UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_________________________________________





FORM
10-K


_________________________________________





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


SECURITIES
EXCHANGE ACT OF 1934





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


EXCHANGE
ACT OF 1934





For
Fiscal Year Ended


December
31, 2009





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)





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of Contents





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





Yes           o           No           þ





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





Yes           o           No           þ





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





Yes           o           No           þ





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





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





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





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





Yes    o        Noþ





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





Class
            
            Outstanding
      at April 19, 2010Common
      Stock, $.0001 par value
            
            42,976,548





Revenues
for year ended December 31, 2009: $ 16,851,224.





Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of December 31, 2009 is: $649,702.





Transfer
Agent as of April 19, 2010:





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





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of Contents








TABLE OF CONTENTS





PART
      IITEM
      1.
              DESCRIPTION OF
      BUSINESS
              4ITEM
      1A.
              RISK
      FACTORS
              13ITEM
      1B.
              UNRESOLVED STAFF
      COMMENTS
              13ITEM
      2.
              DESCRIPTION OF
      PROPERTY
              13ITEM
      3.
              LEGAL
      PROCEEDINGS
              13ITEM
      4.
              SUBMISSION OF MATTERS TO A VOTE OF
      SECURITY HOLDERS
              14PART IIITEM
      5.
              MARKET FOR COMMON EQUITY AND RELATED
      STOCKHOLDER MATTERS
              15ITEM
      6.
              SELECTED FINANCIAL
      DATA
              19ITEM
      7.
              MANAGEMENT S DISCUSSION AND
      ANALYSIS
              19ITEM
      7A.
              QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET RISK
              24ITEM
      8.
              FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA
              24ITEM
      9.
              CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
              25ITEM
      9A(T).
              CONTROLSAND PROCEDURES
              25ITEM
      9B.
              OTHER
      INFORMATION
              26PART IIII ITEM
      10.
              DIRECTORS, EXECUTIVE OFFICERS,
      PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE
      EXCHANGE ACT
              27ITEM
      11.
              EXECUTIVE
      COMPENSATION
              30ITEM
      12.
              SECURITY OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT
              31ITEM
      13.
              CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS, AND DIRECTOR INDEPENDENCE
              31ITEM
      14.
              PRINCIPAL ACCOUNTANT FEES AND
      SERVICES
              31ITEM
      15.
              REPORTS ON FORM
      8-K
              31PART
      IVITEM
      16.
              EXHIBITS AND FINANCIAL STATEMENT
      SCHEDULES
              32SIGNATURES
              33






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PART
I




ITEM 1. DESCRIPTION OF BUSINESS




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




Form
and Year of Organization




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




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




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




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




3.
            MBKR
      Holdings Inc. - a Canadian federally incorporated company, through which
      the Company centralizes back office services in Canada;
    and,




4.
            MBKR
      Franchising Inc. – a Canadian federally incorporated company, through
      which the Company acts as a franchisor in Canada of the
      MortgageBrokers.com business
system.




Bankruptcy,
Receivership or Similar Proceeding




None




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




None




Business
of Issuer




Products
and Services




In
operation since 2005, our Company is a mortgage brokerage operation whose
national agency sales force services the borrowing and refinancing needs of
individual home buyers and owners.  We have access to a full range of
mortgage lenders, in excess of 50 banks, trusts and private lender sources, and
our agents source and negotiate the loan with the best rates, terms and features
to meet each customer's unique needs.  The Company acts as broker only
and is not a lender.  The Company has no mortgage lending related ‘on
or off balance sheet’ liabilities in case mortgage financing becomes
default.




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




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




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




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




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




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




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




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




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




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




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




1)
            For
      approximately 94 % of all mortgage origination deal flow at our Company,
      our subsidiaries generate revenue when our licensed mortgage agents place
      mortgages, on behalf of customers, with third party lenders who in return,
      pay the Company a commission fee, as
follows:




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




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




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




2)
            For
      approximately 6% of all mortgage origination deal flow at our Company,
      commercial, alternative and sub-prime lenders may pay only a nominal
      referral Finder’s Fee.  For these transactions, our mortgage
      agents may charge negotiated brokerage fees to generate
      revenue.




3)
            We
      currently earn commission revenue through the referral and placement of
      creditor insurance with third party insurance providers.  In
      general, when a client takes creditor insurance related to the mortgage
      transaction originated by the Company, the Company earns a gross
      commission which is, on average, estimated to be 14 basis points of the
      mortgage amount.




