)
      fell three or more months behind in their mortgage
    payments.




·
            The
      composition of Canadian households continues to change as baby boomers
      age. For decades, couples with children have made up a declining
      percentage of all households, and the average size of households has
      shrunk.




A Study
done by CAAMP (Canadian Association of Accredited Mortgage Professionals) in
November 2008 found that “Canadians confront housing market with caution and
confidence” Some of the Outline of this study is as follows:




Attitudes
towards local conditions have shifted only slightly with 38 per cent of
Canadians believing now is a good time to purchase and 32 per cent believing it
is a bad time. Mortgage arrears remain low and steady at .28 per cent and an
overwhelming 84 per cent of home owners are satisfied with their mortgages. The
information was gathered by Maritz from an online survey of over 2,000 Canadians
in mid-October and analyzed in conjunction with CAAMP Chief Economist Will
Dunning.




Canadians
do expect housing prices to fall: 35 per cent, more than twice as many as last
fall, now believe prices will drop; half of those surveyed gave a neutral answer
while the number who thought prices would go up fell from 40 per cent to 20 per
cent. Westerners, who have endured particularly hot housing markets, are most
negative, and in British Columbia, 48 per cent of those surveyed said they
expect prices to fall, far above the national average.




Despite
the traumatic American mortgage fall out, Canada has managed to steer clear of
deflated markets. The Canadian system is supported by low and steady interest
rates, better underwriting processes, different products and normal re-sale
activity levels. “Canada is a financially conservative country where consumers
are able to meet the terms of their mortgages and buying decisions are based on
affordability,” said Dunning. “This contributes to a solid real estate market
that will not experience the same drop off we see south of the
border.”




Housing
equity positions are strong in Canada with a growing trend of re-financing
mortgages. About one in five borrowers took out an increasing amount of cash
from their mortgages, with the average draw rising 20 per cent to $41,000
compared to last year. Fifty-six per cent of respondents said they used this
money, which totals $18.5 billion nationwide, for debt consolidation and
repayment; 30 per cent of these funds went towards home repair and
renovation.




New home
buyers took advantage of alternative mortgage products - half of new mortgages
taken out in the last year were for amortizations longer than the traditional 25
years, an increase of 13 per cent. Longer term amortizations now account for 16
per cent of all outstanding mortgages and six per cent are 40-year terms. The
federal government has now introduced stricter regulations on insured mortgages.
CAAMP’s survey found Canadians had low awareness of the new regulations; however
once explained, 60 per cent supported the changes.




There are
two primary consolidation business models being executed in the Canadian market
place:  the sales agency model and the franchise model.  The
primary tools amongst brokerages for executing a competitive strategy in
recruiting mortgage agents has been exercised through increasing commission
splits (which currently ranges between 60 and 95% of the total commission fees
received are paid out to the mortgage agent), the development of brand and the
provision of administrative and marketing services.




-7-




We
believe that the most significant long standing mortgage broker industry issues
affecting fragmentation in the market place include the matters of ownership,
career exit strategy and agent retention.




Management
believes that the Canadian market down turn in the latter half of 2007 through
to present has had nominal material negative impact to our
business




Competitive
Market Conditions




Mortgage
origination in Canada can be segmented into three broad categories and their
estimated relative market share: (i) bank branch networks - 48%; (ii) bank
mobile mortgage sales teams - 22%; and (iii) mortgage brokers - 30%. Over
the past decade, the relative share for the bank branch networks had decreased
as consumer demand for accessibility and specialization intensify.




Our
Company’s direct competition in the Canadian marketplace is the major bank
mobile mortgage sales teams and the consolidating mortgage
brokerages.




According
to CAAMP, mortgage brokers captured 30% of the annual mortgage origination
market in 2007. Most industry sales referral relationships have been
established at the individual mortgage agent level. It is conservatively
estimated by the Company that there are in excess of 11,000 active mortgage
agents operating in Canada (based on a reported 11,000 membership reported in
the January 2008 Mortgage Journal published by Naylor Canada Inc. for
CAAMP).




The
Canadian mortgage origination market is fragmented, with an estimated 50% of the
market captured by five large Canadian mortgage origination companies or “Super
Brokers” who also lay claim to having more than two-thirds of the active
mortgage agents licensed in Canada. It is a growing trend to establish
national corporate sales referral arrangements with strategic alliances, and
there is significant market competition in the recruitment of mortgage agents
and their associated ‘books of business’ amongst the mortgage
originators.




The
primary tools used by our competitor consolidating brokerages for executing a
competitive strategy in recruiting mortgage agents has been increasing
commission splits (which currently ranges between 60 and 75% (for fee-based
organizations) of the total commission fees received), the development of brand
and the provision of administrative and marketing services.




The
competitor mobile sales teams of the major banks compete with us by leveraging
bank brand appeal, exclusive mortgage products and leveraging a captive bank
customer base.  In an effort to compete with mortgage brokers who
offer varying credit quality mortgage solutions of numerous lenders, the bank
mortgage sales forces have begun allowing their sales teams to offer other
lender products outside their credit parameters.




-8-




Our
Business Model Market Positioning




We have
positioned ourselves in this competitive landscape to the mortgage broker
industry as a very service oriented company that incorporates stock-based
compensation into our value offering.    Our management team
firmly believes that we have positioned ourselves to be a long term value
creator in our industry.
 
 Our
centralized services, as more fully described in the previous section describing
our distribution methods for our  services and again expanded in the
previous section describing the status of our products and services to our
agents, reduces our agents overhead allowing them to focus on their core
strength of sales and marketing.
 
 We have
additionally designed our business model to incorporate two principal elements
which we believe will attract those mortgage agents who value ownership and a
career exit strategy within the Canadian mortgage market. We also believe
that mortgage brokerages have long suffered from their inability to retain their
top loan originators, typically losing them to competing brokerages that offer
increased commissions with very little sustainable value being returned to the
mortgage agent to help them grow their businesses. In addition, in today’s
consolidating environment, we believe many sales agents have seen the companies
they work with sold to large financial institutions or brokerages with nothing
to show from the transaction when it is they who are responsible for creating
much of the value associated with the transaction. Therefore, management
believes there is pent up demand within the industry for a mortgage brokerage
model that will address what we believe to be the industry’s long- standing
issues of agent retention and equity participation.


As
Canada’s first and, at present, only publicly-traded and independent (non-bank
owned) mortgage brokerage, we have strategically positioned our Company as a
consolidator attracting those mortgage agents who value ownership and a career
exit strategy within the Canadian mortgage market. We have developed what
we believe to be a unique transparent business model that, we believe, will
allow us to rapidly and sustainably develop our national sales agency and long
term sales referral sources around which we can diversify our product offering
and develop our brand for the consumer. While there are no direct means to
quantify and compare our rate of growth and the success of our strategy with our
competition as they are not public companies, our strategy was acknowledged in
the October 2008 issue of Profit Magazine where our Company, amongst a peer
group of a wide variety of industries across Canada, was identified as the
number one fastest growing of Canada’s emerging growth companies with a reported
3,993% top-line revenue growth between 2005 and 2007. No other mortgage
brokerage was referenced in the top 50 companies that made the
list. Additionally, we were recently nominated by CMP (“Canadian Mortgage
Professional”) Magazine as National Mortgage Brokerage of the Year for
2008.




We have
accordingly designed a business model to provide 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.




Generally,
our stock-based compensation model is based upon the future discounted cash flow
margin contribution to our Company’s bottom line of mortgage volume origination
by each exclusively contracted mortgage agent. When the stock-based
compensation model was initially designed, and until the Company is profitable
and generating free cash flow, we made certain assumptions on a Pro Forma basis
that a certain size funded mortgage origination volume would generate free cash
flow based on our expected cost structure. The model, which made certain
assumptions concerning expected growth rates, prevailing interest rates during
the term of the Pro Forma and cost of capital determinations, was developed in
2005. In summary, the results of the model led to a management decision
that granted an aggregate of approximately 11.4 basis points on an agent’s
average funded mortgage origination volumes over a three to five year period to
an agent in the form of stock-based compensation.




To-date
we have made commitments to our existing agents to issue the stock-based
compensation as warrants (such that 1 warrant would be convertible into 1 share)
that would be convertible into stock. The Company is currently in the
process of finalizing and formalizing the mortgage agent stock-based
compensation plan, associated agreements and the registration of such a
plan. Every mortgage agent registered with our company is eligible to earn
stock-based compensation.




The
mortgage agents are not eligible to earn stock warrants until a minimum term
sales period is completed in full, the first of which is three years following
execution of an exclusive agency contract with the Company. In the fall of
2008, the first stock-based compensation was fully earned by our agents and
500,000 shares of restricted stock were issued to the agents by the
Company. No stock warrants have been issued to our mortgage agents under
this program to-date as the Company is still in the process of finalizing the
plan for registration purposes.




-9-




As at
December 31st, 2008, the Company has accrued, as stock-based compensation,
1,030,165 common shares at a price of $0.11 per share for a total of $113,318
payable to our existing mortgage agents.




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 eastern
Canada and Maxwell in western Canada.




Patents,
trademarks, licenses, franchises, Agent Agreements and Commitments




The
following summarizes agreements and arrangements we have in place to protect our
market positioning:




a)
            The
      Company’s Canadian subsidiary agency sales force consists of recruited
      independent contractors operating regionally under the Company's
      licensure. Generally, in the MortgageBrokers.com model, our licensed
      agents earn at least 85% of received commission fees. In addition to
      earned commission fees, the Company provides an opportunity for our
      Canadian subsidiary's national agency sales force to earn stock warrants
      in the Company based on annual sales volumes over a period of
      time. In practice, recruited mortgage sales agents execute an
      exclusive and confidential agreement with a subsidiary of
      MortgageBrokers.com as a third party sales subcontractor. The mortgage
      agents agree to operate under the terms of the sales agreement and the
      mortgage broker licensure and brand of the Company and allow the Company
      to take typically 15% of the commission fees payable to the mortgage agent
      from a mortgage lender in exchange for payroll, revenue management (volume
      pooling), licensure, compliance, and marketing services. No money is
      paid by the Company for purchase of any asset of the mortgage agent or
      their business including the agent’s book of business. The Company
      does not take an equity ownership position in the independent business of
      the individual mortgage agent or mortgage agent
  team.




b)
            As
      reported in the Company's Form 8K filing on June 9, 2006 pursuant to our
      May 25th,
      2006 amending agreement with RE/MAX (included by reference in our 2007
      Form 10-KSB), Alex Haditaghi, the Company Chairman and Chief Executive
      Officer, agreed that commencing on January 31, 2006, the first 4,000,000
      shares to be granted to the national sales agency network will be provided
      out of Mr. Haditaghi's personal holdings and be non-dilutionary on the
      Company's capital structure.  The company is currently working
      with it’s accountants, tax consultants and legal counsel to determine how
      this needs to be transacted and accounted for.  To date, none of
      Alex Haditaghi’s committed 4,000,000 shares have been granted to a
      mortgage agent as stock-based
compensation.




c)
            RE/MAX
      Ontario-Atlantic Canada Inc. is one of 70 regions in the world for RE/MAX
      International and RE/MAX is licensed to sell real estate franchises in
      Ontario and the Atlantic provinces. Franchises operating under the
      RE/MAX Ontario-Atlantic region are able to participate in our mortgage
      referral program as described here-under.  MortgageBrokers.com
      has an agreement with only RE/MAX Ontario-Atlantic Canada Inc. within the
      greater RE/MAX organization.  Our RE/MAX renewable 10-year
      strategic alliance marketing, referral and revenue sharing agreement is
      captured in the following three agreements, all of which were filed at
      various times in our past filings as
exhibits:




i.
            License
      Agreement dated January 30, 2006 between RE/MAX Ontario-Atlantic Canada
      Inc. and Mortgagebrokers.com Holdings, Inc.  (This exhibit was
      filed with our Current Report on Form 8-K filed on February 1, 2006, and
      was included in our 2007 Form 10-KSB by
  reference);




ii.
            Amendment
      to License Agreement dated May 25, 2006 by and among Mortgagebrokers.com
      Holdings, Inc., RE/MAX Ontario-Atlantic Canada Inc, and Alex
      Haditaghi  (This exhibit was filed with our Current Report on
      Form 8-K filed on June 13, 2006 and was included in our 2007 Form 10-KSB
      by reference); and,




iii.
            Service
      Level Agreement between Mortgagebrokers.com Financial Group of Companies,
      Inc. and RE/MAX Franchisees which provides the details of the Mortgage
      Solution Program (filed as an exhibit to our 2007 Form
      10K-SB).




