UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




_________________________________________




AMENDMENT
NO. 1 TO FORM 10-KSB


_________________________________________




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, 2007




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 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
  Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.
  Yes           o           No           þ
  Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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-KSB or any
amendment to this Form 10-KSB.
  o
  Revenues
for year ended December 31, 2007: $ 10,251,113.
  Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of December 31, 2007 is: $3,309,741.
  Number of
shares of the registrant's common stock outstanding as of April 15, 2008 is:
38,516,470
  Transfer
Agent as of April 15, 2008:
  Securities
      Transfer Corporation2591
      Dallas Parkway, Suite 102Frisco,
      TX, 75034















TABLE
OF CONTENTS




PART IITEM
      1.
                            DESCRIPTION OF BUSINESS
            1ITEM
      2.
                            DESCRIPTION OF PROPERTY
            6ITEM
      3.
                            LEGAL PROCEEDINGS
            6ITEM
      4.
                            SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
            7PART IIITEM
      5.
                            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS
            8ITEM
      6.
                            MANAGEMENT S DISCUSSION AND ANALYSIS
            10ITEM
      7.
                            FINANCIAL STATEMENTS
            14ITEM
      8.
                            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE
            14ITEM
      8A
      (T).             CONTROLS AND PROCEDURES
            14ITEM
      8B.                    OTHER INFORMATION
            14PART IIIITEM
      9.
                            DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
    ACT
            15ITEM
      10.                     EXECUTIVE COMPENSATION
            17ITEM
      11.                     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT
            19ITEM
      12.                     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
      DIRECTOR INDEPENDENCE
            19ITEM
      13.                     EXHIBITS AND REPORTS ON FORM 8-K
            19ITEM
      14.                     PRINCIPAL ACCOUNTANT FEES AND SERVICES
            21SIGNATURES
            22















PART I




ITEM
1.  DESCRIPTION OF BUSINESS




Corporate
Background




MortgageBrokers.com
Holdings, Inc. (the “Company”, “we”, “our” or “us”) was incorporated under the
laws of Delaware on February 6, 2003 as MagnaData, Inc. and was initially
established for the purposes of providing consulting and technical support to
internet service providers to develop e-commerce market intelligence
services.  On January 31, 2005, Alex Haditaghi, the Company’s current
majority shareholder, chief executive officer and sole director, purchased
1,510,000 issued and outstanding shares from three shareholders of MagnaData
Inc. for cash consideration ($692,813) in an arms length
transaction.  This share purchase represented approximately 78% of
MagnaData's common shares outstanding at the time of the
transaction.  In February 2005, we filed articles of amendments with
the State of Delaware changing the name of our company to MortgageBrokers.com
Holdings, Inc.  On March 21, 2005, the Company entered into a Stock
Purchase Agreement and Share Exchange with Mortgagebrokers.com, Inc. (“MBI”), an
Ontario, Canada, corporation, whereby the Company purchased all 1,000 issued and
outstanding common shares of MBI from Alex Haditaghi, the sole shareholder of
MBI, in exchange for the issuance to Mr. Haditaghi of 4,000,000 shares of our
stock.  Pursuant to this agreement, MBI became our subsidiary for
operating as a mortgage broker in Ontario.  In October 2005, we
incorporated, as a wholly-owned subsidiary, a Canadian federally incorporated
operating company for the purpose of expanding our mortgage broker licensure and
operations across Canada.  Currently, through our subsidiaries, we act
as a mortgage brokerage firm serving the borrowing needs of real estate
professionals and individual home buyers across Canada.






Overview




Background




During
the first half of 2005, management developed our business model, business plans
and strategic market plans that included: organization of the company and
divisions; identification of our 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’ recruitment models; 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.




We began
to establish bookkeeping practices in mid-2005 to account for multiple
subsidiaries, sales channels, and products and services with an initial focus on
two profit center sales channels, namely: the mortgage broker sales channel - a
national network of fully commissioned mortgage broker agent teams, who were
both mobile agents and were operating store front retail branch locations; and,
the real estate sales channel - servicing strategic real estate partner lead
referrals regionally supported with our network of mortgage agents.




During
the last half of 2005, we began to execute our business strategy and generate
revenue.  These activities included the recruitment and licensing of
mortgage brokers and mortgage sales agents within our mortgage broker sales
channel.  We have also commenced discussions with strategic market
referral alliances in our real estate sales channel.  We have incurred
expenses in the establishment of sales management resources and the launch of
our mortgage broker and real estate sales channels.  We received
revenue from these operations.




In the
first two quarters of 2006, we continued to execute, test and refine our
business strategy of recruiting and licensing mortgage brokerage books of
business across Canada and solidifying our first two real estate strategic
alliances, namely: Maxwell Realty Inc. (“Maxwell”) and RE/MAX Ontario-Atlantic
Canada Inc. (“RE/MAX”).  Our first two real estate strategic alliances
provide us with added market access initially in Alberta, Ontario and Eastern
Canada and eventually in the United States and the E.U.







1




During
2006, we announced that on January 31, 2006 and later amended on May 25, 2006,
RE/MAX had executed a renewable 10-year strategic alliance marketing, referral
and revenue sharing agreement with us.




The
assets of Lending Source Canada Inc. in Alberta, Canada were acquired by our
Company on March 10, 2006, from the owners of Maxwell in exchange for stock in
our Company to provide a platform for servicing Maxwell and launching our
business in western Canada.  A third owner of Lending Source Canada
Inc. received no compensation but was hired by our Company as a sales executive
servicing western Canada.  On April 12, 2006, our Company executed a
three year renewable marketing, referral and revenue sharing agreement with
Maxwell.
 
 With the
basic business model infrastructure in place, the Company’s focus through 2007
was towards recruitment of mortgage agents across Canada and growing our real
estate referral relationships with RE/MAX and Maxwell.  In 2007, 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.  Four of our senior sales executives were tasked in 2007 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.  In 2007,
our Company also commenced a pilot sales training program for our mortgage sales
agency and commenced development of on-line www-based systems to support our
national sales agency in the areas of Customer Relationship Management,
Marketing, and training.




Products
and Services




We are a
mortgage origination company that has gained access to a full range of mortgage
funding products from in excess of 40 banks, trusts and private lender
sources.  The Company acts as broker only and is not a
lender.  The Company has no ‘on balance sheet’ liabilities in case
mortgage financing becomes default.  We are dedicated to finding the
right loan, with the best rates, terms and costs, to meet each client's unique
needs.  Our subsidiaries generate revenue by placing mortgages, on
behalf of clients, with third party lenders who in return, pay the Company a
commission fee.  The commission fee is a combination of finder's fees
and volume bonus whose aggregate sum fee typically ranges between 75 to 150
basis points (0.75 to 1.5%) of the total mortgage volume.  We
currently earn additional commission revenue through the referral and placement
of creditor insurance with third party insurance providers.  In
general, when a client takes creditor insurance related to the mortgage
transaction originated by the Company, the Company earns a commission which is
estimated to be 20 to 30 basis points of the funded insurance
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.




Distribution
Methods for our Services




The
Company provides its services to the consumer through a national sales agency
network that is exclusively licensed with the Company.  Our national
agency sales force are independent contractors operating exclusively under the
Company's mortgage brokerage licensure and brand who operate regionally as
mobile sales professionals and teams; alternatively, they may establish regional
retail offices from which they build sales teams leveraging the Company’s
business model.  As at December 31, 2007, we had 320 licensed mortgage
agents operating across Canada and our agents had established 27 retail office
locations under the Company brand.




Market
Conditions




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.




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 10,000
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).






2








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.




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.




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.




Competitive
Business Conditions




Mortgage
origination in Canada can be segmented into three broad categories and their
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.




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
very fragmented, with an estimated 50% of the market captured by five large
Canadian mortgage origination companies or “Consolidating Brokerages” who also
lay claim to having more than two-thirds of the active mortgage agents licensed
in Canada.  There is significant market competition in the recruitment
of mortgage agents and their associated ‘books of business’ amongst the mortgage
originators.




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




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 100% 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.




The
competitor mobile sales teams of the major banks compete with us by leveraging
bank brand appeal, exclusive mortgage products and leveraging 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.




Our
Business Model




Overview




We have
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.  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
ownership.






3








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 allows 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.




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.




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.




The
RE/MAX “Mortgage Solution Program” was launched on June 1, 2006 and, as of
November 7, 2007, 76 RE/MAX franchises across Ontario and Atlantic Canada,
representing in excess of 30% of the RE/MAX Franchise network sales force, were
participating in the referral program.  RE/MAX 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.