Generally,
between 80 to 90% of all received commission revenue is paid to the Company’s
mortgage agents.




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, Saskatchewan and Alberta.




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Distribution
Methods for our Services




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




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




Generally,
in the MortgageBrokers.com model, our licensed agents earn between 80 to 90% of
received commission fees.  In addition to earned commission fees, our
business model also provides our mortgage agents with the potential to earn
stock-based compensation in our Company based on their annual mortgage
origination volume.  This form of equity participation is intended to
provide our national sales agency network a transparent career exit strategy for
retirement and a retention strategy for team building purposes.  It is
our belief that the benefit to the Company is that we are able to build a
sustainable long term operational margin contribution from Canadian operations
and we are able to include our national agency sales force, responsible for
executing the Company's sales strategy, into the ownership of the Company,
theoretically allowing them to benefit from Company growth related directly to
their contribution.




The
primary services that the Company provides to our national agency sales network
are:




Ø
            mortgage
      brokerage licensure;




Ø
            a
      national brand and related marketing
  initiatives;




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




Ø
            human
      resource services where we perform new agent registration, licensure, and
      insurance coverage;




Ø
            access
      to our corporately arranged group health insurance and benefits
      plan;




Ø
            a
      payroll and commission service reconciling commission fees paid by lenders
      and insurers and accurate and timely payroll to our agents and their
      referral sources with detailed payroll statements on a weekly
      basis;




Ø
            revenue
      optimization for our agents through deal flow
  aggregation;




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




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




Ø
            information
      technology services; and,




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






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Prior to
contracting with a mortgage agent, and in addition to the minimum regulatory
requirements prospective mortgage agents must meet for provincial registration,
MortgageBrokers.com reviews the prospective agent’s tenure and experience in the
industry, credit bureau history and a minimum of 2 reference
checks.  Those mortgage agents that have minimal experience are
obligated to work as a mortgage agent under a more senior mortgage agent
(referred to within MortgageBrokers.com as a Managing Partner) who will sponsor,
supervise and train the inexperienced agent.




It is our
sales management team’s responsibility to recruit, mentor and support the
mortgage broker sales force across Canada.  To integrate a mortgage
agent into our network, we make mandatory the licensure with the appropriate
provincial regulatory body, application for membership with the Canadian
Association of Accredited Mortgage Professionals (CAAMP), our national mortgage
brokerage industry association, and application to our Errors and Omissions
insurance plan we hold corporately.




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




The
following table outlines the estimated net growth of our sales agency network
over the past three years:




YEAR
            AGENT
      COUNT2007
            3202008
            3872009
            430




The
Company may also develop and be party to strategic national or regional
alliances with real estate brands from time to time with a view to providing our
licensed mortgage agents access, on a volume basis, to mortgage referrals in
some form of revenue sharing arrangement.  On January 26, 2006, and
later modified on May 25, 2006, the Company entered into a referral agreement
with RE/MAX Ontario-Atlantic CANADA Inc. (“RE/MAX”) in eastern
Canada.  For referrals to our mortgage agents leading to funded
mortgages, RE/MAX receives 40 to 60% of the our Finder’s Fee commission as well
as stock-based compensation from the Company based on the aggregate volume of
funded referrals.  On April 12, 2006 the Company entered into a
referral agreement with Maxwell Realty Inc. (“Maxwell”) in western
Canada.  For referrals to our mortgage agents leading to funded
mortgages, Maxwell receives 25 to 40% of our Finder’s Fee commission as well as
stock-based compensation from the Company based on the aggregate volume of
funded referrals.




2009
Business Activities and Status of Publicly Announced Products and
Services




Expanding
upon our business model infrastructure, the Company’s focus through 2009 was
towards recruitment and servicing of mortgage agents across
Canada.  Regional recruitment activities included introducing and
selling the Company’s value proposition to mortgage agents via direct
presentations, trade shows and arranged meetings.  Regional servicing
of existing agents includes team building, marketing support and services with
signage and advertising, facilitating lender product training, realtor referral
relationship development, consumer business development and sales training,
lender relations management, and consumer servicing support.  The
Company also made investments in information technology systems to support our
mortgage agents including developing a mortgage agent back office sales support
environment.