-10-




The
following summarizes the RE/MAX renewable 10-year strategic alliance marketing,
referral and revenue sharing agreement:




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 provides its expertise in
respect of North American mortgage finance and origination business solutions to
RE/MAX and its franchisees and their salespersons in the form of a program known
as the “Mortgage Broker Solution.”  The terms of the Mortgage Broker
Solution are summarizes as follows:




1)
            During
      the launch of the Mortgage Broker Solution, the RE/MAX franchisee would
      work collaboratively with the Company to establish Company mortgage
      agents, as mutually agreed upon, to service the RE/MAX Franchisee’s retail
      offices;




2)
            The
      Company will arrange for mortgage agents to be assigned to service each
      participant RE/MAX franchisee office.  The assigned mortgage
      agent may be part of a service team organized to service several RE/MAX
      franchisee offices to provide geographical and temporal coverage and
      provide flexibility to respond to cultural and language
      sensitivities;




3)
            The
      RE/MAX franchisee will actively promote the Mortgage Broker Solution
      throughout the RE/MAX FRANCHISEE’S business operations and RE/MAX sales
      associate network;




4)
            The
      RE/MAX franchisee will participate in a RE/MAX strategic advisory council,
      as may be requested from time to time by the Company and RE/MAX master
      franchisor;




5)
            Allow
      equal access to Company mortgage agents to each RE/MAX franchisee retail
      office as may be afforded to any other competitive mortgage
      agent.  Such access is to be provided by the RE/MAX franchisee
      at no cost to the Company or the Company’s mortgage
      agents.  Such access includes access to all general sales
      meetings and, where possible, include on-site access to electrical power
      and the internet;




6)
            As
      appropriate and mutually agreed upon, the RE/MAX franchisee will work with
      the Company to optimize the presence and marketability of the Company
      mortgage agent in the RE/MAX franchisee’s
  office;




7)
            The
      RE/MAX franchisee will work collaboratively with the Company to provide
      full disclosure to the consumer as may be required under any and all
      current and future regulations applicable to the RE/MAX franchisee and the
      Company;




8)
            All
      customer files will be reviewed by an independent compliance officer, an
      employee of the Company, to screen for fraud and licensure
      non-compliance;




9)
            The
      RE/MAX franchisee will meet with the Company’s regional sales manager at
      least quarterly to discuss the Mortgage Broker Solution, the mortgage
      sales pipeline, capture rates, marketing initiatives, and best
      practices;




10)
            The
      RE/MAX franchisee will work collaboratively with the Company and RE/MAX
      master franchisor to distribute commission fees to RE/MAX Sales
      Associates;




11)
            The
      Company and RE/MAX franchisee agree that they will carry out the Mortgage
      Broker Solution in a manner that is professional, transparent, ethical,
      legal and fully compliant with applicable industry
      regulations.




12)
            Our
      back office administration will manage the revenue pipeline and manage the
      reporting systems.




-11-




13)
            For
      transactions placed with lenders who pay the Company a finders fee and
      volume bonus, the RE/MAX Master Franchisor, RE/MAX franchisee, and RE/MAX
      franchisee sales Associate (collectively, the “RE/MAX Organization”) shall
      be entitled to revenue sharing of mortgage origination finders fees
      received by the Company (“Finders Fees”) as a result of a referral or lead
      generated by a RE/MAX sales associate (“Referral Fee”).  Based
      on the particular finders fee paid by the lender in a mortgage
      transaction, the RE/MAX Organization shall be paid a referral fee
      (‘Referral Fee’) based on the
following:




·
            The
      Referral Fee will equal sixty percent (60%) of Finders Fees up to 45 basis
      points (0.45%) of the mortgage amount for residential
      mortgages;




·
            The
      Referral Fee will equal twenty-five percent (25%) of the Finders Fees up
      to 30 basis points (0.30%) of the mortgage amount for commercial
      mortgages;




14)
            Our
      back office administration will manage the revenue pipeline and manage the
      reporting systems.




15)
            The
      Company will provide to each RE/MAX franchisee as well as the RE/MAX
      Master Franchisor with a lead referral and sales data report on a no less
      than quarterly basis for management
purposes.




In
addition to revenue sharing, RE/MAX and their franchise network, as
sophisticated and accredited investors, were provided the opportunity to be
equity participants in the Company, through a one-time equity private placement
offering of up to 6 million units at $1 per unit, each unit comprised of one
share and one full warrant, each warrant convertible into one further share at
an exercise price that is 30% below the 30 day moving average price of the
Company shares preceding the date such warrants are
exercised.  One-fifth (1/5) of such warrants were to be exercisable on
each anniversary date of the closing of the offering in each of the first five
years following the completion of the offering and if not so exercised would
expire.  On June 1, 2006 this private placement was completed and
2,112,470 units at $1.00 per unit for the amount of $2,112,470 were
issued.  A payment of $1,852,344.00 was received and promissory notes
for the balance of $265,000 were executed.  Through the last quarter
of 2005 and first quarter of 2006, we executed notes for unsecured debt to
RE/MAX Ontario-Atlantic Canada Inc. which were convertible to stock at the same
price as offered through the private placement ($1.00 per
share).  These notes were converted to shares on June 12,
2006.  By December 31, 2007, the Company had collected $110,000 in
promissory notes receivable associated with the private placement
offering.  Based on non-payment of outstanding promissory notes, the
Company commenced cancellation of issued shares having outstanding promissory
notes totalling $125,000 with new replacement subscriptions resulting in a cash
payment of $60,000 and a new promissory note of $65,000.




The
Company also agreed, on each anniversary of the commencement of the RE-MAX
licensing agreement, for so long as such agreement remains in force, commencing
on June 9, 2007, to issue to the RE/MAX affiliated purchasers in the private
offering, at no additional cost, a number of common shares of the Company that
are equal in number to 25% of the total number of shares initially purchased by
the purchaser in the 2006 private placement.  These annual stock
issues were stock-based compensation for RE/MAX affiliate’s continued support of
the Mortgage Broker Solution through the life of the program.




The
Company also agreed with RE/MAX that we would not, prior to June 9, 2010 and
without the prior written consent of RE/MAX, issue any new shares, options or
warrants or other instruments convertible into shares; and that, (ii) RE/MAX
shall have a first right of refusal to purchase any shares proposed to be issued
out of treasury during the term of this agreement for the purpose of capital
investment and to advance funds pursuant to any instrument proposed to be issued
by the Company that is convertible into shares. Further, the Company agreed
that, within 60 days following the closing of the private placement offering, to
file an SB-2 Registration Statement with the United States Securities and
Exchange Commission to register the shares subscribed for pursuant to such
offering and the Amended Agreement. This registration statement was not
filed as it is not required at this time due to changes in
legislation.




-12-




As at
December 31, 2008, the Company had accrued, as stock-based compensation payable
to RE/MAX related to mortgage referral, 76,693 common shares at a price of $0.11
per share (December 31, 2008 day closing price of our stock) for a total of
$8,437 payable.




d)
            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. In summary, and on a pro rata basis, Maxwell have
      the opportunity to earn 3,000 warrants (1 warrant convertible to 1 share)
      for every $10,000,000 in funded mortgage origination annually that were a
      result of a Maxwell referral. Warrant earned between 2006 through
      2011 are fully earned and vested assuming our agreement is in good
      standing with Maxwell on December 31, 2011. To-date the Company has
      not issued any warrants to Maxwell related to this program. As at
      December 31, 2008, the Company had accrued, as stock-based compensation
      payable to Maxwell related to mortgage referral, 27,384 common shares at a
      price of $0.11 per share (December 31, 2008 day closing price of our
      stock) for a total of $3,012 payable. No stock warrants have been
      issued to Maxwell or it’s sales agents under this program to-date as the
      Company is preparing to finalize the plan for registration
      purposes.




e)
            We
      have made application in Canada to register the marks
      “MortgageBrokers.com” and “Security through Ownership” as being trade
      marks of our Company.  These applications are still in due
      process.  Both applications have been formalized and are
      currently awaiting examiner’s
reports.




Government
Licensure and Approvals




The
Mortgage Brokerage industry is regulated provincially in Canada. For
instance, in the Province of Ontario, we are regulated by the Financial Services
Commission of Ontario under the Mortgage Brokerages Lenders and Administrators
Act, 2006 and in the Province of Alberta, we are governed by the Real Estate
Council of Alberta under the Real Estate Act, 2000. These licensing bodies
have minimum criteria for licensure of potential mortgage agents recruited to
operate under the Company’s respective Provincial broker license, which include
relevant educational requirements, criminal record checks and disclosure of any
personal bankruptcy or court proceedings.




Our
subsidiaries are currently holding licenses in good standing in the provinces of
Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Ontario and
Alberta. Typically, our licensure is renewed annually.




As an
organization, and as required for licensure in some Canadian provinces, we
maintain an errors and omissions liability insurance policy through Encon Group
Inc. which covers the organization and it’s national network of mortgage agents
from legal claims that brokers are exposed to on a daily basis.  Our
current policy provides coverage up to CDN $5 million per incident and up to CDN
$10 million in aggregate.




The
Company is in the process of becoming a franchisor with an expected business
launch in 2009.  The franchise disclosure regulations are provincially
regulated.  In Ontario, for instance, franchisors are regulated by
the  Arthur Wishart Act (R.S.O., 2000).  Compliance to the
Ontario act generally guarantees compliance in the Province of
Alberta.




Effect
of Existing or Probable Government Regulations on the Business




The
existing government regulatory regime protects the consumer through the mortgage
broker process including, but not limited to, protection of confidential
information, representation, cooling off period, and
disclosure.  Current regulations requiring mortgage agent standards
helps raise the industry’s standards and promulgates a positive consumer
experience in Canada.




Research
and Development Activities in Past Two Years




None.




Environmental
Compliance Costs and Effects




None.




-13-




Employees




As at
December 31, 2008, our Company had 14 full-time employees and 5 full-time
contract staff for a total of 19 full-time staff.




ITEM
1A.  RISK FACTORS




Not
applicable as a smaller reporting company.




ITEM
1B.  UNRESOLVED STAFF COMMENTS




Not
applicable as a smaller reporting company.




ITEM
2. DESCRIPTION OF PROPERTY




The
Company negotiated and executed a 5 year lease agreement commencing July 31,
2007 for our corporate offices at 11-260 Edgeley Boulevard, City of Vaughan,
Ontario, CANADA. Our current contact information for our Ontario office 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 negotiated and executed a lease for its corporate office in Calgary,
Alberta, Canada, and is party to a five (5) year lease which commenced May 1,
2007.




ITEM
3.  LEGAL PROCEEDINGS




On
October 27, 2006, Trisan Equitable Corporation (“Trisan”) commenced an action in
the Ontario Superior Court in Ontario, Canada against several parties, including
the Company, MortgageBrokers.com Inc (“MBI”), our Ontario subsidiary, 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:




·
            it
      ultimately loaned upwards of CDN$550,000 pursuant to the loan
      agreement;




·
            the
      purchased Magna Data Shares were to be pledged as security for repayment
      of the loan to the Borrowing
Parties,




·
            Trisan
      was to have been issued, upon certain conditions, 500,000 shares of the
      Company’s common stock;




·
            the
      funds advanced to Mr. Haditaghi and/or MBI were never repaid;
      and,




·
            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 CDN
$5,000.  The order bears interest at the rate of 10% per year
commencing from the date of the judgment.  Please see Note 8 in our
financial statements here-in for further details.




-14-


No
decision has yet been made as to allocation of liability for the judgment among
the Borrowing Parties.




As at
December 31, 2008, $611,360 (CDN$748,671) plus interest of $77,534 (CDN$94,948)
was accrued by the Company.




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
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS




None.






-15-




PART
II






ITEM
5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS




Market
Information




Our
shares of common stock are approved for quotation on the OTC Bulletin Board
under the symbol “MBKR”.




The
following table represents the closing high and low bid information for our
common stock during the last two fiscal years as reported by the OTC Bulletin
Board. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.  The
market for our common stock is sporadic and our stock is thinly
traded.




2008
                
                High
                
                
                LowFirst
      Quarter
                
                $
                0.31
                
                
                $
                0.08Second
      Quarter
                
                $
                0.15
                
                
                $
                0.08Third
      Quarter
                
                $
                0.24
                
                
                $
                0.07Fourth
      Quarter
                
                $
                0.41
                
                
                $
                0.102007
                
                High
                
                
                LowFirst
      Quarter
                
                $
                1.15
                
                
                $
                0.59Second
      Quarter
                
                $
                2.27
                
                
                $
                0.31Third
      Quarter
                
                $
                0.50
                
                
                $
                0.35Fourth
      Quarter
                
                $
                0.43
                
                
                $
                0.30




Holders




On
December 31, 2008, there were 376 beneficial shareholders of record for our
outstanding common stock.




Dividends




To date,
we have paid no dividends on our shares of common stock and have no present
intention of paying any dividends on our shares of common stock in the
foreseeable future. The payment by us of dividends on the shares of common stock
in the future, if any, rests solely within the discretion of our board of
directors and will depend upon, among other things, our earnings, capital
requirements and financial condition, as well as other factors deemed relevant
by our board of directors.  Although dividends are not limited currently by
any agreements, it is anticipated that future agreements, if any, with
institutional lenders or others may limit our ability to pay dividends on our
shares of common stock.




Securities
Authorized for Issuance under Equity Compensation Plan




The
following table summarizes those securities authorized for issuance in 2008 in
accordance to an equity compensation plan including individual compensation
arrangements:




Plan
      Category
                                  Number
      of Securities to be Issued upon Exercise of Outstanding Options, Warrants
      & Rights
                                  Weighted
      Average Exercise Price of Outstanding Options, Warrants &
      Rights
                                  Number
      of Securities remaining Available for Future Issuance under Equity
      Compensation Plans (excluding Securities reflected in Column
      (a))(a)
                                  (b)
                                  (c)Equity
      Compensation Plans Approved by Security Holders
                                  0
                                  0
                                  0Equity
      Compensation Plans not Approved by Security Holders
                                  0
                                  0
                                  19,500,000





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 December 31, 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 April 7, 2009. The
Company is currently in the process of amending the existing employment
agreements which are expected to be executed in 2009. Until the new employment
contracts have been formally and legally executed, the existing employment
contracts of the Company are still in effect.




-16-




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.