The
Maxwell “Mortgage Solution Program” was launched on April 12,
2006.  Maxwell is the largest independent real estate company in
Alberta, Canada.  According to the agreement, our mortgage agents will
service the Maxwell network which, since its inception in 1999, has grown to
over 20 offices with over 650 successful real estate agents throughout the
province of Alberta.  In addition to Maxwell's six Calgary offices,
franchises have been established in Canmore, Lethbridge, Edmonton, Fort
McMurray, Stettler, Airdrie, Medicine Hat, Red Deer and Chestermere Lake,
Alberta.




Incentives
for Mortgage Brokers




Our
business model provides an opportunity for our Canadian subsidiary's national
agency sales force to earn stock warrants in the Company, generally 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,
pursuant to the execution of a stock warrant agreement.  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.  It is currently
anticipated that the first Company stock warrants associated with this program
will be executed by contracted sales mortgage agents in the fall of 2008 which
may be monetized in 2009 at the earliest. As reported in the Company's Form 8K
filing on June 9, 2006, Alex Haditaghi, the Company Chairman and Chief Executive
Officer, agreed that commencing on January 31, 2006, the next 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.









4






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 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.




Incentives
for Strategic Real Estate Brokerage Partners




In
addition to issuing stock-based compensation to our referral market alliances,
the Company compensates cash referral fees associated with funded mortgages, the
bulk of which is directed to the real estate agent and their
broker.  In the RE/MAX program, our referral fees are directed through
the broker into a registered retirement fund administered by The Manufacturers
Life Insurance Company (“Manulife Financial”).  In this way, the real
estate agent get the benefit of the referral commission by leveraging their
current customer base and the added benefit of receiving a tax benefit resulting
from deposits automatically made into their Registered Retirement Savings
Plan.
  RE/MAX
Agreements
  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 to be
known as the “Mortgage Broker Solution.”  In return, RE/MAX agreed to
refer to our Company all requests for mortgage financing that are received
directly by RE/MAX whether received on the RE/MAX web site or
otherwise.
  In
consideration for this alliance, the Company offers the RE/MAX franchises,
associated sales associates and RE/MAX revenue sharing from mortgage referrals
that result in a funded mortgage.  In addition to revenue sharing,
RE/MAX and their network 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 shares at $1.00 per share 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 $260,126 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
offering.  Based on non-payment of outstanding promissory notes, the
Company commenced cancellation of issued shares having outstanding promissory
notes totaling $125,000 with new replacement subscriptions resulting in a cash
payment of $60,000 and a new promissory note of $65,000.  As at
December 31, 2007, the cancellation of the 125,000 shares associated with the
private placement was still in progress, which left the Company with a
subscription receivable balance outstanding associated with the PPM of $220,000,
which includes the promissory note of $65,000.  As at December 31,
2007, warrants associated with the PPM were exercised for 64,086 shares of our
common stock for a purchase price of $64,086.  As at December 31,
2007, the Company had a subscription receivable balance associated with these
warrant exercises of $7,540.
  The
Company agreed, on each anniversary of the commencement of the Re-MAX agreement,
for so long as such agreement remains in force, commencing on June 1, 2007, to
issue to the 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 issued to purchaser (such right to additional shares
being assignable at the discretion of the person entitled
thereto).  The Company also agreed with Re/MAX that it would not,
prior to June 1, 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.




5




Maxwell
Agreement
  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.




Trade
Marks




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
Licenses




In
Canada, our services are governed under licenses granted by the respective
provincial governments under various versions of a “Mortgage Brokers
Act”.  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.  The Mortgage Brokers Act is being updated and
amended in many jurisdictions the Company operates in.  The biggest
changes that might have an affect on the Company that are being considered are
associated with new educational requirements for mortgage agents.  We
see this as a very positive step to help ensure that our agents are as
professional and educated as possible which should enhance the Consumer
experience.




Employees




As at
March 31, 2008, our Company had 15 full-time staff.




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 commencing in May 1,
2007.




The
Company is not party to any regional lease obligations associated with the 27
retail office locations of our sales agency.




ITEM 3. LEGAL PROCEEDINGS




Peter
Doherty, a former employee, commenced an action against both of the Company’s
subsidiaries, MortgageBrokers.com Inc. and MortgageBrokers.com Financial Group
of Companies Inc on July 31, 2007 in the Ontario Superior Court of Justice for
wrongful termination.  The statement of claim was for an aggregate
payment of CDN $600,000 plus interest and costs.  The Company filed a
statement of defense on September 5, 2007.   A mediation took
place in this matter on February 11, 2008, and at that time a settlement was
reached between the parties whereby MortgageBrokers.com Inc. would pay $23,500
to Peter Doherty.







6




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;




(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, cross-claim and counterclaim in response to Trisan’s statement of
claim, in which the defendants alleged breach of the loan agreement by
Trisan.




On
October 3, 2007 a partial summary judgment from the Ontario Superior Court
ordered that the Borrowing Parties pay Trisan the sum of CDN$598,636 within 90
days, along with interest in the amount of CDN$136,128 and legal expenses in the
amount of CDN$8,907.  The court further ordered the dismissal of the
counterclaim filed by the Company and the Borrowing Parties and ordered that the
balance of Trisan’s claims contained in its statement of claim should proceed to
trial. The Court further ordered that 500,000 unrestricted shares of the Company
be deposited by the defendants with an escrow agent upon payment of the above
ordered amounts, pending final disposition of Trisan’s other claims and that
costs of the motion for summary judgment be fixed at CDN$5,000 payable to Trisan
within 90 days.  Upon payment of the judgment amount, the security
provided for the loan would be released.


The
October 3, 2007 partial summary judgment was appealed by the Company and the
Borrowing Parties, but the judgment was upheld on appeal by the Ontario Court of
Appeal on March 31, 2008 with costs for the appeal fixed at
$CDN5,000.




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




ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS




None.






7




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.




2007
            
            High
            
            
            LowFirst
      Quarter
            
            $
            1.15
            
            
            $
            0.59Second
      Quarter
            
            $
            2.27
            
            
            $
            0.31Third
      Quarter
            
            $
            0.50
            
            
            $
            0.35Fourth
      Quarter
            
            $
            0.43
            
            
            $
            0.302006
            
            High
            
            
            LowFirst
      Quarter
            
            $
            2.35
            
            
            $
            1.25Second
      Quarter
            
            $
            1.70
            
            
            $
            0.98Third
      Quarter
            
            $
            1.00
            
            
            $
            0.54Fourth
      Quarter
            
            $
            1.01
            
            
            $
            0.25


Holders




On
December 31, 2007, there were 363 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 2007 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







8






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, 2007, no options had been issued under
this plan.  On July 23, 2007, the Company’s Board of Directors
authorized the issuance 1,700,000 shares of restricted (Rule 144) Company stock
to its senior management team pursuant to the plan.  These shares have
not been released and the release is pending the finalizing and execution of
management agreements.  The Company is currently in the process of
amending the existing employment agreements which are expected to be executed in
2008.
  On March
1, 2005 the Board of Directors approved a program (“Service Compensation Plan”)
whereby Company stock would be issued for services, inaugurating its service
compensation program which is embodied in its negotiated agreements with service
providers.  The purpose of the Service Compensation Plan 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 currently authorized for issuance
under the Service Compensation Plan is 5,000,000.




Recent
Sales of Unregistered Securities




During
2007, the Company issued the following restricted shares of its common stock, in
each case relying upon the exemption from registration afforded by Regulation S
or Section 4(2) of the United States Securities Act of 1933:




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




On July
23, 2007, the Company issued 40,000 restricted common shares to Alexander
Gershtein in exchange for furniture and equipment valued at $45,416, under its
Service Compensation Plan.




On July
23, 2007, the Company issued 25,000 restricted common shares at a price of $1.00
per share to Kalymon Consulting Ltd. in exchange for consulting services under
its Service Compensation Plan.




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.  These shares were issued under the Company`s
Equity Compensation Plan.




On
November 2, 2007, the Company committed to issuing 50,000 shares to vFinance,
Inc. and affiliates in exchange for investment banking services pursuant to the
execution of an investment banking service agreement for services over the
following 12 months.







9




ITEM 6.
            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, 2007 and 2006.  The following
information should be read in conjunction with the audited consolidated
financial statements for the period ending December 31, 2007 and notes thereto
appearing elsewhere in this form 10-KSB.