The
following provides further details highlighting our 2009 business activities and
their status:




Ø
            At
      the beginning of 2009, we had two full time senior sales executives and
      five full time contract senior sales executives strategically servicing
      sales territories across Canada, who divided their time between servicing
      existing agents in their territory, recruiting new books of business and
      promoting the Company.  Our sales management team serviced one
      of the following Canadian regions:  Alberta & the Prairies
      out of Calgary, Alberta; central and eastern Ontario out of Ottawa,
      Ontario; the Greater Toronto Area from Toronto; south western Ontario out
      of Windsor, Ontario; and , Atlantic Canada out of Halifax, Nova
      Scotia.  By the end of 2009, the Company had strategically
      consolidated its sales management resources to two full time senior sales
      executives regionally servicing our national sales agency and centrally
      supported by our Canadian sales
President.






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Ø
            In
      September, 2009, the Company was recognized in Profit Magazine’s 10th
      annual “PROFIT HOT 50” as Canada’s No. 27th Emerging Growth Company and
      the Top Job Creator for 2009.  The Company’s ranking was based
      on reported growth of 293% over a two year span (from reported revenue of
      $4.0 million and 195 staff in 2006 to $15.8 million and 402 staff in
      2008).




Ø
            In
      November of 2008, the Company hired Diana Soloway as our chief strategy
      officer responsible for assisting the CEO with creating, communicating,
      executing, and sustaining strategic initiatives within our
      organization.  Ms. Soloway’s goals were to establish a
      centralized mortgage investment fund for the Company, as well as to
      establish a central services office supporting our mortgage agents with
      difficult deals in the alternative and sub-prime
      markets.  Through 2009, Ms. Soloway hired 2 staff and commenced
      the development of a central services office in the latter half of 2009
      which was responsible for $ 21 million in mortgage origination in
      2009.  Planning continues regarding the development of a
      centralized mortgage investment
fund.




Ø
            We
      experienced an 11 percent increase in 2009 over 2007 in the number of
      licensed agents registered with the Company.  At December 31,
      2008, we had 430 licensed mortgage agents operating exclusively under the
      Company’s licensure.  Our newly recruited mortgage agents were
      recruited throughout 2009 by our sales management team.  The
      Company also regularly reviews the production level of all of our agents
      and periodically will terminate our contractual agreement if mortgage
      agents are unable to demonstrate the ability to increase their production
      levels.




Ø
            On
      May 13, 2009, the Company gave notice to RE/MAX regarding the Company’s
      intent to terminate its agreement with RE/MAX on June 12, 2009 in
      accordance with the provisions of the agreement.  The primary
      reason for termination of the agreement was due to management’s belief
      that the terms of the agreement had become an impediment to the referral
      arrangement’s performance.  Termination of the agreement does
      not affect the Company’s ability to continue to work with RE/MAX
      Franchisees and their sales associates on existing or new referral fee
      arrangements.  Termination of the agreement has resulted
      in:  i) RE/MAX no longer providing any ongoing program market
      support following termination; ii) termination of promotions by RE/MAX of
      the RE/MAX registered retirement plan for RE/MAX franchisee sales
      associates where Company referral fees were being directed and, iii) the
      Company no longer being obligated to pay annual stock-based compensation
      for the remaining term of the agreement to RE/MAX equal to 25% per year of
      RE/MAX and affiliates original investment participation in the Company’s
      private Placement memorandum that closed on June 9, 2006.  The
      Company does not expect the termination of this agreement to materially
      impact the Company as the mortgage origination volume from RE/MAX
      referrals amounted to less than 4% of the Company’s total mortgage
      origination volume in 2009 at the time of agreement
      termination.




Competitive
Business Conditions and our Market Positioning




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




Market
Conditions




To-date,
all of our operations are conducted through our subsidiaries in Canada
only.  The U.S. mortgage industry has generally deteriorated since the
latter part of 2007 through 2009. This deterioration has been a deterrent for
management to consider entering the U.S. market as a mortgage brokerage at this
time.  As such, we are solely affected operationally by market
conditions in Canada.