Recent
Sales of Unregistered Securities




The
Company has routinely issued unregistered restricted stock in exchange for cash,
services, compensation and assets he relative pricing of our stock was
based on upon a point in time negotiation as well as the market price at the
time the sale, purchase or contract was executed.  The following
summarizes these issuances over the past three years:




Exemption
from Registration Claimed




The
following exemptions were relied upon in the issuance of unregistered securities
as referenced here-under over the past three years:




Regulation D Rule
506




The
Common Stock issued in our Regulation D, Rule 506 offering was issued in a
transaction not involving a public offering in reliance upon an exemption from
registration provided by Rule 506 of Regulation D of the Securities Act of
1933. In accordance with Section 230.506 (b)(1) of the Securities Act of
1933, these shares qualified for exemption under the Rule 506 exemption for this
offerings since it met the following requirements set forth in Reg.
§§230.506:




1)
            No
      general solicitation or advertising was conducted by us in connection with
      the offering of any of the Shares.




2)
            At
      the time of the offering we were not: (1) subject to the reporting
      requirements of Section 13 or 15 (d) of the Exchange Act; or (2) an
      “investment company” within the meaning of the federal securities
      laws.




3)
            Neither
      we, nor any of our predecessors, nor any of our directors, nor any
      beneficial owner of 10% or more of any class of our equity securities, nor
      any promoter currently connected with us in any capacity has been
      convicted within the past ten years of any felony in connection with the
      purchase or sale of any security.




4)
            The
      offers and sales of securities by us pursuant to the offerings were not
      attempts to evade any registration or sale requirements of the securities
      laws of the United States or any of its
states.




5)
            None
      of the investors are affiliated with any of our directors, officers or
      promoters or any beneficial owner of 10% or more of our
      securities.




Please
note that pursuant to Rule 506, all shares purchased in the Regulation D Rule
506 offering were restricted in accordance with Rule 144 of the Securities Act
of 1933. In addition, each of these shareholders were either accredited as
defined in Rule 501 (a) of Regulation D promulgated under the Securities Act or
sophisticated as defined in Rule 506(b)(2)(ii) of Regulation D promulgated under
the Securities Act.




We have
never utilized an underwriter for an offering of our securities. Other than the
securities mentioned above, we have not issued or sold any
securities.




-17-




Regulation
S




The
Company issued restricted shares of its common stock for services, cash or
assets. The shares were issued by the Company relying upon the exemption
from registration as set forth in Regulation S of the Securities Act for the
issuance of these shares. The stockholders are not a "U.S. Person" as that
term is defined in the Securities Act, and at the time of the offering and
issuance of the shares, the stockholders were located outside of the United
States. In addition, the stockholders took the shares for investment
purposes without a view to distribution and had access to information concerning
the Company and our business prospects, and were permitted access to the
Company's management for the purpose of acquiring investment information, as
required by the Securities Act. Further, there was no general solicitation
or advertising for the issuance of the shares. The Company issued the
shares without compliance with the registration requirements of the Securities
Act in reliance upon the exemptions there from afforded by Regulation
S.




Section 4(2) of the
Securities Act




The
Company issued restricted shares of its common stock. The were issued in
reliance on the exemption under Section 4(2) of the Securities Act of 1933, as
amended (the “Act”). These shares of our common stock qualified for exemption
under Section 4(2) of the Securities Act of 1933 since the issuance shares by us
did not involve a public offering. The offering was not a “public offering”
as defined in Section 4(2) due to the insubstantial number of persons involved
in the deal, size of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a high number of
shares to a high number of investors. In addition, this shareholder had the
necessary investment intent as required by Section 4(2) since they agreed to and
received share certificates bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction
ensures that these shares would not be immediately redistributed into the market
and therefore not be part of a “public offering.” Based on an analysis of the
above factors, we have met the requirements to qualify for exemption under
Section 4(2) of the Securities Act of 1933 for these transactions




2006




On
September 15, 2005, Elliot Sud, a third party, subscribed for 100,000 shares of
unregistered restricted (Rule 144) common stock at $1 per share.
 Payment for the subscription was received on September 15, 2006 ($84,340)
and on November 10, 2006 ($15,560).  The Company relied upon the
exemption from registration as for these shares as set forth in Regulation S of
the Securities Act as described heretofore.  The shares were approved
by the Company for issuance on November 8, 2005 and the 100,000 shares were
issued on March 14, 2006. The shares were issued at $1.00 per share, the
closing price of the security on the date of stock purchase agreement was
negotiated and executed.




On June
12, 2006, the Company completed an offering in which it issued a total of
2,112,470 shares of restricted (Rule 144) common stock to accredited third
party investors including RE/MAX Ontario-Atlantic Canada Inc., its executives
and franchisees, at a price per share of $1.00 for an aggregate offering price
of $2,112,470. The private placement shares were issued in reliance on the
exemption under Regulation D, Rule 506 and Regulation S of the Securities Act of
1933, as amended (the “Act”), as described heretofore.  Purchasers of
these securities receive the following additional rights and
privileges:




·
            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




·
            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.




Pursuant
to a stock purchase agreement dated October 24, 2005, on November 11, 2005
1,000,000 restricted (Rule 144) shares of common stock were issued to
Mercatus & Partners Funding Limited, a third party, for cash consideration
of $0.63 per share or 45% of the market value on the time of free trading
securities of the Company.  The Company relied upon the exemption from
registration as for these shares as set forth in Section 4(2) of the Securities
Act as described heretofore.  On September 8, 2006 1,000,000 shares of
restricted common stock previously issued to Mercatus & Partners Funding
Limited pursuant to a stock purchase agreement for the total net proceeds of
$630,000 were recalled and cancelled after no payment was
received.  The shares were issued at $0.63 per share based upon the
negotiated price in the stock purchase arrangement.




-18-




On March
14, 2006, the Company issued 50,000 restricted (Rule 144) common shares at
a price of $1.80 per share for total amount of $90,000 to vFinance, Inc., a
third party, based on the execution of an investment banking service agreement.
vFinance, Inc. is an arms length third party consultant. vFinance Inc. provided
advisory services with respect to the review of financing term sheets and
investment banking matters.  The Company relied upon the exemption
from registration as for these shares as set forth in Regulation S of the
Securities Act as described heretofore.  The shares were issued at
$1.80 per share, the closing price of the security on the date of
issue.




On March
14, 2006 the Company issued 50,000 restricted (Rule 144) common shares at a
price of $1.80 per share for total amount of $90,000 to Mr. Elliot Sud, a third
party, based on the execution of advisory services.  The Company
relied upon the exemption from registration as for these shares as set forth in
Regulation S of the Securities Act as described heretofore.  The
shares were issued at $1.80 per share, the closing price of the security on the
date of issue.




On March
14, 2006, the Company issued 100,000 restricted (Rule 144) common shares
divided equally amongst Ms. Sharon Oakes and Mr. Ron Stanners, third parties,
for certain office equipment, cash, the proceeds from work in progress and
office supplies acquired valued at $58,801 from Lending Source Canada
Inc.  The Company relied upon the exemption from registration as for
these shares as set forth in Regulation S of the Securities Act as described
heretofore.  The securities were valued at $0.58 per share as
negotiated based on the value of assets purchased in the Lending Source Inc.
asset purchase.




On March
14, 2006, the Company issued 5,000 restricted (Rule 144) common shares at a
price of $1.80 per share for a total amount of $9,000 to Ms. Nicole Locking, a
third party, pursuant to the execution and termination of an employment
agreement.  The Company relied upon the exemption from registration as
for these shares as set forth in Regulation S of the Securities Act as described
heretofore.  The shares were issued at $1.80 per share, the closing
price of the security on the date of issue.




On March
14, 2006, the Company issued 100,000 restricted (Rule 144) common shares at
a price of $1.80 per share for a total amount of $180,000 to Mr. Mark Lindsay, a
third party, based on the execution of an advisory and consulting
agreement.  The Company relied upon the exemption from registration as
for these shares as set forth in Regulation S of the Securities Act as described
heretofore.  The shares were issued at $1.80 per share, the closing
price of the security on the date of issue.




On March
14, 2006, the Company issued 25,000 restricted (Rule 144) common shares at
a price of $1.80 per share for a total amount of $45,000 to Mr. Mike Fearnow, a
third party, pursuant to the execution of an advisory services
agreement.  The Company relied upon the exemption from registration as
for these shares as set forth in Regulation S of the Securities Act as described
heretofore.  The shares were issued at $1.80 per share, the closing
price of the security on the date of issue.




On March
14, 2006, the Company issued 15,000 restricted (Rule 144) common shares at
a price of $1.80 per share for a total amount of $27,000 to Mr. Attilio
Lombardi, a third party, care of NCP Computers Inc. pursuant to the provision of
information systems and technology services.  The Company relied upon
the exemption from registration as for these shares as set forth in Regulation S
of the Securities Act as described heretofore.  The shares were issued
at $1.80 per share, the closing price of the security on the date of
issue.




On April
25, 2006, the Company issued 500,000 restricted (Rule 144) common shares to
Lendiem Corporation (a related party to Trisan Corporation) and Vito Galloro,
both third parties. These shares were issued by mistake and the Company is
working on cancelling these shares.




On
October 30, 2006, the Company issued 48,000 restricted (Rule 144) common
shares at a price of $0.53 per share for a total amount of $25,440 to
iStockdaily.com, a third party, pursuant to the execution of an advisory
services agreement.  The Company relied upon the exemption from
registration as for these shares as set forth in Regulation S of the Securities
Act as described heretofore.  The shares were issued at $0.53 per
share, the closing price of the security on the date of issue.




On
October 30, 2006, the Company issued 48,000 restricted (Rule 144) common
shares at a price of $0.53 per share for a total amount of $25,440 to Max
Communications, Inc., a third party, pursuant to the execution of an advisory
services agreement.  The Company relied upon the exemption from
registration as for these shares as set forth in Regulation S of the Securities
Act as described heretofore.  The shares were issued at $0.53 per
share, the closing price of the security on the date of issue.




-19-




2007




On July
7, 2007, the Company issued 125,000 restricted (Rule 144) 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, all third parties. 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. The private placement shares were issued in
reliance on the exemption under Regulation D, Rule 506 and Regulation S of the
Securities Act of 1933, as amended (the “Act”), as described
heretofore.  The shares were issued at $1.00 per share, the offered
price in the private placement which closed on June 9, 2006.




On
January 3, 2007, the Company issued 10,000 restricted (Rule 144) common
shares at a price of $0.75 per share for total amount of $7,500 to
SmallCapVoice.com, a third party, based on the execution of an investor
relations agreement.  The Company relied upon the exemption from
registration as for these shares as set forth in Regulation S of the Securities
Act as described heretofore.  The shares were issued at $0.75 per
share, the closing price of the security on the date of issue.




On July
7, 2007, the Company issued 478,000 restricted (Rule 144) common shares
under the terms of its Mortgage Service License Agreement with RE/MAX
Ontario-Atlantic Canada Inc, and its franchisee and broker owners, all third
parties that participated in the private placement offering which closed on June
9, 2006.  The Company relied upon the exemption from registration as
for these shares as set forth in Regulation S of the Securities Act as described
heretofore.  The shares were issued at $0.42 per share, the closing
price of the security on the date of issue.




On July
23, 2007, the Company issued 40,000 restricted (Rule 144) common shares to
Alexander Gershtein, a third party, in exchange for furniture and equipment
valued at $45,416, under its Service Compensation Plan.  The Company
relied upon the exemption from registration as for these shares as set forth in
Regulation S of the Securities Act as described heretofore.  The
securities were valued at $1.14 per share as negotiated on the value of the
assets acquired based on the value of assets purchased.




On July
23, 2007, the Company issued 25,000 restricted (Rule 144) common shares at
a price of $1.00 per share to Kalymon Consulting Ltd., a third party, in
exchange for consulting services under its Service Compensation
Plan.  The Company relied upon the exemption from registration as for
these shares as set forth in Regulation S of the Securities Act as described
heretofore.  The securities were valued at $1.00 per share as
negotiated at the time the contract was executed in 2005.




On July
23, 2007, the Company issued 1,700,000 shares of restricted (Rule 144) Company
stock to its senior management team based upon draft management agreements that
are expected to be executed by December 31, 2007. These shares have not
been released and the release is pending the finalizing and execution of
management agreements.  The securities were valued at $0.43 per share,
the security closing price on the date of issue.




2008




On
February 5, 2008, the Company issued 50,000 restricted (Rule 144) common
shares at a price of $0.19 per share, the market close price on the date of
issue, for total value 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.  The Company relied upon the exemption from registration as
for these shares as set forth in Regulation S of the Securities Act as described
heretofore.




On
September 11, 2008, the Company issued 490,500 restricted (Rule 144) common
shares under the terms of its Mortgage Service License Agreement with RE/MAX
Ontario-Atlantic Canada Inc, and its franchisee and broker owners, all third
parties, that participated in the private placement offering which closed on
June 9, 2006.  The Company relied upon the exemption from registration
as for these shares as set forth in Regulation S of the Securities Act as
described heretofore.  The shares were valued at $0.11 per share, the
share price on the date of issue.




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.  The Company relied upon
the exemption from registration as for these shares as set forth in Regulation S
of the Securities Act as described heretofore.  These shares have not
been released and the release is pending the finalizing and execution of
employment agreements. The shares were valued at $0.11 per share, the share
price on the date of issue.




-20-




On
October 20, 2008, the Company issued 150,000 restricted (Rule 144) common shares
at a price of $0.29 per share, based on the market price at the subscription
date, 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 were issued in reliance on
the exemption under Regulation D, Rule 506 and Regulation S of the Securities
Act of 1933, as amended (the “Act”), as described heretofore.




On
October 21, 2008, the Company issued 47,078 restricted (Rule 144) common shares
at a price of $0.28 per share, based on the market price at the subscription
date, 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 were issued in reliance on
the exemption under Regulation D, Rule 506 and Regulation S of the Securities
Act of 1933, as amended (the “Act”), as described heretofore.