Overview




In
operation since 2005, our Company is a mortgage brokerage operation whose
national agency sales force service the borrowing and refinancing needs of
individual home buyers.  We have access to a full range of mortgage
lenders and our agents’ source and negotiate the loan with the best rates, terms
and costs to meet each customer's unique needs.  The company acts as
broker only and is not a lender.  The company has no ‘on balance
sheet’ liabilities in case mortgage financing becomes default.  The
Company has established what it believes to be unique strategic alliances within
the real estate industry for mortgage origination referrals.  Our
national agency sales force consists of independent contractors operating
exclusively under the Company's licensure who may operate regionally as
individual businesses or they may establish regional retail offices from which
they build agency sales teams leveraging the Company’s business
model.  The primary services that the Company provides to our national
agency sales network is mortgage brokerage licensure; a national brand and
related marketing initiatives; a regulatory compliance service associated with
our agents transactions; a payroll and commission service reconciling commission
fees paid by lenders and insurers and accurate and timely payroll to our agents;
revenue optimization for our agents through deal flow aggregation; the
establishment of market partnerships to allow our agency sales network to access
a greater portion of the mortgage and refinance market; and, information
technology services.




In 2007,
operations were 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.




As at
December 31, 2007, we had 320 licensed mortgage agents operating across Canada
and our agents had established 27 retail office locations under the Company
brand.  The number of mortgage agents in our national sales agency at
the end of the reporting period represents a 66% increase over that of
2006.




Results
of Operations




Gross
revenue in 2007 increased by 155% from 2006 to $10,251,113, which management
believes was directly related to increasing the number of sales agency mortgage
agents by 67% and having a significant portion of our sales agency’s book of
business mature early in the year so that mortgage origination volumes were
maximized during typical summer and fall seasonal business peak
periods.
  The
following summarize material trends and outlooks related to our comparative
income statement:
  1.
              operating
      expenses increased in 2007 by 105% over
2006
  2.
              Gross
      revenue increased by 155% from 2006 to
  $10,251,113
  3.
              The
      Company’s operating expenses increased in 2007 by 105% over 2006. The
      primary components that make up this increase are agent commissions,
      salaries and benefits, general and administrative expenses, occupancy
      costs and stock-based compensation:
  ·
              73%
      of the operating expenses in 2007 were associated with agent
      commissions.  Agent commission fees as a percent of revenues
      increased by 15% from 2006 to 2007.  This is primarily related
      to an increase in the volume of mortgage origination that was sourced from
      referral alliances (from which the Company receives a marginally smaller
      portion of the commission fees) and the introduction of higher commission
      fees paid out to very large agent teams (in excess of $100 million in
      mortgage origination annually);
  ·
              11%
      of the operating expenses in 2007 were associated with salaries and
      benefits.  Salaries and benefits as a percent of total operating
      expenses decreased by 31% from 2006 to
2007.
  ·
              General
      and administrative expenses as a percent of total operating expenses
      decreased by 41% from 2006 to 2007.
  ·
              Occupancy
      costs increased 33% from 2006 to $126,886 and is primarily related to
      moving into the Company’s current corporate office space which will meet
      corporate growth needs for the near
future.





10




·
              Stock-based
      compensation decreased by 12% from 2006 to $852,015 and represented less
      than 10% of total operating expenses in
2007.
  Liquidity
and Capital Resources
  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 a Manulife administered RRSP account 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
assets.  Comparatively as at December 31, 2006, we had $1,238,357 in
cash and a total of $1,450,891 in total assets.
  As at
December 31, 2007, we had $791,419 in accounts payable, $149,601 in accrued
liabilities related to services received but not invoiced yet and employee
vacation accrual, $170,691 in loans payable to a related party, $434,584 in
employee tax deductions payable, $989,145 in accrued stock-based compensation,
$151,316 in bank indebtedness related to an unsecured line of credit, $44,936 in
trust liability associated with RE/MAX agent referral commissions payable
awaiting transfer to the agent’s Manulife RRSP account, and $773,658 in accrued
expenses associated with a legal judgment for a total of $3,509,994 in
liabilities.  Comparatively as at December 31, 2006, the Company had
$149,911 in accounts payable, $178,276 in accrued liabilities, $204,868 in loans
payable to a related party, $ 292,706 in employee tax deductions payable,
$30,320 payable in a trust liability associated with RE/MAX agent referral
commissions payable awaiting transfer to the agent’s Manulife RRSP account,
$5,589 in obligations under capital leases, $1,155,066 in stock-based
compensation accrual and $98,682 in bank indebtedness related to an unsecured
line of credit for a total of $2,115,418 in liabilities.
  Management
makes the following comments regarding the most significant factors affecting
Company liquidity and capital resources and their measured trends over the
reporting period as compared to 2006:
  ·
              Cash
      and cash equivalents decreased by 33% from 2006 to
      $830,852.  This trend was primarily due to a reduction in
      working capital reserves.
  ·
              Prepaid
      expenses increased by 89% from 2006 to $148,611.  The trend was
      primarily related to funding growth and expansion through 2007 where
      increases were seen in the recruitment of mortgage agents whose
      registration fees were incurred as a prepaid expense in the fall of 2007
      for the following year but had not been collected yet from the agent; and,
      increases were incurred in prepaid rent over the same period in 2006
      related to the leasing of our current corporate offices.  We do
      not expect that the rate of increase experienced through 2007 over 2006
      will continue through 2008 due, in part, to the Company implementing a new
      policy to obtain receipt of agent registration expenses in advance of such
      registration and due, in part to the fact that the company doesn’t expect
      the remaining existing prepaid expenses to increase during
      2008.
  ·
              Bank
      indebtedness increased by 53% over 2006 to $151,316.  The
      Company continues to make full use of all available credit to supplant
      working capital.  Management expects to commence principal
      payments to eliminate bank indebtedness when it achieves operational
      profitability.
  ·
              Accounts
      payable increased 428% over 2006 to $791,419.  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 2008 assuming our mortgage
      agent recruitment program continues the pace in 2008 as experienced in
      2007.
  ·
              The
      Company has accrued in 2007 for the liability of a partial summary
      judgment to a claim to which the Company is a party.  The
      calculated judgment liability is $773,658.  While the full
      amount of the judgment was accrued, it is the expectation of management
      that only a portion, if any, of the liability will be satisfied by the
      Company in this multi-party judgment.  See discussion
      below.
  ·
              Employee
      tax deductions payable increased by 48% from 2006 to
      $434,584.  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
      2008.  See discussion
below.
  ·
              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.
  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.




11






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
agreement with CRA which, if certain conditions are met, allows the Company to
pay down the balance in monthly payments of $10,000 beginning February 28, 2008
with the remaining balance due on September 30, 2008.  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 for the amount owing to CRA.  The liability
currently bears interest at 9% annually.
  Judgment
in Lawsuit
  On
October 3, 2007 a partial summary judgment from the Ontario Superior Court
ordered 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.


Critical
Accounting Policies




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




Revenue
Recognition


Revenue
consists of mortgage brokerage fees and finders fees. The revenue is recognized
upon the funding of a customer’s mortgage and when the collection is reasonably
assured which occurs when the brokerage fee from the bank has been
advanced.
  Share-based
Payment
  The
Company adopted the disclosure requirements of SFAS No. 123R, "Share-Based
Payment" ("SFAS No. 123R") for stock options and similar equity instruments
(collectively, "options") issued to employees. The Company applies the fair
value base method of accounting as prescribed by SFAS No. 123R. Under the fair
value based method, compensation cost is measured at the grant date based on the
value of the award and is recognized over the service period, which is usually
the vesting period. For stock options, the fair value is determined using an
option-pricing model that takes into account the stock price at the grant date,
the exercise price, the expected life of the option, the volatility of the
underlying stock and the expected dividends on it, and the risk-free interest
rate over the expected life of the option. SFAS No. 123R also applies to
transactions in which an entity issues its equity instruments to acquire goods
or services from non-employees. Those transactions must be accounted for based
on the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable, as described in note
12.
 
 Going
Concern
  The
Company’s consolidated financial statements are presented on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. For the year ended December 31,
2007, the Company incurred a loss of $2,843,781 (2006 -
$2,008,677).  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.






12




The
Company has devoted substantially all of its efforts to establishing its current
business. Management developed its business model, business plans and strategic
marketing plans that included: 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.
  The
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.


Off-Balance
Sheet Arrangements








13






ITEM
7. FINANCIAL STATEMENTS




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




ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE




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.
  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 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.


ITEM 8A(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 2007 and as of December 31, 2007, 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 not 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.




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, 2007 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal controls over
financial reporting.




ITEM 8B. OTHER INFORMATION




None.






14






PART III




ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT




The
following table sets forth, as of March 31, 2008, the name and age of our sole
director and executive officers.  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
              35
              President,
      CEO, CFO and Chairman of the BoardDong
      Lee
              34
              Vice
      President of OperationsRobert
      Hyde
              44
              Vice
      President of Finance & AdministrationDavindra
      Persaud
              36
              Corporate
      ControllerMatthew
      Laverty
              36
              Vice
      President of Sales - Eastern CanadaDave
      Mercer
              47
              Vice
      President of Sales - Western Canada


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 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, establishing corporate policy and
providing overall leadership to the organization.