Highlights
of the Canadian Association of Accredited Mortgage Professionals (“CAAMP”) Chief
Economist report “Annual State of the Residential Mortgage Markets in Canada,”
dated November 2009, describe the Canadian mortgage market within which our
Company operates as follows:




Ø
            as
      of August 2009, there was CAD $940 billion (2007: CAD $787 billion) of
      outstanding residential mortgage credit in
  Canada;




Ø
            Growth
      of residential mortgage credit has slowed in the past year as the
      recession negatively affected home buying activity.  Reduced
      number of housing starts in Canada also means there is less demand for new
      mortgages associated with new houses.  It is estimated that the
      current year over year market is growing approximately 7.1% per year which
      represents CADN $63 billion;






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Ø
            Based
      on the volume of new approvals, which includes new mortgages, refinancing
      of existing mortgages and transfers between lenders, the annual mortgage
      origination market amounted to CAD $216 billion in 2008 (CAD $75 billion
      in 2000 and CAD $217 billion in
2007);




Ø
            On
      average, 23% of annual mortgages were obtained with the use of a mortgage
      broker (34% for new mortgages and 17% for renewed mortgages) which
      represents an annual mortgage origination market of approximately $50
      billion (an estimated $550 million in gross
  revenue);




According
to CAAMP, in most Canadian provinces, housing demand is driven by job creation
and affordability – the investment motive is largely absent.  While
the Canadian mortgage market is expected to continue to grow in 2010 at an
average pace of 7% annually, it is forecasted to grow to a lesser degree than
that leading up to 2008 (10% annually).  The economic factors driving
an expected Canadian economic slowdown and this forecast include: a strong
Canadian dollar which is hurting exporters; the credit crunch is making it more
difficult for businesses to expand; and, Canada has experienced little job
creation in 2009.




Competitive
Market Conditions




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




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




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




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




The
primary tools used by our competitor consolidating brokerages for executing a
competitive strategy in recruiting mortgage agents has been increasing
commission splits (which currently ranges between 75 and 95% of the total
commission fees received), the development of brand and the provision of
administrative and marketing services.




The
competitor mobile sales teams of the major banks compete with mortgagebrokers by
leveraging bank brand appeal, exclusive mortgage products and leveraging a
captive bank customer base.




Our
Business Model Market Positioning




We have
positioned ourselves in this competitive landscape to the mortgage broker
industry as a very service oriented company that incorporates stock-based
compensation into our value offering to attract long-term value
builders.  Our management team firmly believes that we have positioned
ourselves to be a long term value creator in our industry.




Our
centralized services, as more fully described in the previous section describing
our distribution methods for our services and again expanded in the previous
section describing the status of our products and services to our agents,
reduces our agents overhead allowing them to focus on their core strength of
sales and marketing.




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We have
additionally designed our business model to incorporate two principal elements
which we believe will attract those mortgage agents who value ownership and a
career exit strategy within the Canadian mortgage market.  We also
believe that mortgage brokerages have long suffered from their inability to
retain their top loan originators, typically losing them to competing brokerages
that offer increased commissions with very little sustainable value being
returned to the mortgage agent to help them grow their businesses.  In
addition, in today’s consolidating environment, we believe many sales agents
have seen the companies they work with sold to large financial institutions or
brokerages with nothing to show from the transaction when it is they who are
responsible for creating much of the value associated with the
transaction. Therefore, management believes there is pent up demand within
the industry for a mortgage brokerage model that will address what we believe to
be the industry’s long- standing issues of agent retention and equity
participation.




As
Canada’s first and, at present, only publicly-traded and independent (non-bank
owned) mortgage brokerage, we have strategically positioned our Company as a
consolidator attracting those mortgage agents who value ownership and a career
exit strategy within the Canadian mortgage market.  We have developed
what we believe to be a unique transparent business model that, we believe, will
allow us to rapidly and sustainably develop our national sales agency and long
term sales referral sources around which we can diversify our product offering
and develop our brand for the consumer.  There are no direct means to
quantify and compare our rate of growth and the success of our strategy with our
competition since  they are not public companies. However, our
strategy was acknowledged in the October 2008 issue of Profit Magazine where our
Company was identified as the number one fastest growing Canadian emerging
growth company. We reported 3,993% top-line revenue growth between 2005 and 2007
and were recognized in October 2009 as the number twenty-seventh fastest growing
of Canada’s emerging growth companies with a reported 293% top-line revenue
growth between 2006 and 2008.  In 2009, one of our direct competitors,
a private corporation, was recognized as the 25th
fastest growing company in Canada of Canada’s emerging growth companies,
confirming to management that our industry sector is very dynamic, healthy and
exhibits strong growth opportunities.