On
December 16, 2008, the Company issued 500,000 shares of restricted (Rule 144)
Company stock to a group of its mortgage agents based upon agreements.
 These shares were issued under the Company’s Service Compensation
Plan.  The shares were issued at $0.16 per share, the market close
share price on the date of issue.  The Company relied upon the
exemption from registration as for these shares as set forth in Regulation S of
the Securities Act as described heretofore.




Repurchases
of Securities




No
repurchases were made by our Company or an affiliate in a month within the
fourth quarter of the fiscal year 2008.




ITEM
6. SELECTED FINANCIAL DATA




Not
applicable as a smaller reporting company.






ITEM
7.  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
fiscal years ended December 31, 2008 and 2007.  The following
information should be read in conjunction with the audited consolidated
financial statements for the period ending December 31, 2008 and notes thereto
appearing elsewhere in this form 10-K.




Liquidity




As at
December 31, 2008, we had $1,262,321 in cash; $17,848 of referral fees held in
trust (which are awaiting completion of administrative agreements prior to being
transferred to ManuLife administered Register Retirement Savings Plan accounts
owned by RE/MAX sales agents), $116,211 in prepaid expenses, $112,184 in
equipment and recognized $2,424 in equipment under capital leases for a total of
$1,510,988 in assets. Comparatively as at December 31, 2007, we had
$830,852 in cash, $44,936 of referral fees held in trust (which are awaiting
completion of administrative agreements prior to being transferred to ManuLife
administered Register Retirement Savings Plan accounts owned by RE/MAX sales
agents), $148,611 in prepaid expenses, $153,474 in equipment and recognized
$4,278 in equipment under capital leases for a total of $1,182,151 in total
assets.




As at
December 31, 2008, we had $1,190,905 in accounts payable, $68,210 in accrued
liabilities related to services received but not invoiced yet and employee
vacation accrual, $129,425 in loans payable to a related party, $275,317 in
employee tax deductions payable, $310,108 in accrued stock-based compensation,
$117,385 in bank indebtedness, $17,848 in trust liability associated with RE/MAX
agent referral commissions payable awaiting transfer to the agent’s ManuLife
RRSP account, $1,624 in obligations under capital leases, and $688,894 in
accrued expenses associated with a legal judgment for a total of $2,799,716 in
liabilities. Comparatively as at December 31, 2007, 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 accounts,
$4,644 in obligations under capital leases, $989,145 in stock-based compensation
accrual, $151,316 in bank indebtedness and $773,658 in accrued expenses
associated with a legal judgment for a total of $3,509,994 in
liabilities.




Management
makes the following comments regarding the most significant factors affecting
Company liquidity and their measured trends over the reporting period as
compared to 2007:




a)
            Cash
      and cash equivalents increased by 52% from 2007 to $1,262,321. This
      trend was primarily due to an increase in Work in Progress payable and a
      marginal increase in working capital
resources.




-21-




b)
            Prepaid
      expenses decreased by 22% from 2007 to $116,211. There is no trend in
      pre-paid expenses and pre-paid expenses are based on the amount in a given
      point in time.




c)
            Bank
      indebtedness decreased by 22% over 2007 to $61,244. This decrease is
      related to the Company effort to pay off its credit
    facility.




d)
            Accounts
      payable increased 50% over 2007 to $1,190,905. This is a direct
      result of mortgage agent recruitment program success, as the bulk of this
      payable amount is Work in Progress payable following completion of
      mortgage agent origination compliance procedures. The company expects
      that this trend will continue through 2009 assuming our mortgage agent
      recruitment program continues the pace in 2009 as experienced in
      2008.




e)
            The
      Company has accrued in 2008 for the liability of a partial summary
      judgment to a claim to which the Company is a party. The calculated
      judgment liability is $688,894. While the full amount of the judgment
      was accrued, it is the expectation of management that none of the
      liability will be satisfied by the Company in this multi-party judgment.
      See Discussion below regarding infrequent event affecting results of
      operations.




f)
            Employee
      tax deductions payable decreased by 37% from 2007 to
      $275,317. Company management has meet 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 in 2009. See
      discussion below.




g)
            Stock-based
      compensation accruals vary widely 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. The Company anticipates that it will continue to
      negotiate stock-based compensation arrangements to maximize working
      capital resources.




Capital
Resources




Unless
and until the Company increases its revenue and profitability from operations,
we will continue to rely upon the issuance of common stock and additional
capital contributions from shareholders and/or loans from shareholders and
third-party lenders.




Results
of Operations




The
following summarize material trends and outlooks related to our comparative
income statement:




1)
            Gross
      revenue increased by 54% from 2007 to
  $15,802,861;




2)
            Operating
      expenses increased in 2008 by 26% over 2007 to $15,438,028;
      and,




3)
            We
      reported earnings of $338,074 in 2008 as compared to a net loss of
      $2,843,781 in 2007.




Unusual
or Infrequent Events that affect Reported Income




a)
            During
      the 2008 reporting period, our expenses were reduced by an approximate net
      amount of $95,000 related to staff restructuring and some members of the
      management team who agreed to reduce salary for seven months in 2008 to
      allow the company to attract new talent to help in the company’s
      growth.




b)
            The
      current financial market conditions may have had a negative impact on the
      market for our securities as a perceived mortgage finance
      company.  If so, this would have had a negative impact on the
      market price of our securities which has a direct impact on reducing and
      reversing stock-based accrual expenses for
2008.




c)
            On
      October 3, 2007 a partial summary judgment from the Ontario Superior Court
      ordered MBI, 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 3
      above. 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 $CDN5,000.  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.  In the fourth quarter of 2007, following the issued
      judgment on October 3, 2007, Alex Haditaghi commenced negotiations with
      Trisan to satisfy the judgment on a personal basis. Mr. Haditaghi has
      indicated to the Company that these discussions are nearing a satisfactory
      resolution. While these negotiations are carried out, the Company has
      fully accrued for the judgment.  Once Mr. Haditaghi has
      satisfied the outstanding judgment personally, it is the company’s intent
      to refile our filings to remove this accrual.  This accrued
      charge took place in 2007 and 2008 reported income was affected with
      respect to accrued interest.




d)
              In
      the fall of 2008 the Company was chosen as a final contender in the
      acquisition of the company Mortgage Intelligence Inc. from
      GMAC.  In the end, we were unsuccessful in acquiring Mortgage
      Intelligence Inc. and through our due diligence, negotiations, and bid
      submission processes incurred one time legal expenses of approximately
      $77,000.






-22-




Revenue
Trend Analysis




Gross
revenue in 2008 increased by 54% from 2007 to $15,802,861 and was in direct
correlation to an increase in mortgage origination in 2008 over
2007.  Management believes our revenue growth experienced between 2007
and 2008 was directly related to mortgage agent recruitment accomplishments, the
organic growth of our existing agent’s books of business and improved revenue
management.




Our sales
management team increased the number of our mortgage agents by 21% in 2008 as
compared to 2007.  A significant portion of our top-line revenue
growth is also related to organic growth of our existing network of mortgage
agents who have grown their book of business, considering that our agent count
only increased by 21% in 2008 over 2007.




Management
identified no material changes between 2007 and 2008 regarding mortgage
origination basis point revenue which averaged 105 basis points on mortgage
origination volumes.




Expense
Trend Analysis




The
Company’s operating expenses increased in 2008 by 26% over 2007.  The
primary components that comprise the Company’s operating expenses are agent
commissions, salaries and benefits, general and administrative expenses,
occupancy costs and stock-based compensation for which the following trends are
observed by management:




·
            86%
      of the operating expenses in 2008 were associated with agent commissions.
      Agent commission fees as a percent of revenues decreased by 4% from 2007
      to 2008 as the Company’s gross margins increased.  Our gross
      margins increased primarily related to origination from our sales agency
      mortgage agents, where our gross margin contribution is higher, grew at a
      faster pace then that sourced from referral alliances, where our gross
      margin contribution is lower.  The Company receives a marginally
      smaller portion of the commission fees when it is sourced from its
      referral alliances (i.e. the Company receives less net revenue from deal
      flow originated through our referral
alliances).




·
            8%
      of the operating expenses in 2008 were associated with salaries and
      benefits.  Costs associated with Salaries and Benefits decreased
      by 12% compared to 2007.  This is related to staff restructuring
      and some members of the management team who agreed to reduce salary for
      seven months in 2008 to allow the company to attract new talent to help in
      the company’s growth and repay debt obligations.  Management
      expects salaries and benefits to increase in 2009 comparable to
      2007.




·
            General
      and administrative expenses as a percent of total operating expenses
      decreased by 3% from 2007 to 2008.  This change is primarily
      attributable to greater management of administrative
    expenses.




·
            Occupancy
      costs increased 26% from 2007 to $159,317and is related to the company
      expensing a full year of occupancy costs for it’s corporate office in
      Concord, Ontario where as it expensed only a partial year in 2007
      commiserate with our lease
commencement.




Off-Balance
Sheet Arrangements




None




Tabular
Disclosure of Contractual Obligations




Not
applicable as a smaller reporting company.




ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Not
applicable as a smaller reporting company.




ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA




The
financial statements of the Company appear at the end of this report beginning
with the Index to Financial Statements on page F-1.




-23-




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




The
following describes changes in and disagreements with accountants on accounting
and financial disclosures through 2007 and 2008:




On May
16, 2007, SF Partnership LLP (“SF Partnership”) resigned as our independent
registered public accounting firm.  SF Partnership’s audit report for the
years ended December 31, 2006 and 2005 contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to audit scope or
accounting principles. On May 16, 2007, we engaged a new independent
registered public accounting firm. The new independent registered public
accounting firm is Jewett, Schwartz, Wolfe & Associates
(“Jewett”). Pursuant to Item 304(a) of Regulation S-K under the Securities Act
of 1933, as amended, and under the Securities Exchange Act of 1934, as amended,
the Company reports as follows:




A.
      i)
            SF
      Partnership resigned as our independent registered public accounting firm
      effective on May 16, 2007.




ii)
            During
      the previous two fiscal years and the interim period through May 16, 2007,
      our financial statements were modified for an uncertainty as to the
      Company’s ability to continue as a going concern. SF Partnership’s audit
      report for the years ended December 31, 2006 and 2005 contained no adverse
      opinion or disclaimer of opinion and was not qualified or modified as to
      audit scope or accounting
principles.




iii)
            The
      resignation of SF Partnership and engagement of Jewett was approved by the
      Company’s Board of Directors.




iv)
            During
      the two most recent fiscal years and the subsequent interim period through
      May 16, 2007, the Company and SF Partnership did not have any
      disagreements with regard to any matter of accounting principles or
      practices, financial statement disclosure, or auditing scope or
      procedure.




v)
            During
      the two most recent fiscal years and the subsequent interim period through
      May 16, 2007, we did not experience any reportable
  events.




B.
            On
      May 16, 2007, we engaged Jewett to be our independent registered public
      accounting firm.




i)
            Prior
      to engaging Jewett, we had not consulted Jewett regarding the
      application of accounting principles to a specified transaction, completed
      or proposed, the type of audit opinion that might be rendered on our
      financial statements or a reportable event, nor did we consult with
      Jewett regarding any disagreements with its prior auditor on any
      matter of accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure, which disagreements, if not
      resolved to the satisfaction of the prior auditor, would have caused it to
      make a reference to the subject matter of the disagreements in connection
      with its reports.




ii)
            We
      did not discuss any past disagreements with any prior auditors with
      Jewett.




C.
            The
      Registrant has requested SF Partnership to furnish it with a letter
      addressed to the SEC stating whether it agrees with the statements made by
      the Registrant regarding SF Partnership. However, such letter has not been
      provided by SF Partnership and, therefore, is not included in this Form 8K
      resulting from a disagreement over auditing fees charged by SF
      Partnership.




On
January 23, 2008, Jewett, Schwartz, Wolfe & Associates (the “Accountant”),
resigned as the Company’s independent auditor.  The Accountant was
engaged on May 16, 2007, and, therefore, served as the Company’s independent
accountant for just over eight months. During that limited period of
service, the Accountant did not issue any audit report on the Company’s
financial statements because it did not conduct any audit of the financial
statements of the Company, there were no disagreements with the Accountant on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not resolved to the
Accountant’s satisfaction, would have caused it to make reference to the subject
matter of the disagreement(s) in connection with any report it might have issued
on the financial statements of the Company, and there were no reportable events
described in Item 304(a)(1)(iv) of Regulation S-B.




On
February 8, 2008, the board of directors of the Company approved the engagement
of DNTW Chartered Accountants, LLP (“DNTW”), as its new independent
accountant. During the two most recent fiscal years and through the date
hereof, neither the Company nor any one on behalf of the Company has consulted
with DNTW regarding the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company’s financial statements, or any other matters or
reportable events required to be disclosed under Regulation S-K.




-24-


On April
16, 2008, DNTW Chartered Accountants, LLP (“DNTW”) advised the Company that DNTW
would not be accepting the engagement as the Company’s auditors for the year
ended December 31, 2008 and that DNTW’s role as auditors of the Company would
cease immediately. After some discussion between the Company and DNTW as to
terms upon which DNTW might reconsider its decision not to accept such
engagement, DNTW provided written confirmation to the Company on April 22, 2008
that the client-auditor relationship between DNTW and the Company had
ceased. DNTW provided an audit report on the financial statements of the
Company for the year ended December 31, 2007. Other than a statement as to
the ability of the Company to continue as a going concern, there was in such
report no adverse opinion or disclaimer of opinion or modification as to
uncertainty, audit scope or accounting principles. Since DNTW’s engagement
on February 7, 2008, there have been no disagreements with DNTW on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to DNTW’s satisfaction, would have
caused it to make reference to the subject matter of the disagreement(s) in
connection with the report it issued on the financial statements of the Company,
and there were no reportable events described in Item 304(a)(1)(iv) of
Regulation S-B. The Company has provided DNTW with a copy of the
disclosures it is making in response to Item 304(a) of Regulation S-B and
requested that DNTW furnish the Company with a letter addressed to the
Commission stating whether it agrees with the statements made by the
Company. On May 9, 2008, DNTW provided the Company a letter to this effect,
a copy of which is filed in our current report filed May 12, 2008.