Dong
Lee, Vice President of Operations




Dong Lee
has been vice president of operations at our Company 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.




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 in April of 2005.  His responsibilities
include corporate development, finance, 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 system oversight and
support.






15






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 provides early stage technology based
companies/divisions/ entrepreneurial subsidiaries 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.  He is currently completing his CFA
designation.




Davindra
Persaud, Corporate Controller




Mr.
Persaud joined MortgageBrokers.com 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.  Mr.
Persaud is currently in the process of obtaining his Certified Public Accountant
designation in the United States.




Matthew
Laverty, Vice President of Sales - Eastern Canada




Since
joining our company in September, 2005, Mr. Laverty's role at
MortgageBrokers.com has been to lead the execution of our Mortgage Broker
Channel Sales plan across Eastern Canada.  He leads our acquisition
strategy and establishes our national network of mortgage broker managing
partners.




Prior to
joining MortgageBrokers.com, Mr. Laverty was based in Ottawa as Regional Sales
Director, Eastern Ontario and Atlantic Canada for Mortgage Intelligence Inc., a
GMAC company.  As Regional Director at Mortgage Intelligence, Mr.
Laverty was responsible for the recruitment, management and revenue generation
of over 130 mortgage consultants.  Prior to that, Mr. Laverty spent 10
years in various sales, marketing and management roles at Americredit Financial
Services, Canadian Imperial Bank of Commerce (CIBC) and The Associates Financial
Services of Canada.




Dave
Mercer, Vice President of Sales - Western Canada




Since
joining our Company in September of 2005, Mr. Mercer has been responsible for
introducing MortgageBroker.com's value proposition to mortgage agents across the
country through executing the company's `Broker Channel Acquisition
Program'.  Through this program, MortgageBrokers.com will be offering
mortgage agents equity ownership in a public company in exchange for their
origination volume.  In addition, Mr. Mercer will be focusing on
expanding the company's product offering to strengthen the sustainability of
MortgageBroker.com's business model, while further legitimizing the broker
channel as a first choice for financing.  Through ongoing
diversification of the company's product offerings and associated revenue
streams, Mr. Mercer will help the executive management team build sustainable
Mortgage Broker Partner commissionable earnings.




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.






16






Mr. Mercer
has also served as President of the Alberta Mortgage Brokers Association (AMBA),
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 (AREA) through Mt. Royal College.




Directors;
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.”




COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT




Mr.
Haditaghi has not filed a Form 5 for 2007, but intends to complete such
filing in the near future.  None of the Company’s executive officers
other than Mr. Haditaghi have filed a Form 3 or a Form 5 but intend to complete
such filing in the near future.




CODE
OF ETHICS




The
Company has adopted a Code of Ethics applicable to its Chief Executive Officer
and Chief Financial Officer and has filed a copy of this Code of Ethics as an
exhibit hereto.




ITEM 10. EXECUTIVE COMPENSATION




The
following summarizes the Companies named executive officers
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
            2007
              2006
            $120,930
              $87,449
            0
              0
            259,459
              0
            0
              0
            0
              0
            0
              0
            0
              0
            $380,389
              $87,449Dong
      Lee, VP, Operations
            2007
              2006
            $120,930
              $
      113,159
            0
              0
            107,040
              180,000
            0
              0
            0
              0
            0
              0
            0
              0
            $227,970
              $293,159Robert
      Hyde, VP, Finance
            2007
              2006
            $120,930
              $107,775
            0
              0
            278,320
              42,500
            0
              0
            0
              0
            0
              0
            0
              0
            $399,250
              $150,275Dave
      Mercer, VP-Sales
            2007
              2006
            $118,604
              $
      77,160
            0
              0
            154,247
              56,940
            0
              0
            0
              0
            0
              0
            0
              0
            $272,851
              $134,100Matthew
      Laverty, VP-Sales
            2007
              2006
            $120,155
              $
      97,002
            0
              0
            105,126
              68,328
            0
              0
            0
              0
            0
              0
            0
              0
            $225,281
              $165,330




Footnotes:




1:  The
executive’s base salary was paid in Canadian dollars.  In Canadian
dollars, the base salary was $130,000 in 2007 for each executive.  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 2006 as reported by the Bank of Canada was USD $1.0 = CDN
$1.134.






17






2:  The
equity-awards were earned by the identified executive management and are pending
release upon completion of employment agreements.  The employment
agreements are expected to be completed in 2008.  The equity awards
are based on verbal agreements between Company management and the Company CEO as
disclosed in past filings.  The portion of the stock-based
compensation that were 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 $0.30.  All stock-based
compensation earned in 2006 were owing at December 31, 2006 and therefore valued
at $0.80.






Narrative
Disclosure to the Summary Compensation Table




The
employment agreements for all of 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 2008.









OUTSTANDING
      EQUITY AWARDS AT 2007 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
            0Dong
      Lee, VP, Operations
            0
            0
            0
            0
            0
            0
            0
            0
            0Robert
      Hyde, VP, Finance
            0
            0
            0
            0
            0
            0
            0
            0
            0Dave
      Mercer, VP-Sales
            0
            0
            0
            0
            0
            0
            0
            0
            0Matthew
      Laverty, VP-Sales
            0
            0
            0
            0
            0
            0
            0
            0
            0


Compensation
of Directors




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







18




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 April 15, 2008, no options to Company employees,
officers or directors are outstanding.




ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT








Name
      of Beneficial Owner (2)
            Number
      of Total Shares
            Percent
      of class (1)Alex
      Haditaghi
            25,734,000
            66.9%All
      executive officers
              
              and
      directors as a group
            25,734,000
            66.9%


(1)
Based on 38,466,470 shares of common stock issued and outstanding as of December
31, 2007.




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.




For the
period of September 2006 to March 2007, the Company operated from a property
owned by a related party and did not incur any rent expenses during this
period.




On August
1, 2007, the Company’s current office space was sold to a related party of the
Chief Executive Officer, the Company’s majority shareholder.  The
Company’s lease agreement obligation was extended from two to five
years.




ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K




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






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.10.6
              Service
      Level Agreement between Mortgagebrokers.com Financial Group of Companies,
      Inc. and RE/MAX Franchisees10.7
              Lease
      between Mark Pharmaceutical Services Inc. and Mortgagebrokers.com,
      Inc.









19




10.8
              Financial
      Advisory and Investment Banking Agreement dated November 2, 2007 between
      vFinance Investments, Inc. and Mortgagebrokers.com Holdings,
      Inc.10.9
              Form
      of Subscription Agreement entered into between the Company and investors
      in the Company’s 2006 Private Offering14.1
              Code
      of Ethics (5)21.1
              List
      of Subsidiaries31.1
              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.







20




ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES




Audit
Fees




For the
Company's fiscal year ended December 31, 2007 and 2006, we were billed
approximately $54,000 and $70,000, respectively for professional services
rendered for the audit and reviews of our financial statements.  The
current year fees include $24,000 related to quarterly review fees paid to our
previous auditors.




Tax
Fees




For the
Company's fiscal year ended December 31, 2007 and 2006, we did not incur any
fees for professional services rendered for tax compliance, tax advice, and tax
planning.




All Other
Fees




The
Company was billed approximately $5,000 in fees related to accounting and audit
services rendered by our principal accountant for the fiscal year ended December
31st , 2007 to restate our financials for the 2006 first, second and third
quarters.






21








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
      AccountingOfficer,President, Secretary and
Director






Dated:
April 23, 2008




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






NAME
            
            TITLE
            DATE/s/ Alex
      Haditaghi
            
            President,
      Secretary and Director
            April
      23, 2008Alex
      Haditaghi







22






MORTGAGEBROKERS.COM
      HOLDINGS, INC. AND SUBSIDIARIES
                  (FORMERLY
      MAGNADATA, INC.)
                  
                  CONSOLIDATED FINANCIAL STATEMENTS
                  
                  
                  DECEMBER
      31, 2007 AND 2006
  
 
    MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
  CONSOLIDATED
FINANCIAL STATEMENTS
  DECEMBER
31, 2007 AND 2006
  CONTENTS
  
 Report
      of Independent Registered Public Accounting Firm DNTW Chartered
      Accountants, LLP
              F1Report
      of Independent Registered Public Accounting Firm SF Partnership,
      LLP
              F2Consolidated
      Balance Sheets
              F3Consolidated
      Statements of Operations and Comprehensive Loss
              F4Consolidated
      Statements of Stockholders' Deficit
              F5
      - F6Consolidated
      Statements of Cash Flows
              F7Notes
      to Consolidated Financial Statements
              F8
      - F26
   
  
 
   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
 
  F1
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Board of Directors and Stockholders of
 Mortgagebrokers.com
Holdings, Inc. and Subsidiaries
 (Formerly
MagnaData, Inc.)
  We
have audited the accompanying consolidated balance sheets ofMortgagebrokers.com Holdings, Inc.
and Subsidiaries  (Formerly MagnaData, Inc.)  (a Delaware corporation) as of
December 31, 2006 and 2005, and the related statements of operations and
comprehensive loss, stockholders' deficit, and cash flows for each of the years
in the two-year period ended December 31, 2006. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position ofMortgagebrokers.com
Holdings, Inc. and Subsidiaries  as of December 31, 2006 and
2005, and the results of its operations and its cash flows for each of the years
in the two-year period ended December 31, 2006 in conformity with accounting
principles generally accepted 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 has suffered recurring losses and negative working
capital from operations, which raises substantial doubt about its ability to
continue as a going concern. Management’s plan in regard to these matters are
also described in note 1. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
  "SF
PARTNERSHIP, LLP"
 CHARTERED
ACCOUNTANTS
  Toronto,Canada
 April
12, 2007
      
 F2
 
 MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Consolidated
Balance Sheets
 December
31, 2007 and 2006
  2007
              
              
              2006ASSETSCurrent
      AssetsCash
      and cash equivalents
              
              $
              830,852
              
              
              $
              1,238,357Referral
      fees held in trust (note 3)
              
              
              44,936
              
              
              
              30,320Prepaid
      expenses
              
              
              148,611
              
              
              
              78,445Total
      Current Assets
              
              
              1,024,399
              
              
              
              1,347,122Equipment, net (note
      4)
              
              
              153,474
              
              
              
              98,571Equipment Under Capital
      Leases (note 5)
              
              
              4,278
              
              
              
              5,198Total
      Assets
              
              $
              1,182,151
              
              
              $
              1,450,891LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      LiabilitiesBank
      indebtedness (note 6)
              
              $
              151,316
              
              
              $
              98,682Accounts
      payable
              
              
              791,419
              
              
              
              149,911Accrued
      liabilities
              
              
              149,601
              
              
              
              178,276Employee
      tax deductions payable (note 7)
              
              
              434,584
              
              
              
              292,706Accrued
      legal judgment (note 8)
              
              
              773,658
              
              
              
              -Advances
      from related party (note 9)
              
              
              170,691
              
              
              
              204,868Trust
      liability (note 3)
              
              
              44,936
              
              
              
              30,320Obligation
      under capital leases - current portion (note 10)
              
              
              2,602
              
              
              
              1,674Stock-based
      compensation accrual - current portion (note 11a)
              
              
              102,066
              
              
              
              232,082Employee
      stock-based compensation accrual (note 11b)
              
              
              657,260
              
              
              
              813,850Total
      Current Liabilities
              
              
              3,278,133
              
              
              
              2,002,369Obligation Under Capital
      Leases (note 10)
              
              
              2,042
              
              
              
              3,915Stock-based Compensation
      Accrual (note 11c)
              
              
              229,819
              
              
              
              109,134Total
      Liabilities
              
              
              3,509,994
              
              
              
              2,115,418Commitments 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; 38,466,470 (2006: 36,088,470) issued and
                outstanding(note
      12)
              
              
              3,847
              
              
              
              3,609Additional
      Paid-in Capital
              
              
              3,424,264
              
              
              
              2,179,443Additional Paid-in Capital -
      Warrants (note 13)
              
              
              622,211
              
              
              
              732,605Subscription
      for Stock
              
              
              64,086
              
              
              
              -Subscription Receivable
      (note 14)
              
              
              (227,540
              )
              
              
              (242,301
              )Treasury
      Stock(note 15)
              
              
              (25,234
              )
              
              
              (17,779
              )Accumulated
      Other Comprehensive Loss
              
              
              (33,009
              )
              
              
              (7,417
              )Accumulated
      Deficit
              
              
              (6,156,468
              )
              
              
              (3,312,687
              )Total
      Stockholders' Deficit
              
              
              (2,327,843
              )
              
              
              (664,527
              )Total
      Liabilities and Stockholders' Deficit
              
              $
              1,182,151
              
              
              $
              1,450,891
  (The
accompanying notes are an integral part of these consolidated financial
statements.)
 
 
 F3
 
 
 MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Consolidated
Statement of Operations and Comprehensive Loss
 Years
Ended December 31, 2007, and 2006
  2007
              
              
              2006Revenue
              
              
              10,251,113
              
              
              
              4,023,281ExpensesCommission
      and agent fees
              
              
              8,998,410
              
              
              
              3,067,143Salaries
      and benefits
              
              
              1,320,600
              
              
              
              931,260General
      and administrative expenses
              
              
              968,296
              
              
              
              800,134Employee
      stock-based compensation (note 11b)
              
              
              574,410
              
              
              
              187,939Stock-based
      compensation (note 18a, 18b, and 18c(i))
              
              
              120,685
              
              
              
              109,134Stock-based
      compensation (note 18c(ii))
              
              
              70,744
              
              
              
              232,082Stock-based
      compensation for services (note 12)
              
              
              86,451
              
              
              
              441,000Interest
      expense - beneficial conversion feature
              
              
              -
              
              
              
              108,840Occupancy
      costs (note 16)
              
              
              126,886
              
              
              
              95,212Depreciation
      expense
              
              
              31,707
              
              
              
              26,408Total
      Operating Expenses
              
              
              12,298,189
              
              
              
              5,999,152Loss
      from Operations
              
              
              (2,047,076
              )
              
              
              (1,975,871
              )Other
      ExpensesInterest,
      Finance and Other Expenses
              
              
              (83,285
              )
              
              
              (32,806
              )Loss
      Before Income Taxes
              
              
              (2,130,361
              )
              
              
              (2,008,677
              )Provision
      for income taxes (note 17)
              
              
              -
              
              
              
              -Net
      Loss Before Extraordinary Item
              
              
              (2,130,361
              )
              
              
              (2,008,677
              )Extraordinary
      ItemLegal
      judgment – net of tax (note 8)
              
              
              (713,420
              )
              
              
              -Net
      Loss
              
              
              (2,842,781
              )
              
              
              (2,008,677
              )Foreign
      Currency Translation Adjustment
              
              
              (25,592
              )
              
              
              (10,630
              )Total
      Comprehensive Loss
              
              
              (2,869,373
              )
              
              
              (2,019,307
              )Net
      Loss per Share - Basic and Diluted During the Year
              
              
              (0.08
              )
              
              
              (0.06
              )Net
      Loss per Share - Basic and Diluted During the Year – net of extraordinary
      item
              
              
              (0.06
              )
              
              
              (0.06
              )Weighted
      Average Number of Shares Outstanding - Basic and Diluted During the
      Year
              
              
              37,174,199
              
              
              
              35,693,625
  (The
accompanying notes are an integral part of these consolidated financial
statements.)
   
 F4
 
 
 MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Consolidated
Statements of Stockholders' Deficit
 Years
Ended December 31, 2007 and 2006
   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, 2005
              
              
              33,935,000
              
              
              $
              3,394
              
              
              $
              760,111
              
              
              $
              -
              
              
              $
              100,000
              
              
              $
              (630,000
              )
              
              $
              -
              
              
              $
              3,213
              
              
              $
              (1,304,010
              )
              
              $
              (1,067,292
              )Shares
      issued for cash:March
      14, 2006 - Issued for $1.00 per share
                (note
      12)
              
              
              100,000
              
              
              
              10
              
              
              
              99,990
              
              
              
              -
              
              
              
              (100,000
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -June
      12, 2006- Issued for $1.00 per share(note
      12)
              
              
              2,112,470
              
              
              
              211
              
              
              
              2,112,259
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,112,470Issuance
      of warrants (note 13)
              
              
              
              
              
              
              
              
              
              
              (732,605
              )
              
              
              732,605Shares
      issued for services:March
      14, 2006 - Issued for $1.80 per share (note 12)
              
              
              245,000
              
              
              
              24
              
              
              
              440,977
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              441,001April
      25, 2006- Issued for $0.5 per share
                (note
      12)
              
              
              1,000,000
              
              
              
              100
              
              
              
              499,900
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              500,000October
      30, 2006 - Issued for $0.53 per share (note 12)
              
              
              96,000
              
              
              
              10
              
              
              
              50,870
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              50,880Shares
      issued for equipment:March
      14, 2006- Issued for $0.59 per share (note 12)
              
              
              100,000
              
              
              
              10
              
              
              
              58,791
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              58,801Cancelled
      shares:August
      8, 2006  (note 12)
              
              
              (500,000
              )
              
              
              (50
              )
              
              
              (499,950
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (500,000
              )September
      8, 2006 (note 12)
              
              
              (1,000,000
              )
              
              
              (100
              )
              
              
              (629,900
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (630,000
              )Subscription
      receivable (note 14)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              630,000
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              630,000Subscription
      receivable (note 14)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (242,301
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (242,301
              )Purchase
      of treasury stock (note 15)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (17,779
              )
              
              
              -
              
              
              
              -
              
              
              
              (17,779
              )Reduction
      in legal fees
              
              
              -
              
              
              
              -
              
              
              
              (58,000
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (58,000
              )Beneficial
      conversion feature of
                convertible
      debenture
              
              
              -
              
              
              
              -
              
              
              
              77,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              77,000Foreign
      currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (10,630
              )
              
              
              -
              
              
              
              (10,630
              )Net
      loss for the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,008,677
              )
              
              
              (2,008,677
              )Balances at December 31,
      2006
              
              
              36,088,470
              
              
              $
              3,609
              
              
              $
              2,179,443
              
              
              $
              732,605
              
              
              $
              -
              
              
              $
              (242,301
              )
              
              $
              (17,779
              )
              
              $
              (7,417
              )
              
              $
              (3,312,687
              )
              
              $
              (664,527
              )
  (The
accompanying notes are an integral part of these consolidated financial
statements.)
  