On May
11, 2008, the board of directors of the Company approved the engagement of
McGovern, Hurley, Cunningham, LLP, as its new independent
accountant. During the two most recent fiscal years and through the date
hereof, neither the Company nor any one on behalf of the Company has consulted
with McGovern, Hurley, Cunningham, LLP regarding the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company’s financial statements,
or any other matters or reportable events required to be disclosed under
Regulation S-K.




ITEM
9A(T). CONTROLS AND PROCEDURES




(a)  Management’s
Annual Report on Internal Control Over Financial Reporting.




The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting.  The Company’s
internal control over financial reporting is a process designed under the
supervision of the Company’s Chief Executive Officer and Chief Financial Officer
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the Company’s financial statements for external purposes
in accordance with U.S. generally accepted accounting principles.




In the
fourth calendar quarter of 2008 and as of December 31, 2008, under the
supervision and with the participation of our management, we conducted an
evaluation of the effectiveness of the design and operations of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated
under the Securities Exchange Act of 1934 and based on the criteria for
effective internal control described in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management concluded that our
financial disclosure controls and procedures were effective so as to timely
identify, correct and disclose information required to be included in our
Securities and Exchange Commission (“SEC”) reports due to the Company’s limited
internal resources and lack of ability to have multiple levels of transaction
review. Through the use of external consultants and the review process,
management believes that the financial statements and other information
presented herewith are materially correct.




The
Company’s management, including its Chief Executive Officer and Chief Financial
Officer, does not expect that its disclosure controls and procedures, or its
internal controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefit of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected.




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




-25-




This
report shall not be deemed to be filed for purposes of Section 18 of the
Securities Exchange Act of 1934, or otherwise subject to the liabilities of that
section, and is not incorporated by reference into any filing of the Company,
whether made before or after the date hereof, regardless of any general
incorporation language in such filing.




(b)
Changes in Internal Controls.




There
have been no changes in the Company’s internal control over financial reporting
during the period ended December 31, 2008 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal controls over
financial reporting.




ITEM
9B. OTHER INFORMATION




None.




-26-


PART
III






ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT




Registrant
Director and Executive Officer




The
following table sets forth, as of December 31, 2008, the name and age of our
sole director and executive officer. The director will hold such office
until the next annual meeting of shareholders and until his successor has been
elected and qualified.




Name
              Age
              PositionAlex
      Haditaghi
              36
              President,
      CEO, CFO, Chief Accounting Officer and sole
  Director




Business
Experience




The
following summarizes the occupation and business experience of our sole director
and executive officers:




Alex
Haditaghi, President, Chief Executive Officer, Chief Financial Officer, Chief
Accounting Officer and Chairman of the Board of Directors




Alex
Haditaghi has been working in the mortgage industry in Canada since 1999 and has
extensive experience in both residential and commercial
mortgages.  Mr. Haditaghi formed Lending Tree Canada Inc., a private
mortgage brokerage operating in Canada, in 2000.  He served as
President for five years until he founded MortgageBrokers.com in January
2005.  Since then, Mr. Haditaghi has been the CEO, CFO and sole
director of MortgageBrokers.com Holdings, Inc. and President of its two
subsidiaries.  Mr. Haditaghi is responsible for the business vision,
expansion, capital resources, hiring the executive management team, establishing
corporate policy and providing overall leadership to the
organization




Significant
Contributing Management




The
following table sets forth, as of April 15, 2009, the names and ages of our
Canadian operations management team.




Name
              Age
              PositionDong
      Lee
              36
              Vice
      President of OperationsRobert
      Hyde
              45
              Vice
      President of Finance & AdministrationDavindra
      Persaud
              37
              Corporate
      ControllerDaniel
      Putnam
              52
              President
      of Sales - CanadaDiana
      Soloway
              44
              Chief
      Strategy OfficerGary
      Laughlin
              59
              Vice
      President of Sales OntarioDavid
      Mercer
              49
              Vice
      President of Sales Alberta




Business
Experience




The
following summarizes the occupation and business experience of our Canadian
operations subsidiary management team:




Dong
Lee, Vice President of Operations




Dong Lee
has been vice president of operations at our Company’s Canadian subsidiary since
joining us in April, 2005.  Mr. Lee is responsible for establishing,
managing and expanding our mortgage agent and referral commission and compliance
operations, lender relations, and responsible for overall business model
development.




-27-




Prior to
joining MortgageBrokers.com, Mr. Lee was Senior Manager-Alternate Delivery
Channels, for Scotiabank where he oversaw the strategic development of both
Scotiabank's mobile mortgage sales team and mortgage broker delivery
channels.  In this position, Lee was responsible for the strategic
marketing and development of sales programs.  Mr. Lee worked at
Scotiabank from January 2001 to April 2005.  Before joining
Scotiabank, Mr. Lee spent several years as the Business Development Officer for
Canada Mortgage & Housing Corporation (“CMHC”), where he managed and grew
the market share of CMHC's largest lender portfolio. Before specializing in the
mortgage sector, Lee spent several years with TD Bank Financial group as Manager
of Korean banking.  Under that position, Lee envisioned, launched and
managed the Korean Banking Centre, establishing a multi million dollar referral
network with several of the largest banks in Korea.




Mr. Lee
is a graduate from Queen's University's undergraduate business
program.  During his time at Queen's, Mr. Lee studied international
business at Herstmonceux Castle in Hailsham, England.  Mr. Lee
completed his MBA in 2007 through Dalhousie University.




Robert
Hyde, Vice President of Finance & Administration




Mr. Hyde
joined MortgageBrokers.com’s Canadian subsidiary in April of
2005.  His responsibilities include corporate development, finance and
reporting, agreement preparation and administration, administration of warrant,
option and other capital structure programs, regulatory and legal liaison,
private placement memorandum and registration statement preparation, and
accounting support.




Prior to
joining MortgageBrokers.com, Mr. Hyde had a 17 year career in the engineering,
software and management consulting industries servicing the real estate,
financial services and petrochemical industries with significant business
building experience and leadership roles in Canada, the US, and the
EU.  Most recently, Robert was Managing Director of Paladin Capital
Ventures.  Paladin Capital Ventures provided early stage technology
based companies with business model development, strategic planning, finance and
capital planning, facilitating venture capital and private placement, and
providing strategic market planning services.  From 1998 to 2004,
Robert was the founder and managing director of eRealVantage Incorporated, a
real estate investment portfolio securitization technology company servicing the
REIT and pension fund portfolio market place.  From 1992 to 1998, he
was President of Enviro Cheq Corporation and Vice President of the
knowledge-based environmental risk management company, Trillium Environmental
Corporation.




Mr. Hyde
graduated from the Richard Ivey School of Business, University of Western
Ontario (MBA) in 2003 and received his Masters of Engineering degree from
University of Windsor in 1990.  He is a Professional Engineer in the
Province of Ontario and has completed numerous executive training courses
including the Art of Negotiation.




Davindra
Persaud, Corporate Controller




Mr.
Persaud joined MortgageBrokers.com’s Canadian subsidiary in June 2007 after
having spent the last 9 years working with various large and medium sized public
accounting firms where he specialized in accounting, audit, tax and financial
reporting for publicly traded companies listed in Canada and the United
States.  As a public accountant, Mr. Persaud had the opportunity to
audit and work with multi-national public companies in various industries
including the financial services sector supporting them with their accounting
and reporting needs.




Mr.
Persaud earned his Bachelor of Arts in Economics from the University of Western
Ontario in 1995 and received his Chartered Accountants license and designation
from the Institute of Chartered Accountants of Ontario in 2002.




Daniel
Putnam, President of Sales - Canada




Since
joining our Company’s Canadian subsidiary in November, 2008, Daniel Putnam has
been President of our Canadian sales organization and currently directs our
sales management staff to service, recruit and manage our national mortgage
sales agency.  Mr. Putnam directs a marketing manager responsible for
developing advertising, information brochures, and sales support
materials.  Mr. Putnam also directs our senior Information System /
Information Technology staff responsible for developing www-based technology
back office systems to service the mortgage sales agency.  Mr. Putnam
was formerly President of Mortgage Centre Canada – a Division of CIBC Mortgages
Inc. and more recently was President of Originations for Macquarie
Financial.




Diana
Soloway, Chief Strategy Officer




Since
joining our Company’s Canadian subsidiary in November of 2008, Diana Soloway is
our Chief Strategy Officer responsible for assisting the CEO with creating,
communicating, executing, and sustaining strategic initiatives within our
organization. Ms. Soloway brings with her 18 years of mortgage experience before
from operating her own mortgage brokerage firm to working within large financial
institutions. Prior to MortgageBrokers.com Ms. Soloway spent 8 years at Home
Trust company as VP Marketing and Sales.




-28-




Gary
Laughlin, Vice President Sales - Ontario




Gary
Laughlin is the Company’s vice president of sales for the Province of Ontario
and joined us in May of 2008.  With over 25 years experience in the
financial services and mortgage industry, Mr. Laughlin brings to
MortgageBrokers.com a successful track record of building and leading sales
teams. Most recently, Mr. Laughlin lead the Mobile Mortgage Sales team in
Ontario for the Royal Bank of Canada.




David
Mercer, Vice President Sales - Alberta




David
Mercer is the Company’s vice president of Sales for Alberta and joined us
September of 2005.  Prior to joining MortgageBrokers.com, Mr. Mercer,
a 23 year veteran of the real estate and mortgage broker industry, was President
of Lending Source Canada Inc.  Previously, Mr. Mercer spent 4 years as
a top producing regional manager for The Mortgage Alliance Company of Canada,
who today claims to be the largest independent mortgage originator in
Canada.  Through his career in the industry, Mr. Mercer has been
responsible for the recruitment, training and mentorship of over 300 Mortgage
Brokers across Canada.  Mr. Mercer has also served as President of the
Alberta Mortgage Brokers Association, and for many years served as the Chair for
the Communications and Ethics committees.  Mr. Mercer also currently
teaches for the Alberta Real Estate Association through Mt. Royal College,
Alberta.




Family
Relationaships




None.




Involvement
in Certain Legal Proceedings




See Item
3 of this form 10-K..




Promoters
and Control Persons




None.




Code
of Ethics




The Company has adopted a Code of Ethics applicable to its Chief Executive
Officer and Chief Financial Officer which has been filed as an exhibit to our
Annual Report on Form 10-KSB on March 31, 2005.




Directors
and Committees




The
Company currently has only one director and, as such, has no nominating, audit
or other committees of its board of directors. The sole director of the
Company does not qualify as an “audit committee financial
expert.”  To-date, no formal board meetings have taken
place.




Shareholder
Communications




The
Company has retained an investor relations Company to communicate and respond to
shareholders.  Shareholders may also correspond directly to our
Director.




Compliance
with Section 16(A) of the Exchange Act




Mr.
Haditaghi filed a Form 5 for 2008 on February 17, 2009.




ITEM
11.  EXECUTIVE COMPENSATION







-29-




The
following summarizes the Companies named officer and director, as identified in
Item 10 of this Firm 10-K, compensation:




SUMMARY
      COMPENSATION TABLEName
      and principal position
                  (a)
                Year
                  (b)
                Salary
      ($)
                  (c)1
                Bonus
      ($)
                  (d)
                Stock
      Awards ($)2
                Option
      Awards ($)
                Non-Equity
      Incentive Plan Compensation ($)
                Nonqualified
      Deferred Compensation Earnings
                  ($)
                All
      Other Compensation ($)
                Total
                  ($)Alex
      Haditaghi, Chairman and CEO
                2008
                  2007
                $31,074
                  $120,930
                0
                  0
                $33,000
                  $259,459
                0
                  0
                0
                  0
                0
                  0
                0
                  0
                $64,074
                  $380,389





Footnotes:




1:  The
executive’s base salary was paid in Canadian dollars.  In Canadian
dollars, the base salary was $130,000 in 2007 and $33,125 in 2008.  It
was converted to USD for presentation in the table as required using the
conversion factor (USD $1.0 = CDN $1.075), the annual average exchange rate for
2007 as reported by the Bank of Canada.  The annual average exchange
rate for 2008 as reported by the Bank of Canada was USD $1.0 = CDN
$1.066.




2:  The
equity-awards were earned by the identified executive are pending release upon
completion of employment agreements.  The employment agreements are
expected to be completed in 2009.  The equity awards are based on
verbal agreements between management and the Company CEO as disclosed in past
filings.  The portion of the stock-based compensation that was
registered in 2007 were issued at a price of $0.43.  The portion of
stock-based compensation that was owing to the employee at year end was valued
at $0.11.






Narrative
Disclosure to the Summary Compensation Table




The
employment agreements for executive officers are presently being
prepared.  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 April 16,
2008.  The company is currently in the process of preparing employment
agreements which are expected to be executed in 2009.