 F5
 
 
 
  
 MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Consolidated
Statements of Stockholders' Deficit (Continued)
 Years
Ended December 31, 2007 and 2006
  
 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.)
   F6
  
 MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Consolidated
Statement of Cash Flows
 Year
Ended December 31, 2007 and 2006
   2007
              
              
              2006Cash
      Flows from Operating ActivitiesNet
      loss
              
              $
              (2,843,781
              )
              
              $
              (2,008,677
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
              
              
              31,707
              
              
              
              26,408Loss
      on disposal of assets
              
              
              -
              
              
              
              25,578Interest
      expense - beneficial conversion feature
              
              
              -
              
              
              
              108,840Stock
      issued for services
              
              
              86,451
              
              
              
              441,000Employee
      stock-based compensation
              
              
              (156,590
              )
              
              
              187,939Stock-based
      compensation accrual
              
              
              1,022,912
              
              
              
              341,216(Increase)
      decrease in net assets:Referral
      fees held in trust
              
              
              (14,616
              )
              
              
              (30,320
              )Prepaid
      expense
              
              
              (102,617
              )
              
              
              (17,677
              )Accounts
      payable
              
              
              641,508
              
              
              
              312,673Accrued
      liabilities
              
              
              (28,675
              )
              
              
              213,547Employee
      tax deduction payable
              
              
              141,878
              
              
              
              -Accrued
      legal judgment
              
              
              773,658
              
              
              
              -Trust
      liability
              
              
              14,616
              
              
              
              30,320Net
      Cash Used in Operating Activities
              
              
              (433,549
              )
              
              
              (369,153
              )Cash
      Flows from Investing ActivitiesPurchase
      of equipment, net
              
              
              (37,268
              )
              
              
              (29,094
              )Disposal
      of equipment
              
              
              -
              
              
              
              25,578Equipment
      under capital leases
              
              
              -
              
              
              
              (5,198
              )Net
      Cash Used in Investing Activities
              
              
              (37,268
              )
              
              
              (8,714
              )Cash
      Flows from Financing ActivitiesDeferred
      offering costs
              
              
              -
              
              
              
              8,598Proceeds
      from notes payable
              
              
              -
              
              
              
              23,000(Repayments
      of) obligation under capital leases
              
              
              (945
              )
              
              
              5,589Repayment
      of advances from related party
              
              
              (34,177
              )
              
              
              (127,997
              )Proceeds
      from issuance of common stock
              
              
              14,761
              
              
              
              829,634Purchase
      of treasury stock
              
              
              (7,455
              )
              
              
              (17,779
              )Proceeds
      from issuance of warrants
              
              
              -
              
              
              
              732,605Subscription
      for stock
              
              
              64,086
              
              
              
              -Increase
      in bank indebtedness
              
              
              52,634
              
              
              
              4,104Net
      Cash Provided by Financing Activities
              
              
              88,904
              
              
              
              1,457,754Net
      (Decrease) Increase in Cash and Cash Equivalents
              
              
              (381,913
              )
              
              
              1,079,887Foreign
      Exchange on Balances
              
              
              (25,592
              )
              
              
              (10,623
              )Cash
      and Cash Equivalents - Beginning of Year
              
              
              1,238,357
              
              
              
              169,093Cash
      and Cash Equivalents - End of Year
              
              $
              830,852
              
              
              $
              1,238,357Supplemental
      Cash Flow InformationInterest
      paid
              
              $
              18,679
              
              
              $
              4,944Income
      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
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
   1.         
Nature
of Business and Going Concern
  Nature of
Business
  MortgageBrokers.com
Holdings, Inc., which registered a change of name with the state of Delaware in
February 2005 and  Subsidiaries (the “Company”) was formerly known as
MagnaData, Inc. and organized under the laws of the State of Delaware on
February 6, 2003.
  The
planned operations of the Company consists 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.”). Operations are
presently conducted through the Company’s subsidiaries, Mortgagebrokers.com Inc.
(an Ontario, Canada company) and MortgageBrokers.com Financial Group of
Companies, Inc. (Canadian federal company), in Canada only.
 
 Change of
Control
  On
January 31, 2005, the Company’s majority shareholder, Alex Haditaghi, purchased
1,510,000 common stock from three shareholders of MagnaData Inc. for cash
consideration ($692,813) in an arm’s length transaction. This share purchase
represented approximately 78% of MagnaData’s common stock outstanding at the
time of the transaction, based on the Company’s December 2004, Form 10-KSB. On
February 11, 2005 MagnaData Inc.’s name was changed to MortgageBrokers.com
Holdings, Inc.
  As part
of the sale, $74,727 of the Company’s debt was forgiven by a third party and
$5,698 of the Company’s debt and accrued interest was forgiven by a shareholder
which resulted in a gain on forgiveness of debt of $80,425 for the year ended
December 31, 2005.
  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,
2007, the Company incurred a loss of $2,843,781 (2006 -
$2,008,677).  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.
 
 
 F8
 MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
  
   1.         
Nature
of Business and Going Concern (cont'd)
  Going Concern
(cont'd)
  The
Company has devoted substantially all of its efforts to establishing its current
business. Management developed its business model, business plans and strategic
marketing plans that included: 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.
  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. and Mortgagebrokers.com Financial Group of Companies,
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 base on the estimated useful lives of the
assets:
  Furniture
      and equipment
              20%
      decliningComputer
      equipment
              30%
      decliningComputer
      software
              30%
      decliningLeasehold
      improvements
              20%
      straight line
  F9
 
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
  2.         
Summary
of Significant Accounting Policies (cont'd)
  d) Revenue
Recognition
  Revenue
consists of mortgage brokerage fees and finders fees. The revenue is recognized
upon the funding of a customer’s mortgage and when the collection is reasonably
assured which occurs when the brokerage fee from the bank has been
advanced.
  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, 2007, 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.  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.
   
 F10
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
  2.         
Summary
of Significant Accounting Policies (cont'd)
 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.
  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. 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.
  
 
 F11
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 20076 and 2006
 
 2.         
Summary
of Significant Accounting Policies (cont'd)
   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 period.
  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 year.  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.
  There
were no dilutive financial instruments for the years ended 31 December 2007 and
2006.  The Company had stock options and warrants which, due to the
losses incurred, are considered anti-dilutive equity instruments, accordingly,
the effect of these instruments have not been reflected in loss per share for
the years ended 31 December 2007 and 2006.
  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 year. 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.
  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.
  
 F12
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
  2.         
Summary
of Significant Accounting Policies (cont'd)
   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
September 2006, the FASB issued SFAS No. 157, “Defining Fair Value
Measurement”("SFAS No. 157"), which
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about fair
value measurements.  SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after 15 November 2007. The Company
is currently evaluating the impact of adopting SFAS No. 157 on its consolidated
financial statements.
 