OUTSTANDING
      EQUITY AWARDS AT 2008 FISCAL YEAR END TABLEOPTION
      AWARDS
                            STOCK
      AWARDSName
      and principal position
                              (a)
                            Number
      of Securities Underlying Unexercised Options
                              (#)
                              Exercisable
                              (b)
                            Number
      of Securities Underlying Unexercised Options
                              (#)
                              Unexercisable
                              (c)1
                            Equity
      Incentive Plan Awards:
                              Number
      of Securities Underlying Unexercised Unearned Options
                              (#)
                              (d)
                            Option
      Exercise Price
                              ($)2
                              (e)
                            Option
      Expiration
                              Date
                              (f)
                            Number
      of Shares or units of Stock that have not Vested
                              (#)
                              (g)
                            Market
      Value of Shares or Units of Stock that have not Vested
                              ($)
                              (h)
                            Equity
                              Incentive
      Plan Awards:
                              Number
      of Unearned shares, Units or other rights that have not
Vested
                              ($)
                              (i)
                            Equity
      Incentive Plan Awards:
                              Market
      or Payout Value of Unearned shares, Units or other rights that have not
      Vested
                              ($)
                              (j)Alex
      Haditaghi, Chairman and CEO
                            0
                            0
                            0
                            0
                            0
                            0
                            0
                            0
                            0




Compensation
of Directors




No
additional compensation is paid to Alex Haditaghi, our sole
director.




Stock
Option Grants In The Past Fiscal Year




We have
not issued any grants of stock options in the past fiscal year to any officer or
director.  As at December 31, 2008, no options to Company employees,
officers or directors are outstanding.




-30-




ITEM
12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT








Name
      of Beneficial Owner (2)
              Number
      of Total Shares
              Percent
      of class (1)Alex
      Haditaghi
              26,734,000
              62.2%All
      executive officers
                
                and
      directors as a group
              26,734,000
              62.2%




(1)
Based on 42,976,548 shares of common stock issued and outstanding as of December
31, 2008.






ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.




As of
December 31, 2008, the controlling shareholder and Chief Executive Officer of
the Company had advanced $129,425 (December 31, 2007 - $170,691) to fund the
working capital of the Company. The advances are unsecured, non-interest
bearing, with $84,425 due on demand, $25,000 due in 2010, and $20,000 due in
2011.




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. No amount was paid by either party or is due from one party to
another related to this transaction.




On August
1, 2007, the Company’s current office space was sold by our then landlord, an
arm’s length third party to the Company, 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.  No
additional material terms of our lease for this office location were amended
between our former landlord lease agreement and our current landlord lease
agreement.






ITEM
14.  PRINCIPAL ACCOUNTING FEES AND
SERVICES




Audit
Fees




For the
Company's fiscal year ended December 31, 2008, we have incurred $15,478 and
accrued $28,143 for professional services rendered for the audit and
reviews of our financial statements.




For the
Company's fiscal year ended December 31, 2007, we had incurred $54,000 for
professional services rendered for the audit and reviews of our financial
statements.




Tax
Fees




For the
Company's fiscal year ended December 31, 2007, we were billed approximately CDN
$3,940 for professional services rendered for tax compliance, tax advice, and
tax planning.




To-date,
the Company has not incurred expenses for professional services rendered for tax
compliance, tax advice, and tax planning.




All
Other Fees




None.




-31-




PART
IV






ITEM
15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES






The
following documents are included as exhibits to this report pursuant to Item 601
of Regulation S-K.




Exhibit
      No.
              Description3.1
              Certificate
      of Incorporation (1)3.2
              First
      Amendment to Certificate of Incorporation (1)3.3
              Certificate
      of Amendment to Certificate of Incorporation filed February 1,
      20053.4
              Bylaws
      (1)10.1
              2003
      Equity Compensation Plan (1)10.2
              Stock
      Purchase Agreement and Share Exchange dated March 21, 2005 by and among
      Mortgagebrokers.com Holdings, Inc., Mortgagebrokers.com, Inc., and Alex
      Haditaghi (2)10.3
              License
      Agreement dated January 30, 2006 between RE/MAX Ontario-Atlantic Canada
      Inc. and Mortgagebrokers.com Holdings, Inc. (3)10.4
              Amendment
      to License Agreement dated May 25, 2006 by and among Mortgagebrokers.com
      Holdings, Inc., RE/MAX Ontario-Atlantic Canada Inc, and Alex Haditaghi,
      (4)10.5
              Service
      Agreement dated April 12, 2006 between Mortgagebrokers.com Financial Group
      of Companies, Inc. and Maxwell Realty Inc. (6)10.6
              Service
      Level Agreement between Mortgagebrokers.com Financial Group of Companies,
      Inc. and RE/MAX Franchisees (6)10.7
              Lease
      between Mark Pharmaceutical Services Inc. and Mortgagebrokers.com, Inc.
      (6)10.8
              Financial
      Advisory and Investment Banking Agreement dated November 2, 2007 between
      vFinance Investments, Inc. and Mortgagebrokers.com Holdings, Inc.
      (6)10.9
              Form
      of Subscription Agreement entered into between the Company and investors
      in the Company’s 2006 Private Offering (6)14.1
              Code
      of Ethics (5)21.1
              List
      of Subsidiaries23.1
              Consent
      of Independent Registered Public Accounting Firm31.1
              Certifications
      of Chief Executive Officer and Chief Financial Officer32.1
              Certifications
      of Chief Executive Officer and Chief Financial
  Officer




___________________________


Footnotes:




(1)
            This
      exhibit was filed with our Registration Statement on Form SB-2 filed on
      June 2, 2003 (SEC Filed No. 333-117718) and is incorporated herein by this
      reference.




(2)
            This
      exhibit was filed with our Current Report on Form 8-K filed on March 22,
      2005 and is incorporated herein by this
  reference.




(3)
            This
      exhibit was filed with our Current Report on Form 8-K filed on February 1,
      2006 and is incorporated herein by this
  reference.




(4)
            This
      exhibit was filed with our Current Report on Form 8-K filed on June 13,
      2006 and is incorporated herein by this
  reference.




(5)
            This
      exhibit was filed with our Annual Report on Form 10-KSB on March 31, 2005
      and is incorporated herein by this
reference.





(6)
            This
      exhibit was filed with our Annual Report on Form 10-K on April 15,
      2008 and is incorporated herein by this
  reference.







-32-




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:
April 15, 2009




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
            April
      15, 2009Alex
      Haditaghi




-33-






MORTGAGEBROKERS.COM
      HOLDINGS, INC. AND SUBSIDIARIES
                
                
                CONSOLIDATED
      FINANCIAL STATEMENTS
                
                
                DECEMBER
      31, 2008 AND 2007




















MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES







CONSOLIDATED
FINANCIAL STATEMENTS




DECEMBER
31, 2008 AND 2007




CONTENTS







Report
      of Independent Registered Public Accounting Firm McGovern, Hurley,
      Cunningham, LLP  Chartered Accountants
              F1Report
      of Independent Registered Public Accounting Firm DNTW Chartered
      Accountants, LLP
              F2Consolidated
      Balance Sheets
              F3Consolidated
      Statements of Operations and Comprehensive Income (Loss)
              F4Consolidated
      Statements of Stockholders' Deficit
              F5
      - F6Consolidated
      Statements of Cash Flows
              F7Notes
      to Consolidated Financial Statements
              F8
      - F23





















REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Mortgagebrokers.com
Holdings, Inc.








We have
audited the accompanying consolidated balance sheet of Mortgagebrokers.com
Holdings, Inc. and Subsidiaries (the “Company”) as at December 31, 2008 and the
statement of operations and comprehensive income, statement of stockholders’
deficit and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting.  Accordingly, we express no such
opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides a reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Mortgagebrokers.com Holdings, Inc.
and Subsidiaries as at December 31, 2008 and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company’s operating losses, negative working capital,
and total capital deficiency raise substantial doubt about its ability to
continue as a going concern.  Note 1 also describes management’s plans
to address these financial matters.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.






McGOVERN, HURLEY, CUNNINGHAM,
      LLPBy:
                          /s/McGOVERN,
      HURLEY, CUNNINGHAM, LLPChartered
      AccountantsLicensed Public
      Accountants


TORONTO,
Canada


March 18,
2009









2005
Sheppard Avenue East, Suite 300, Toronto, Ontario, Canada, M2J 5B4
 Telephone:
(416) 496-1234- Fax: (416) 496-0125 Email: info@mhc-ca.com
- Website:www.mhc-ca.com





F1











REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders of
 Mortgagebrokers.com
Holdings, Inc.
 (Formerly
MagnaData, Inc.)
  We have
audited the accompanying consolidated balance sheet of Mortgagebrokers.com Holdings, Inc.
and Subsidiaries (Formerly MagnaData, Inc.) (a
Delaware corporation) as of December 31, 2007 and the related statements of
operations, changes in stockholders’ equity, and cash flows for the year then
ended.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting.  Accordingly, we express no such
opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provide a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Mortgagebrokers.com Holdings, Inc.
and Subsidiaries (Formerly MagnaData, Inc.) as
of December 31, 2007, and the results of its operations and its cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note 1
to the consolidated financial statements, the Company’s operating losses,
negative working capital, and total capital deficiency raise substantial doubt
about its ability to continue as a going concern.  Note 1 also
describes management’s plans to address these financial matters.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 /s/ DNTW
Chartered Accountants, LLP
 Licensed
Public Accountants
 
 Markham,
Canada
 March 17,
2008 except for notes 8, 18 and 19 b) which are dated April 14,
2008








F2







MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Balance Sheets


December
31, 2008 and 2007




2008
                      
                      
                      2007ASSETSCurrent
      AssetsCash
      and cash equivalents
                      
                      $
                      1,262,321
                      
                      
                      $
                      830,852Referral
      fees held in trust – restricted (note 3)
                      
                      
                      17,848
                      
                      
                      
                      44,936Prepaid
      expenses
                      
                      
                      116,211
                      
                      
                      
                      148,611Total
      Current Assets
                      
                      
                      1,396,380
                      
                      
                      
                      1,024,399Equipment, net (note
      4)
                      
                      
                      112,184
                      
                      
                      
                      153,474Equipment Under Capital
      Leases (note 5)
                      
                      
                      2,424
                      
                      
                      
                      4,278Total
      Assets
                      
                      $
                      1,510,988
                      
                      
                      $
                      1,182,151LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      LiabilitiesBank
      indebtedness – current portion (note 6)
                      
                      $
                      61,244
                      
                      
                      $
                      151,316Accounts
      payable
                      
                      
                      1,190,905
                      
                      
                      
                      791,419Accrued
      liabilities
                      
                      
                      68,210
                      
                      
                      
                      149,601Employee
      tax deductions payable (note 7)
                      
                      
                      275,317
                      
                      
                      
                      434,584Accrued
      legal judgment (note 8)
                      
                      
                      688,894
                      
                      
                      
                      773,658Advances
      from related party – current portion (note 9)
                      
                      
                      84,425
                      
                      
                      
                      170,691Trust
      liability (note 3)
                      
                      
                      17,848
                      
                      
                      
                      44,936Obligation
      under capital leases - current portion (note 10)
                      
                      
                      1,624
                      
                      
                      
                      2,602Stock-based
      compensation accrual - current portion (note 11a)
                      
                      
                      41,562
                      
                      
                      
                      102,066Employee
      stock-based compensation accrual (note 11b)
                      
                      
                      143,779
                      
                      
                      
                      657,260Total
      Current Liabilities
                      
                      
                      2,573,808
                      
                      
                      
                      3,278,133Bank
      Indebtedness (note 6)
                      
                      
                      56,141
                      
                      
                      
                      -Obligation Under Capital
      Leases (note 10)
                      
                      
                      -
                      
                      
                      
                      2,042Advances
      from related party (note 9)
                      
                      
                      45,000
                      
                      
                      
                      -Stock-based Compensation
      Accrual (note 11c)
                      
                      
                      124,767
                      
                      
                      
                      229,819Total
      Liabilities
                      
                      
                      2,799,716
                      
                      
                      
                      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; 42,976,548 (2007: 38,466,470) issued and
                        outstanding(note
      12)
                      
                      
                      4,298
                      
                      
                      
                      3,847Additional
      Paid-in Capital
                      
                      
                      4,116,807
                      
                      
                      
                      3,424,264Additional Paid-in Capital -
      Warrants (note 13)
                      
                      
                      489,243
                      
                      
                      
                      622,211Subscription
      for Stock
                      
                      
                      8,240
                      
                      
                      
                      64,086Subscription Receivable
      (note 14)
                      
                      
                      (227,540
                      )
                      
                      
                      (227,540
                      )Treasury
      Stock(note 15)
                      
                      
                      (25,234
                      )
                      
                      
                      (25,234
                      )Accumulated
      Other Comprehensive Income (Loss)
                      
                      
                      163,852
                      
                      
                      
                      (33,009
                      )Accumulated
      Deficit
                      
                      
                      (5,818,394
                      )
                      
                      
                      (6,156,468
                      )Total
      Stockholders' Deficit
                      
                      
                      (1,288,728
                      )
                      
                      
                      (2,327,843
                      )Total
      Liabilities and Stockholders' Deficit
                      
                      $
                      1,510,988
                      
                      
                      $
                      1,182,151




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




F3




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Statement of Operations and Comprehensive Income (Loss)


Years
Ended December 31, 2008, and 2007




2008
              
              
              2007Revenue
              
              
              15,802,861
              
              
              
              10,251,113ExpensesCommission
      and agent fees
              
              
              13,314,374
              
              
              
              8,998,410Salaries
      and benefits
              
              
              1,166,935
              
              
              
              1,320,600General
      and administrative expenses
              
              
              942,602
              
              
              
              968,296Employee
      stock-based compensation (note 11b)
              
              
              (153,506
              )
              
              
              574,410Stock-based
      compensation (note 18a, 18b, and 18c(i))
              
              
              (25,052
              )
              
              
              120,685Stock-based
      compensation (note 18c(ii))
              
              
              (6,549
              )
              
              
              70,744Stock-based
      compensation for services (note 12)
              
              
              6,479
              
              
              
              86,451Occupancy
      costs (note 16)
              
              
              159,317
              
              
              
              126,886Depreciation
      expense
              
              
              33,428
              
              
              
              31,707Total
      Operating Expenses
              
              
              15,438,028
              
              
              
              12,298,189Income
      (Loss) from Operations
              
              
              364,833
              
              
              
              (2,047,076
              )Other
      ExpensesInterest,
      Finance and Other Expenses
              
              
              (26,759
              )
              
              
              (83,285
              )Income
      (Loss) Before Income Taxes
              
              
              338,074
              
              
              
              (2,130,361
              )Provision
      for income taxes (note 17)
              
              
              -
              
              
              
              -Net
      Income (Loss) Before Extraordinary Item
              
              
              338,074
              
              
              
              (2,130,361
              )Extraordinary
      ItemLegal
      judgment – net of tax (note 8)
              
              
              -
              
              
              
              (713,420
              )Net
      Income (Loss)
              
              
              338,074
              
              
              
              (2,843,781
              )Foreign
      Currency Translation Adjustment
              
              
              196,861
              
              
              
              (25,592
              )Total
      Comprehensive Income (Loss)
              
              
              534,935
              
              
              
              (2,869,373
              )Net
      Income (Loss) per Share - Basic and Diluted During the Year (note
      19)
              
              
              0.01
              
              
              
              (0.08
              )Net
      Income (Loss) per Share - Basic and Diluted During the Year – net of
      extraordinary item
              
              
              0.01
              
              
              
              (0.06
              )Weighted
      Average Number of Shares Outstanding - Basic During the
    Year
              
              
              39,713,425
              
              
              
              37,174,199Weighted
      Average Number of Shares Outstanding - Diluted During the
    Year
              
              
              43,810,069
              
              
              
              37,174,199




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




F4




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Statements of Stockholders' Deficit


Years
Ended December 31, 2008 and 2007




Common
                  Shares
                
                
                Stock
                  Amount
                
                
                Accumulated
                  Additional
                  Paid-In
                  Capital
                
                
                Additional
                  Paid-In
                  Capital
      -
                  Warrants
                
                
                Subscription
                  for
      Stock
                
                
                Subscription
                  Receivable
                
                
                Treasury
                  Stock
                
                
                Accumulated
                  Other
                  Comprehensive
                  (Loss)
      Income
                
                
                Accumulated
                  Deficit
                
                
                Total
                  Stockholders'
                  DeficitBalances
      at December 31, 2006
                
                
                36,088,470
                
                
                $
                3,609
                
                
                $
                2,179,443
                
                
                $
                732,605
                
                
                $
                0
                
                
                $
                (242,301
                )
                
                $
                (17,779
                )
                
                $
                (7,417
                )
                
                $
                (3,312,687
                )
                
                $
                (664,527
                )Shares
      issued for cash:July
      7, 2007 - Issued for $1 per share (note 12)
                
                
                125,000
                
                
                
                12
                
                
                
                124,988
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                125,000Shares
      issued for services:January
      3, 2007 - Issued for $0.75 per share (note 12)
                
                
                10,000
                
                
                
                1
                
                
                
                7,499
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                7,500July
      7, 2007- Issued for $0.42 per share (note 12)
                
                
                478,000
                
                
                
                48
                
                
                
                200,712
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                200,760July
      23, 2007 – Issued for $1 per share (note 12)
                
                
                25,000
                
                
                
                3
                
                
                
                24,997
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                25,000July
      23, 2007 – Issued at $0.43 per share (note 12)
                
                
                1,700,000
                
                
                
                170
                
                
                
                730,830
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                731,000Shares
      issued for equipment:July
      23, 2007 - Issued for $1.14 per share (note 12)
                
                
                40,000
                
                
                
                4
                
                
                
                45,412
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                45,416Exercise
      and expiry of Warrants:September  30,
      2007, (note 12)
                
                
                -
                
                
                
                -
                
                
                
                110,394
                
                
                
                (110,394
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Subscription
      for stock (note 14)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                64,086
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                64,086Subscription
      receivable (note 14)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                14,761
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                14,761Adjustments
                
                
                -
                
                
                
                -
                
                
                
                (11
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (11
                )Purchase
      of treasury stock (note 15)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (7,455
                )
                
                
                -
                
                
                
                -
                
                
                
                (7,455
                )Foreign
      currency translation adjustment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (25,592
                )
                
                
                -
                
                
                
                (25,592
                )Net
      loss for the year
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,843,781
                )
                
                
                (2,843,781
                )Balances at  December 31,
      2007
                
                
                38,466,470
                
                
                $
                3,847
                
                
                $
                3,424,264
                
                
                $
                622,211
                
                
                $
                64,086
                
                
                $
                (227,540
                )
                
                $
                (25,234
                )
                
                $
                (33,009
                )
                
                $
                (6,156,468
                )
                
                $
                (2,327,843
                )




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




F5




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Statements of Stockholders' Deficit (Continued)


Years
Ended December 31, 2008 and 2007







Common
                  Shares
                
                
                Stock
                  Amount
                
                
                Accumulated
                  Additional
                  Paid-In
                  Capital
                
                
                Additional
                  Paid-In
                  Capital
      -
                  Warrants
                
                
                Subscription
                  for
      Stock
                
                
                Subscription
                  Receivable
                
                
                Treasury
                  Stock
                
                
                Accumulated
                  Other
                  Comprehensive
                  Income
      (Loss)
                
                
                Accumulated
                  Deficit
                
                
                Total
                  Stockholders'
                  DeficitBalances
      at December 31, 2007
                
                
                38,466,470
                
                
                $
                3,847
                
                
                $
                3,424,264
                
                
                $
                622,211
                
                
                $
                64,086
                
                
                $
                (227,540
                )
                
                $
                (25,234
                )
                
                $
                (33,009
                )
                
                $
                (6,156,468
                )
                
                $
                (2,327,843
                )Shares
      issued for services:February
      5, 2008 – Issued for $0.191 per Share (note 12)
                
                
                50,000
                
                
                
                5
                
                
                
                9,545
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                9,550September
      11, 2008 – Issued for $0.11 per Share (note 12)
                
                
                3,272,500
                
                
                
                327
                
                
                
                359,648
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                359,975September
      11, 2008 – Issued for $0.11 per Share (note 12)
                
                
                490,500
                
                
                
                49
                
                
                
                53,906
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                53,955December
      16, 2008 – Issued for $0.16 per Share (note 12)
                
                
                500,000
                
                
                
                50
                
                
                
                79,950
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                80,000Exercise
      and expiry of Warrants:July  9,
      2008, (note 13)
                
                
                -
                
                
                
                -
                
                
                
                132,968
                
                
                
                (132,968
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Subscription
      for stock:
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -October
      20, 2008 – Issuance of stock (note 12)
                
                
                150,000
                
                
                
                15
                
                
                
                43,485
                
                
                
                
                
                
                
                (43,500
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -October
      21, 2008 – Issuance of stock (note 12  )
                
                
                47,078
                
                
                
                5
                
                
                
                13,041
                
                
                
                
                
                
                
                (13,046
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Subscription  for
      Stock (note 14)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                700
                
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                700Foreign
      currency translation adjustment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                196,861
                
                
                
                -
                
                
                
                196,861Net
      Income for the year
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                338,074
                
                
                
                338,074Balances at  December 31,
      2008
                
                
                42,976,548
                
                
                $
                4,298
                
                
                $
                4,116,807
                
                
                $
                489,243
                
                
                $
                8,240
                
                
                $
                (227,540
                )
                
                $
                (25,234
                )
                
                $
                163,852
                
                
                $
                (5,818,394
                )
                
                $
                (1,288,728
                )




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




F6




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Statement of Cash Flows


Year
Ended December 31, 2008 and 2007






2008
                
                
                2007Cash
      Flows from Operating ActivitiesNet
      Income (Loss)
                
                $
                338,074
                
                
                $
                (2,843,781
                )Adjustments
      to reconcile net income (loss) to net cash from operating
      activities:Depreciation
                
                
                33,428
                
                
                
                31,707Stock
      issued for services
                
                
                521,905
                
                
                
                86,451Employee
      stock-based compensation
                
                
                (513,481
                )
                
                
                (156,590
                )Stock-based
      compensation accrual
                
                
                (165,556
                )
                
                
                1,022,912(Increase)
      decrease in net assets:Referral
      fees held in trust
                
                
                (27,088
                )
                
                
                (14,616
                )Prepaid
      expenses
                
                
                13,975
                
                
                
                (102,617
                )Accounts
      payable
                
                
                399,486
                
                
                
                641,508Accrued
      liabilities
                
                
                (81,391
                )
                
                
                (28,675
                )Employee
      tax deduction payable
                
                
                (159,267
                )
                
                
                141,878Accrued
      legal judgment
                
                
                (84,764
                )
                
                
                773,658Trust
      liability
                
                
                27,088
                
                
                
                14,616Net
      Cash from Operating Activities
                
                
                302,409
                
                
                
                (433,549
                )Cash
      Flows from Investing Activities(Purchase)
      of equipment, net
                
                
                (16,039
                )
                
                
                (37,268
                )Net
      Cash From Investing Activities
                
                
                (16,039
                )
                
                
                (37,268
                )Cash
      Flows from Financing Activities(Repayments
      of) obligations under capital leases
                
                
                (3,020
                )
                
                
                (945
                )Repayment
      of advances from related party
                
                
                (41,266
                )
                
                
                (34,177
                )Proceeds
      from issuance of common stock
                
                
                -
                
                
                
                14,761Purchase
      of treasury stock
                
                
                -
                
                
                
                (7,455
                )Subscription
      for stock
                
                
                700
                
                
                
                64,086(Decrease)
      increase in bank indebtedness
                
                
                (5,104
                )
                
                
                52,634Net
      Cash from  Financing Activities
                
                
                (48,690
                )
                
                
                88,904Net
      Increase (Decrease) in Cash and Cash Equivalents
                
                
                237,680
                
                
                
                (381,913
                )Foreign
      Exchange on Balances
                
                
                193,789
                
                
                
                (25,592
                )Cash
      and Cash Equivalents - Beginning of Year
                
                
                830,852
                
                
                
                1,238,357Cash
      and Cash Equivalents - End of Year
                
                $
                1,262,321
                
                
                $
                830,852Supplemental
      Cash Flow InformationInterest
      paid
                
                $
                26,759
                
                
                $
                18,679Income
      taxes paid
                
                $
                -
                
                
                $
                -Stock
      issued for equipment
                
                $
                -
                
                
                $
                45,416




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





F7





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007




1.
            Nature
      of Business and Going Concern




Nature of
Business




MortgageBrokers.com
Holdings, Inc., and Subsidiaries (the “Company”) was organized under the
laws of the State of Delaware on February 6, 2003.




Mortgage
brokerage operations are presently conducted through the Company’s subsidiaries,
Mortgagebrokers.com Inc. (an Ontario, Canada company), MortgageBrokers.com
Financial Group of Companies, Inc. and MBKR Holdings Inc. (Canadian federal
companies), in Canada only.   The planned operations of the
Company consist of becoming a financial services company centered around
mortgage finance, brokerage, sales and consulting in Canada, the United States
and 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 year ended December 31,
2008, the Company generated net income of $338,074 (2007 a loss of -
$2,843,781).  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 develop 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-8




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







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 the United States of America, and their basis of
application is consistent. Outlined below are those policies considered
particularly significant:





a)       Basis
of Consolidation and Presentation





The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and include the accounts of the Company, its wholly-owned subsidiaries
Mortgagebrokers.com Inc., Mortgagebrokers.com Financial Group of Companies, Inc.
and MBKR Holdings, Inc.  All significant inter-company transactions
and balances have been eliminated upon consolidation.





b)       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.





c)       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
                          Over
      the remaining term of the
lease






F-9




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007






2.
            Summary
      of Significant Accounting Policies
(cont'd)




d)    Revenue
Recognition




Revenue
consists of mortgage brokerage fees, finders’ fees and insurance commissions.
The revenue from brokerage fees and finders’ fees are recognized upon the
funding of a customer’s mortgage and when the collection is reasonably assured
which typically occurs when the brokerage fee or finders fees from the lender
has been advanced.  Insurance commission revenues are recognized when
collection is reasonably assured which typically occurs when the insurance
commission fees from the insurance provider has been advanced.





e)    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.





f)    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 December 31, 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.





g)     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-10




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007






2.
            Summary
      of Significant Accounting Policies
(cont'd)




h)       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.  For restricted stock, the
fair value is determined based on the quoted market price. 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.




i)        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 year.





j)        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 year.




k)       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 into United States
dollars using the exchange rates prevailing at the end of the period. Revenues
and expenses are translated using the average exchange rates prevailing
throughout the year.





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-11




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







2.
            Summary
      of Significant Accounting Policies
(cont'd)




l)        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.




m)      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.




n)       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. Management believes
the adoption of this pronouncement will not have a material impact on the
Company's consolidated financial statements.





In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally
Accepted Accounting Principles”.  SFAS No. 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with GAAP for nongovernmental entities. SFAS
No. 162 is effective 60 days following the SEC’s approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.” Management believes the adoption of this pronouncement will not
have a material impact on the Company’s results of operations, financial
position or cash flows.





F-12




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







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’s during 2009.