 
 F13
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
  2.         
Summary
of Significant Accounting Policies (cont'd)
   n) Recent
Accounting Pronouncements (cont'd)
  In
February 2007, the FASB issued SFAS No. 159, "The Fair Value of Option for
Financial Assets and Liabilities" ("SFAS No. 159"), which permits entities to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. An entity would report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. The decision about whether to elect the fair value option is applied
instrument by instrument, with a few exceptions; the decision is irrevocable;
and it is applied only to entire instruments and not to portions of instruments.
The statement requires disclosures that facilitate comparisons (a) between
entities that choose different measurement attributes for similar assets and
liabilities and (b) between assets and liabilities in the financial statements
of an entity that selects different measurement attributes for similar assets
and liabilities. SFAS No. 159 is effective for financial statements issued for
fiscal years beginning after November 15, 2007. Early adoption is permitted as
of the beginning of a fiscal year provided the entity also elects to apply the
provisions of SFAS No. 157. Upon implementation, an entity shall report the
effect of the first re-measurement to fair value as a cumulative-effect
adjustment to the opening balance of retained earnings. Since the provisions of
SFAS No. 159 are applied prospectively, any potential impact will depend on the
instruments selected for fair value measurement at the time of implementation.
The Company is currently evaluating the impact, if any, of the adoption of SFAS
No. 159 will have on its financial position.
  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 15
December 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 15 December 2008. Management believes the adoption of this
pronouncement will not have a material impact on the Company's consolidated
financial statements.
 
 
    
 F14
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
   3.         
Referal
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 in the fourth quarter of 2008. As of December 31, 2007 $44,936 in
referral fees has accumulated in the trust account and the commitment to
transfer the funds to the agents’ RRSP accounts is recorded as trust
liability.
  4.         
Equipment,
net
   Net
      Book
              
              Net
      BookAccumulated
              
              Value
              
              ValueCost
              
              Depreciation
              
              2007
              
              2006Furniture
      and equipment
              
              $
              172,926
              
              
              $
              50,675
              
              
              $
              122,251
              
              
              $
              83,650Computer
      equipment
              
              
              23,270
              
              
              
              10,212
              
              
              
              13,058
              
              
              
              14,921Leasehold
      improvements
              
              
              20,807
              
              
              
              2,642
              
              
              
              18,165
              
              
              
              -$
              217,003
              
              
              $
              63,529
              
              
              $
              153,474
              
              
              $
              98,571
  5.         
Equipment
Under Capital Leases
  2007
              
              2006Computer
      equipment
              
              $
              7,189
              
              $
              6,115Less:
      accumulated depreciation
              
              
              (2,911
              )
              
              (917)$
              4,278
              
              $
              5,198
  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, is due on demand and is secured by a general security
agreement in all assets except real property. At year end $0 (2006 - $30,033)
was available on the line of credit.
   F15
 MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
  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 agreement
with CRA which, if certain conditions are met, allows the Company to pay down
the balance in monthly payments of $10,000 beginning February 28, 2008 with the
remaining balance due on September 30, 2008.  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 for the amount owing to CRA.  The liability
currently bears interest at 9% annually.
  8.         
Accrued
Legal Judgment
   On
October 27, 2006, Trisan Equitable Corporation (“Trisan”) commenced an action in
the Ontario Superior Court 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;
 (v) Trisan obtained security for such repayment of the loan from a number of the
Borrowing Parties, but not from MBI.
 
 In
January 2007, the Company and the Borrowing Parties filed a statement of
defense, crossclaim and counterclaim in response to Trisan’s statement of claim,
in which the defendants alleged breach of the loan agreement by
Trisan..
 
 On
October 3, 2007 a partial summary judgment from the Ontario Superior Court
ordered that the Borrowing Parties pay Trisan the sum of CDN$598,636 within 90
days, along with interest in the amount of CDN$136,128 and legal expenses in the
amount of CDN$8,907.  The court further ordered the dismissal of the
counterclaim filed by the Company and the Borrowing Parties and ordered that the
balance of Trisan’s claims contained in its statement of claim should proceed to
trial. The Court further ordered that  500,000 unrestricted shares of the
Company be deposited by the defendants with an escrow agent upon  payment
of the above ordered amounts, pending final disposition of Trisan’s other claims
and that costs of the motion for summary judgment be fixed at CDN$5,000 payable
to Trisan within 90 days.  Upon Payment of the judgment amount, the
security provided for the loan would be released.
 The
October 3, 2007 partial summary judgment was appealed by the Company and the
Borrowing Parties, but the judgment was upheld on appeal by the Ontario Court of
Appeal on March 31, 2008 with costs for the appeal fixed at $CDN5,000. 
Please see note 18 and 19 for further details.
 
 No
decision has yet been made as to allocation of liability for the judgment among
the Borrowing Parties.
  9.         
Advances
from Related
Party
   As of
December 31, 2007, the controlling shareholder and Chief Executive Officer of
the Company had advanced $170,691 (December 31, 2006 - $204,868) to fund the
working capital of the Company. The advances are non-interest bearing, due on
demand and unsecured.
 
 F16
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
  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:
  2007
                
                
                20062007
                
                $
                -
                
                
                
                3,0442008
                
                
                3,578
                
                
                
                3,0442009
                
                
                2,212
                
                
                
                1,882Total
      minimum lease payments
                
                
                5,790
                
                
                
                7,970Less:
      amount representing interest at approx. 30%
                
                
                (1,146
                )
                
                
                (2,381
                )Total
      obligation under capital leases
                
                
                4,644
                
                
                
                5,589Less:
      current portion
                
                
                (2,602
                )
                
                
                (1,674
                )Long-term
      portion
                
                $
                2,042
                
                
                
                3,915
  11.        Stock-based
Compensation
Accrual
   The
Company has accrued expenses for stock-based compensation:
  a)
              As
      of December 31, 2007, the Company has accrued, as stock-based compensation
      payable, 340,220 common shares at a price of $0.30 per share for a total
      of $ 102,066 payable to the parties referred to in note
      18c(ii).
  b)
              As
      of December 31, 2007, the Company has accrued, as employee stock-based
      compensation, $657,260 (2006 - $813,850) under its Equity Compensation
      Plan referred to in note 12.
 
 c)
              As
      of December 31, 2007, the Company has accrued, as stock-based
      compensation,766,063 common shares at a price of $0.30 per share for a
      total of $229,819 payable to the parties referred to in note 18a, 18b, and
      18c(i).
 
 F17
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
 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, 2007 and
2006.
  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
  
 
 
 F18
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
  12.        Capital
Stock 
(cont'd)
   ii)
              further,
      pursuant to the execution of a service level agreement, on the anniversary
      date of the private placement closure, the Company has agreed to issue a
      number of shares of common stock equal to 25% of the number of common
      shares purchased in the private placement for ten consecutive anniversary
      dates. The receipt of such shares is dependent on the execution and
      maintenance in good standing of the terms of a service level agreement for
      each of the ten years. The service level agreement included the provisions
      of marketing, servicing and promotional
  services.
  On
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.
 
 On July
7, 2007, the Company issued 125,000 restricted common shares at a price of $1
per share and having similar rights and obligations pursuant to the terms of the
2006 Private Placement offered to executives and franchisees of RE/MAX
Ontario-Atlantic Canada Inc.   These shares rights were assigned to the new
subscribers by the initial subscribers of the 2006 PPM.   These
shares were issued in anticipation of the initial participants shares being
cancelled.
  Equity Compensation
Plan
  On
February 6, 2003 and as amended on February 14, 2003, the Company adopted the
2003 Equity Compensation Plan to attract and retain high quality personnel.
The adequacy of this plan is evaluated annually by Company management. As
of December 31, 2007, no stock or 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 15, 2008. The
company is currently in the process of amending the existing employment
agreements which are expected to be executed in 2008. Until the new employment
contracts have been formally and legally executed, the existing employment
contracts of the Company are still in effect.
  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.
   
 F19
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
 12.        Capital
Stock 
(cont'd)
  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 March
14, 2006, the Company issued 50,000 common shares at a price of $1.80 per share
for total amount of $90,000 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 March
14, 2006 the Company issued 50,000 common shares at a price of $1.80 per share
for total amount of $90,000 to Mr. Elliot Sud based on the execution of advisory
services.
  On March
14, 2006, the Company issued 100,000 common shares divided equally amongst Ms.
Sharon Oakes and Mr. Ron Stanners for certain office equipment, cash, the
proceeds from work in progress and office supplies acquired valued at $58,801
from Lending Source Canada Inc.
  On March
14, 2006, the Company issued 5,000 common shares at a price of $1.80 per share
for a total amount of $9,000 to Ms. Nicole Locking pursuant to the execution and
termination of an employment agreement.
  On March
14, 2006, the Company issued 100,000 common shares at a price of $1.80 per share
for a total amount of $180,000 to Mr. Mark Lindsay based on the execution of an
advisory and consulting agreement.
  On March
14, 2006, the Company issued 25,000 common shares at a price of $1.80 per share
for a total amount of $45,000 to Mr. Mike Fearnow pursuant to the execution of
an advisory services agreement.
  On March
14, 2006, the Company issued 15,000 common shares at a price of $1.80 per share
for a total amount of $27,000 to Mr. Attilio Lombardi care of NCP Computers Inc.
pursuant to the provision of information systems and technology
services.
  On April
25, 2006, the Company issued 500,000 common shares to Lendiem Corporation (a
related party to Trisan Corporation) and Vito Galloro. These shares were issued
by mistake and the Company is working on canceling these shares.
 