4.
            Equipment,
      net




Net
      Book
                        
                        Net
      BookAccumulated
                        
                        Value
                        
                        ValueCost
                        
                        Depreciation
                        
                        2008
                        
                        2007Furniture
      and equipment
                        
                        $
                        149,723
                        
                        
                        $
                        61,787
                        
                        
                        $
                        87,936
                        
                        
                        $
                        122,251Computer
      equipment
                        
                        
                        25,133
                        
                        
                        
                        12,382
                        
                        
                        
                        12,751
                        
                        
                        
                        13,058Leasehold
      improvements
                        
                        
                        16,844
                        
                        
                        
                        5,347
                        
                        
                        
                        11,497
                        
                        
                        
                        18,165$
                        191,700
                        
                        
                        $
                        79,516
                        
                        
                        $
                        112,184
                        
                        
                        $
                        153,474








5.
            Equipment Under Capital
      Leases




2008
                      
                      
                      2007Computer
      equipment
                      
                      $
                      5,819
                      
                      
                      $
                      7,189Less:
      accumulated depreciation
                      
                      
                      (3,395
                      )
                      
                      
                      (2,911
                      )$
                      2,424
                      
                      
                      $
                      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 of Canada's prime
plus 0.5% per annum, and is secured by a general security agreement in all
assets except real property.   On November 20, 2008, the credit
facility was converted to a 24 month term loan whereby the Company pays
principal of CDN $6,250 per month plus interest at the Royal Bank of Canada
prime plus 1.5% per annum.




F-13




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







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 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. These afore-mentioned conditions are related
to paying all ongoing collected employee payroll tax deductions to CRA in a
timely manner on a go forward basis as well as communicating with CRA on a
regular and ongoing basis with respect to the Company’s financial condition via
forwarding copies of our quarterly and year end financial reports as well as
keeping CRA informed with respect to our efforts in securing
financing.  To date, the company has maintained in good standing the
terms of its agreement with 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 in Ontario, Canada against several parties, including
the Company, MortgageBrokers.com Inc (“MBI”), our Ontario subsidiary, 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.  The
order bears interest at the rate of 10% per year commencing from the date of the
judgment.  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.





As at
December 31, 2008, $611,360 (CDN$748,671) plus interest of $77,534 (CDN$94,948)
was accrued by the Company.




9.
            Advances
      from Related Party




As of
December 31, 2008, the controlling shareholder and Chief Executive Officer of
the Company had advanced $129,425 (December 31, 2007 - $170,691) to fund the
working capital of the Company. The advances are unsecured, non-interest
bearing, with $84,425 due on demand, $25,000 due in 2010, and $20,000 due in
2011.




F-14




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007






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:





2008
                  
                  
                  20072008
                  
                  
                  
                  
                  
                  
                  3,5782009
                  
                  
                  2,212
                  
                  
                  
                  2,212Total
      minimum lease payments
                  
                  
                  2,212
                  
                  
                  
                  5,790Less:
      amount representing interest at approx. 30%
                  
                  
                  (588
                  )
                  
                  
                  (1,146
                  )Total
      obligation under capital leases
                  
                  
                  1,624
                  
                  
                  
                  4,644Less:
      current portion
                  
                  
                  (1,624
                  )
                  
                  
                  (2,602
                  )Long-term
      portion
                  
                  $
                  -
                  
                  
                  
                  2,042




11.
      Stock-based Compensation Accrual




The
Company has accrued expenses for stock-based compensation:




a)
            As
      of December 31, 2008, the Company has accrued, as stock-based compensation
      payable, 377,838 (December 31, 2007 – 340,220) common shares at a price of
      $0.11 (December 31, 2007 - $0.30) per share for a total of $41,562
      (December 31, 2007 - $102,066) payable to the parties referred to in note
      18c (ii).




b)
            As
      of December 31, 2008, the Company has accrued, as employee stock-based
      compensation, $143,779      (December 31,
      2007 - $657,260) under its Equity Compensation Plan referred to in note
      12.





c)
            As
      of December 31, 2008, the Company has accrued, as stock-based
      compensation, 1,134,242 (December 31, 2007 – 766,063) common shares at a
      price of $0.11 (December 31, 2007 - $0.30) per share for a total of
      $124,767 (December 31, 2007 - $229,819) payable to the parties referred to
      in note 18a, 18b, and 18c (i).




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 December 31,
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


F-15




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007




The
following summarizes the warrants issued, outstanding, exercisable, expired and
exercised related to the company’s private placement that closed on June 9,
2006:


2008
                        
                        
                        2007Number
      of Warrants Outstandingat
      Beginning of Year:
                        
                        
                        1,682,976
                        
                        
                        
                        2,112,470Number
      of Warrants Exercised:
                        
                        
                        10,000
                        
                        
                        
                        223,078Warrants
      Expired:
                        
                        
                        405,494
                        
                        
                        
                        206,416Number
      of Warrants Outstanding and Exercisable at End of Year:
                        
                        
                        1,267,482
                        
                        
                        
                        1,682,976





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.




The
following is a summary of stock-based compensation issuances associated with our
January 30, 2006 agreement with RE/MAX which was modified on May 25,
2006:


YEAR
                              Date
      of Issue
                              
                              Anniversary
                                Stock
      Issued
                              
                              
                              Price
                              
                              
                              Value2007
                              July
      7, 2007
                              
                              
                              478,000
                              
                              
                              $
                              0.42
                              
                              
                              $
                              200,7602008
                              September
      11, 2008
                              
                              
                              490,500
                              
                              
                              $
                              0.11
                              
                              
                              $
                              53,955Subtotal
                              
                              
                              
                              968,500




Based
upon the sale of 2,112,470 shares in our placement which closed on June 9, 2006,
and pursuant to the January 30, 2006 agreement with RE/MAX which was modified on
May 25, 2006, a maximum number of 528,117 shares could be issued each
anniversary of the placement closing date for a total of 5,281,170 shares over
10 years.  As at December 31, 2008, the Company has issued 968,500 of
these common shares.  The issuance of the anniversary shares is
subject to the good standing of the RE/MAX January 30, 2006 and amended May 25,
2006 agreements for RE/MAX affiliates as well as the continued good standing of
a one year renewable service level agreement for the RE/MAX
Franchisee.




The
potential issuance of the shares to the June 9, 2006 private placement offering
participants is accrued for quarterly and issued annually.  The annual
issuances are recorded at the market value of the share on the date of
issuance.





On July
7, 2007, the Company issued 125,000 restricted (Rule 144) 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. The shares were issued at $1.00 per share, the offered price in
the private placement which closed on June 9, 2006.





On
October 20, 2008, the Company issued 150,000 restricted (Rule 144) common shares
at a price of $0.29 per share, based on the market price at the subscription
date, 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.





On
October 21, 2008, the Company issued 47,078 restricted (Rule 144) common shares
at a price of $0.28 per share, based on the market price at the subscription
date, 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.




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 December 31, 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 April 7, 2009. The
Company is currently in the process of amending the existing employment
agreements which are expected to be executed in 2009. Until the new employment
contracts have been formally and legally executed, the existing employment
contracts of the Company are still in effect.




F-16




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007




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
January 3, 2007, the Company issued 10,000 restricted (Rule 144) common
shares at a price of $0.75 per share, the closing price of the shares on the
date of issue, for total amount of $7,500 to SmallCapVoice.com, a third party,
based on the execution of an investor relations agreement under its service
compensation plan.





On July
7, 2007, the Company issued 478,000 restricted (Rule 144) common shares
under the terms of its Mortgage Service Licence Agreement with RE/MAX
Ontario-Atlantic Canada Inc, and its franchisee and broker owners, all third
parties that participated in the private placement offering which closed on June
9, 2006.  The shares were issued at $0.42 per share, the closing price
of the shares on the date of issue..





On July
23, 2007, the Company issued 40,000 restricted (Rule 144) common shares to
Alexander Gershtein, a third party, in exchange for furniture and equipment
valued at $45,416, under its Service Compensation Plan.  The
securities were valued at $1.14 per share based on the value of assets
purchased.





On July
23, 2007, the Company issued 25,000 restricted (Rule 144) common shares at
a price of $1.00 per share to Kalymon Consulting Ltd. in exchange for consulting
services under its Service Compensation Plan.  The securities were
valued at $1.00 per share as negotiated at the time the contract was executed in
2005.





On
July 23, 2007, the Company issued 1,700,000 shares of restricted (Rule 144)
Company stock to its senior management team based upon draft management
agreements that are expected to be executed by December 31,
2009.  These shares have not been released and the release is pending
the finalizing and execution of management agreements.  These shares
were valued at $0.43 per share, the security closing price on the date of issue
and were issued under the Company`s Equity Compensation Plan.




On
February 5, 2008, the Company issued 50,000 restricted (Rule 144) common
shares at a price of $0.19 per share, the market close price on the date of
issue, 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 (Rule 144) common
shares under the terms of its Mortgage Service Licence Agreement with RE/MAX
Ontario-Atlantic Canada Inc, and its franchisee and broker owners, all third
parties, that participated in the private placement offering which closed on
June 9, 2006.  The shares were issued at $0.11 per share, the market
close share price on the date of issue.





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, 2009.  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,
the market close share price on the date of issue.





On
December 16, 2008, the Company issued 500,000 shares of restricted (Rule 144)
Company stock to a group of its mortgage agents based upon agreements.
 These shares were issued under the Company’s Service Compensation
Plan.  The shares were issued at $0.16 per share, the market close
share price on the date of issue.




F-17




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007





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 December 31, 2008,
233,078 of the warrants were exercised at an average price of
$0.28.  As of December 31, 2008, 611,910 warrants expired, 233,078
warrants were exercised and 1,267,482 warrants remain outstanding and
exercisable.


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 December 31,
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 December
31, 2008 two new participants subscribed for 125,000 shares under the private
placement and as of December 31, 2008, $60,000 of the new participants’
promissory notes have been paid and $65,000 remains outstanding.  In
addition, as of December 31, 2008, 233,078 warrants issued under the private
placement were exercised for a total value of $64,786, see note
13.  During the fourth quarter of 2008, the Company issued 197,078
shares in relation to the warrants exercised and paid. The un-issued warrants
exercised are included in subscription for stock in the equity section of the
balance sheet.  As of December 31, 2008, $7,540 receivable on the
exercise of the warrants was outstanding and is included in subscriptions
receivable in the equity section of the balance sheet.  The shares
underlying some of the warrants exercised have not been issued to date due to
non receipt of payment from the exerciser of the warrant.




15.      
      Treasury
      Stock




During
2007, the Company acquired 12,500 common shares of the Company, on the open
market, 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, on the open market, 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.  The estimated value of this un-incurred rent expense is
$2,500 per month during the rent free period.  The estimated amount is
based on the cost of renting a similar sized property in the surrounding
area.





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.  Please see
note 18 for further details.




F-18




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







17.
            Income
      Taxes




The
Company has paid no federal or state income taxes. As of December 31, 2008, the
Company had net operating loss carry forwards for federal income tax reporting
purposes of $3,434,166 which, if unused, will expire in various years. The tax
effect of the operating loss carry forwards and temporary differences at
December 31, 2008 and 2007 are as follows:





2008
                
                
                2007Deferred
      Income Tax Assets:Net
      Operating loss carry forward
                
                $
                1,167,616
                
                
                $
                1,221,828Net
      book value and tax value differences
                
                
                (35,434
                )
                
                
                (35,434
                )Valuation
      allowance for deferred income tax assets
                
                
                (1,132,183
                )
                
                
                (1,186,394
                )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 (expense) benefit
                
                $
                (114,945
                )
                
                $
                966,886Stock
      based compensation
                
                
                60,734
                
                
                
                (289,779)Valuation
      allowance
                
                
                54,211
                
                
                
                (677,107
                )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-19




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007






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-20




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







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 issue 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-21





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







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:




2009
                  
                  $
                  5,5552010
                  
                  $
                  4,7492011
                  
                  $
                  3,3812012
                  
                  $
                  2,990




e)    On
February 8, 2007, the Company entered into a lease to rent office space in
Calgary, Alberta, Canada for maintaining the Company's western Canada
operations. 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:




2009
                    
                    $
                    7,1942010
                    
                    $
                    7,1942011
                    
                    $
                    8,6332012
                    
                    $
                    2,878







F-22




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2008 and 2007







18. Commitments
      and Contingencies (cont'd)




Commitments (cont’d)




f)    On
March 27, 2007, the Company entered into a lease to rent office space in
Concord, Ontario, Canada for 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 to a related party of the CEO and majority shareholder
(note 16) and the lease commitment period was extended from 2 to 5 years on
similar terms and conditions as was originally negotiated with a third
party.




Annual
minimum lease payments (excluding utilities, taxes and common area maintenance
expenses) are as follows:




2009
                    
                    $
                    86,5092010
                    
                    $
                    86,5092011
                    
                    $
                    86,5092012
                    
                    $
                    50,463




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.





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.





19.
            Earnings
      or Loss Per Share




Basic
earnings per shares (EPS) and Diluted EPS for the years ended December 31, 2008
and 2007 have been computed by dividing the net income or loss available to
common stockholders for each respective period by the weighted average shares
outstanding during that period.  All outstanding warrants and
non-vested restricted stock, representing approximately 4,096,644 incremental
shares, have been included in the December 31, 2008 computations of Diluted EPS
as they are dilutive due to the income generated.  All outstanding
warrants and non-vested restricted stock, representing approximately 5,203,205
incremental shares, have been excluded from the December 31, 2007 computations
of Diluted EPS as they are anti-dilutive due to the losses
generated.




20.
            Comparative
      Figures




Certain
figures for the previous period have been reclassified to conform to the current
period’s financial statement presentation.