 On April
25, 2006, the Company issued 500,000 common shares in error.  These
shares were subsequently cancelled on August 8, 2006.
   
 F20
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
 
 12.        Capital
Stock 
(cont'd)
   On
October 30, 2006, the Company issued 48,000 common shares at a price of $0.53
per share for a total amount of $25,440 to Stockdaily.com pursuant to the
execution of an advisory services agreement.
  On
October 30, 2006, the Company issued 48,000 common shares at a price of $0.53
per share for a total amount of $25,440 to Max Communications, Inc. pursuant to
the execution of an advisory services agreement.
 
 On
January 3, 2007, the Company issued 10,000 restricted common shares at a price
of $0.75 per share for total amount of $7,500 to SmallCapVoice.com, based on the
execution of an investor relations agreement under its service compensation
plan.
 
 On July
7, 2007, the Company issued 478,000 restricted common shares under the terms of
its Mortgage Service Licence Agreement with RE/MAX Ontario-Atlantic Canada Inc,
and its franchisee and broker owners that participated in the private placement
offering which closed on June 9, 2006.  The shares were issued at
$0.42 per share.
 
 On July
23, 2007, the Company issued 40,000 restricted common shares to Alexander
Gershtein in exchange for furniture and equipment valued at $45,416, under its
Service Compensation Plan.
 
 On July
23, 2007, the Company issued 25,000 restricted common shares at a price of $1.00
per share to Kalymon Consulting Ltd. in exchange for consulting services under
its Service Compensation Plan.
  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.  These shares were issued under the Company`s
Equity Compensation Plan.
  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 extend for the
first year only, to September 30, 2007.  As of December 31, 2007,
223,078 of the warrants were exercised at an average price of
$0.29.  As of December 31, 2007, 206,416 warrants expired, 223,078
warrants were exercised and 1,682,976 warrants remains 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, 2007, $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, 2007 two new participants subscribed for 125,000 shares under the private
placement and as of December 31, 2007, $60,000 of the new participants’
promissory notes have been paid and $65,000 remains outstanding.  In
addition, on September 30, 2007, 223,078 warrants issued under the private
placement were exercised for a total value of $64,086, see note
13.  The stock has not been issued on the exercise of these warrants
and is included in subscription for stock in the consolidated statement of
stockholders deficit.  As of December 31, 2007, $7,540 receivable on
the exercise of the warrants was outstanding and is included in subscriptions
receivable in the consolidated statement of stockholders deficit.
  F21
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
 
 15.        Treasury
Stock
   During
2007, the company acquired 12,500 common shares of the Company at an average
price of $0.60 per share for a total of $7,455.  In the previous year,
the Company acquired 31,600 common shares of the Company at an average value of
$0.56 per common share, for a total of $17,779.
  16.        Occupancy
Costs - Related
Party
   On
February 1, 2005, the Company agreed to sublease, on a month to month basis, the
office previously occupied by a company under common control. All lease payments
were paid directly to the lessor, who is an arm’s length party. This lease was
completed in August 2006.
  For the
period of September 2006 to March 2007, the Company operated from a property
owned by a related party and did not incur any rent expenses during this
period.
 
 On August
1, 2007, the Company’s current office space was sold to a related party of the
Chief Executive Officer, the Company`s majority shareholder.  The
Company’s lease agreement obligation was extended from two to five
years.
  17.        Income
Taxes
   The
Company has paid no federal or state income taxes. As of December 31, 2007, the
Company had net operating loss carry forwards for federal income tax reporting
purposes of $3,593,612 which, if unused, will expire in various years. The tax
effect of the operating loss carry forwards and temporary differences at
December 31, 2007 and 2006 are as follows:
 
 2007
              
              
              2006Deferred
      Income Tax Assets:Net
      Operating loss carry forward
              
              $
              1,221,828
              
              
              $
              747,629Net
      book value and tax value differences
              
              
              (35,434
              )
              
              
              -Valuation
      allowance for deferred income tax assets
              
              
              (1,186,394
              )
              
              
              (747,629
              )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% (2006 - 34%) rate
to the provision for income taxes:
 
 2007
              
              
              2006Deferred
      Tax Provision:Expected
      income tax benefit
              
              $
              677,107
              
              
              $
              747,629Valuation
      allowance
              
              
              (677,107
              )
              
              
              (747,629
              )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.
 
 F22
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
   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
   
 F23
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 
 
 18.        Commitments
and Contingencies
(cont'd)
   Commitments
(cont’d)
 a) Independent
Mortgage Agents/Loan Officers (cont'd)
  Series II
Warrants
  “Annual
      Volume”:
              defined
      as the total mortgage origination volume executed per 12 month period
      following the Effective Date and subsequent 12 month periods following the
      anniversary dates of the Effective
Date
 
 Number
      of Warrants:
              $1,651
      worth of warrants divided by the Strike Price per CDN $10 million in
      Annual Volume, adjusted on a pro rata basis, no minimum or maximum
      thresholds. The warrants are convertible in common shares on a 1:1
      basis.
 
 Earnings
      Period:
              Series
      II warrants are earned in the first 5 years following the Effective
      Date
 
 Additional
      Vestment:
              All
      SERIES II Warrants fully vest 3 years following the Determination
      Date
 
 Determination
      Date:
              The
      Annual Volume is determined on the fifth year anniversary of the Effective
      Date
  b)Maxwell
Realty Inc.
  Per a
three year renewable agreement dated April 12, 2006 and pursuant to the
execution of a service level agreement by the Maxwell Franchisee, the Company is
committed to issuing to Maxwell at no cost, warrants for common stock of the
Company based on referrals leading to funded mortgage origination volume. The
Maxwell Warrant-Based Compensation Program, which issues warrants (“SERIES III
Warrants”) that are divided amongst the Maxwell Franchisor, Franchisee and
referring Sales Agent.
  Annual
      Volume:
              defined
      as the total funded mortgage origination volume from Maxwell lead referral
      executed per 12 month period following the Effective Date and subsequent
      12 month periods following the anniversary dates of the Effective
      Date
 
 Number
      of Warrants:
              $3,000
      worth of warrants divided by the Strike Price per CDN $10 million in
      Annual Volume, adjusted on a pro rata basis, no minimum or maximum
      thresholds. The warrants are convertible in common shares on a 1:1
      basis.
 
 Earnings
      Period:
              Series
      III warrants are earned in the first 5 years following the Effective
      DateAdditional
      Vestment:
              SERIES
      III warrants are fully vested on the fifth anniversary of the Effective
      Date
   
 F24
 
 
 
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
   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
future payments are as
follows:
  2008
              
              $
              9,2472009
              
              $
              6,8022010
              
              $
              5,8162011
              
              $
              4,1402012
              
              $
              3,662
  e)On
February 8, 2007, the Company entered into a lease to rent office space 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.:
  Future
minimum lease payments (excluding utilities, taxes and common area maintenance
expenses) are as follows:
   2008
              
              $
              8,8102009
              
              $
              8,8102010
              
              $
              9,9852011
              
              $
              10,5722012
              
              $
              3,524
   F25
  MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES
 (FORMERLY
MAGNADATA, INC.)
 Notes to
Consolidated Financial Statements
 December
31, 2007 and 2006
 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 (note 16) and the lease commitment period was extended
from 2 to 5 years.
  Future
minimum lease payments (excluding utilities, taxes and common area maintenance
expenses) are as follows:
  2008
                
                $
                105,9382009
                
                $
                105,9382010
                
                $
                105,9382011
                
                $
                105,9382012
                
                $
                61,797
  18.        Commitments
and Contingencies
(cont'd)
  Contingencies
  Note 8
describes a series of events which results in a continuing legal matter. 
Given that the judgment further allows additional matters in the original
Statement of Claim to proceed to trial the company may incur additional costs
and liabilities.  An estimate of the contingent liability to which the
Company is party to by way of this continued action cannot reasonably be
determined at this time and could be as much as the difference between partial
summary judgment and the original claim amount plus
interest.
  19.        Subsequent
Events
  a)
              On
      February 5, 2008, the Company issued 50,000 restricted common shares of
      Company stock under the terms of its Investment Banking agreement with
      vFinance Investments, Inc. dated November 2, 2007.   These
      shares were issued under the Company’s Service Compensation
      Plan.b)
              On
      March 31, 2008 the judgment referred to in note 8 and note 18 was
      upheld.
  20.        Comparative
Figures
   Certain
figures for the year period have been reclassified to conform to the current
year’s financial statement presentation.
   F26