We have
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, allowing them to benefit from
any Company growth related directly to their contribution.




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




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




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




At
December 31st, 2009, the Company accrued, stock-based compensation equal to
1,849,808 common shares at $0.04 per share, totalling $74,000 which is payable
to our existing mortgage agents.






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




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




a)
            On
      December 3, 2009, we successfully registered a trademark (No. TMA754,451)
      with the Canadian Intellectual Property office of Industry Canada for our
      name and design as follows:











b)
            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 80-90% 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, typically 5 to 8 years.  In practice, recruited mortgage
      sales agents execute an exclusive and confidential agreement with a
      subsidiary of MortgageBrokers.com as a third party sales
      subcontractor.  The mortgage agents agree to operate under the
      terms of the sales agreement, the mortgage broker licensure, and brand of
      the Company and allow the Company to earn 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 have an
      equity ownership position in the independent business of the individual
      mortgage agent or mortgage agent
team.




c)
            Per
      a three year renewable agreement dated April 12, 2006 and pursuant to the
      execution of a service level agreement by the Maxwell Franchisee, the
      Company is committed to issuing to Maxwell, at no cost, warrants for
      common stock of the Company based on referrals leading to funded mortgage
      origination volume.  In summary, and on a pro rata basis,
      Maxwell has the opportunity to earn 3,000 warrants (1 warrant convertible
      to 1 share) for every $10,000,000 in funded mortgage origination that were
      a result of a Maxwell referral annually.  Warrants earned
      between 2006 through 2011 are fully earned and vested assuming our
      agreement is in good standing with Maxwell on December 31,
      2011.  To-date the Company has not issued any warrants to
      Maxwell related to this program.  At December 31, 2009, the
      Company accrued stock-based compensation payable to Maxwell. The accrual
      related to mortgage referral was comprised of 31,330 common shares at
      $0.04 per share. The valuation of such accrual was based upon the December
      31, 2009 closing price of the Company’s stock and resulted in a payable to
      Maxwell equal to $1,253.  To date, no stock warrants have been
      issued to Maxwell or its sales agents pursuant to this
      program.  The Company is preparing to finalize the plan for
      registration purposes.




d)
            The
      Company became a franchisor in the fall of 2008 offering franchise
      opportunities to the mortgage broker market place across
      Canada.  In 2009, the Company sold one franchise which held a
      long term agreement (5 years) with a financial planning team who wished to
      expand their product offering to the market place and secure the
      territory.  The Company will continue to aggressively sell
      franchise opportunities in Canada to stabilize it’s long term book of
      business and resulting revenue
streams.






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Government
Licensure and Approvals




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




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




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




The
Company became a Canadian franchisor near the end of 2008.  The
franchisor disclosure regulations are provincially regulated.  In
Ontario, for instance, franchisors are regulated by the Arthur Wishart Act
(R.S.O., 2000).  Compliance to the Ontario act generally guarantees
compliance in the Province of Alberta.




Effect
of Existing or Probable Government Regulations on the Business




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






Canada
Revenue Agency issued a Notice, pursuant to the passing of Bill C-9, the Jobs
and Economic Growth Act in February 2010 that discussed modifications to the
definition of “Financial Services” as it applies to the current 13 percent
Canadian Harmonized Goods and Services Tax (“GST/HST”).  Prior to this
year, financial services agents (like mortgage brokers, insurance agents,
financial advisors, etc.) were GST exempt.  Finance’s legislative
proposals would generally apply to services provided after December 14, 2009 and
retroactively to past transactions in certain circumstances.  The CRA
has taken the position that it can generally assess taxpayers based on such
proposals even before they become law.  CAAMP says this notice raises
“important and serious questions on the definition of GST/HST exempt financial
services (mortgage brokers presently fall into that category, as do insurance
brokers and financial advisors).  CAAMP has engaged its auditors,
KPMG, to seek clarification, and has also been in contact with officials in
Ottawa.  The concern is that broker compensation could potentially be
subject to a 13 percent GST/HST tax on all revenue payable to Revenue
Canada.  CAAMP says it will oppose that interpretation “in the
strongest possible way.”  It is expected that a final determination on
this issue could come by May or June of 2010.  If GST/HST were ever to
apply to mortgage brokers, there are various possible implications:




·
            lenders
      would potentially have to pay GST/HST on the placement fees they pay
      brokers;


·
            lenders
      would probably not want to absorb this cost so brokers could end up making
      less per deal;


·
            lower
      compensation would reduce broker ranks to some degree which would result
      in fewer choices for consumers;


·
            lower
      compensation could reduce brokers’ incentive to discount interest rates
      which would result in higher costs to
consumers;


·
            customers
      would need to pay GST/HST on broker fees that they pay for commercial,
      sub-prime or private financing;


·
            the
      new tax would create a significant administrative cost for brokers and
      brokerage firms alike; and,


·
            the
      new tax could create an un-level playing field for brokers as compared to
      a lender’s owned in-house broker sales force which would likely not be
      subject to GST/HST.






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Research
and Development Activities in Past Two Years




None.




Environmental
Compliance Costs and Effects




None.




Employees




At
December 31, 2009, our Company had 15 full-time employees and 1 full-time
contract staff for a total of 16 full-time staff.




ITEM 1A.  RISK FACTORS




We are
exempt from this reporting because we are a smaller reporting
company.




ITEM 1B.  UNRESOLVED STAFF COMMENTS




We are
exempt from this reporting because we are a smaller reporting
company.




ITEM 2. DESCRIPTION OF PROPERTY




The
Company negotiated and executed a 5 year lease agreement commencing July 31,
2007 for our corporate offices at 11-260 Edgeley Boulevard, City of Vaughan,
Ontario, CANADA.  Our current contact information for our Ontario
office is telephone number: (877) 410-4848 and fax number: (877)
410-4845.  Our internet website can be found under the domain
name:www.mortgagebrokers.com.




The
Company negotiated and executed a lease for its corporate office in Calgary,
Alberta, Canada, and is party to a five (5) year lease which commenced May 1,
2007.




The
Company negotiated and executed a lease for its corporate office in Glace Bay,
Nova Scotia, Canada, and is party to a twelve (12) month lease which commenced
November 1, 2009.




ITEM 3.  LEGAL PROCEEDINGS




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




In
January 2007, the Company filed a statement of defence, cross claim and counter
claim in response to Trisan`s statement of claim.  On October 3, 2007,
a partial summary judgment from the Ontario Superior Court was awarded to Trisan
regarding the matter in an aggregate amount of CDN $748,671 plus 500,000 shares
of our common stock.  The October 3, 2007 partial summary judgment was
appealed by us but the judgment was upheld on appeal by the Ontario Court of
Appeal on March 31, 2008.




On July
8, 2009, a full and final settlement agreement was executed between Trisan and
the defendants including MortgageBrokers.com Holdings, Inc. and its subsidiary,
MortgageBrokers.com Inc., regarding the prior summary judgment awarded to Trisan
and all outstanding and related matters.  The Agreement provides for a
mutual final and full release and discharge regarding the Company and our
subsidiaries for all matters up to and including July 8, 2009 related to the
original claim and action, counterclaim, judgment, and appeal between Trisan and
the Company and its subsidiaries.  The Trisan settlement agreement
required a third party company, of which our Chief Executive Officer is a
related party, to be encumbered with a financial arrangement.  For the
period ending December 31, 2009, the Company recorded in the statement of
operations a recovery of legal judgement in the amount of $757,521.




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The
settlement agreement does not provide for the payment of any monies, the
creation of any obligations or any encumbrances in favour of Trisan, by or upon
Mortgagebrokers.com Holdings Inc. or its subsidiary MortgageBrokers.com Inc.
other than the release of 500,000 shares of Mortgagebrokers.com Holdings Inc.
common stock which were issued in 2006 to Trisan related parties in
escrow.




The
Company is party to various other claims and proceedings arising in the normal
course of business.  Management does not expect the disposition of
these matters to have a material adverse effect on the Company’s results of
operations or financial condition.




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




None.







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PART
II




ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS




Market
Information




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




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




2009
            
            High
            
            
            LowFirst
      Quarter
            
            $
            0.12
            
            
            $
            0.06Second
      Quarter
            
            $
            0.16
            
            
            $
            0.05Third
      Quarter
            
            $
            0.10
            
            
            $
            0.05Fourth
      Quarter
            
            $
            0.10
            
            
            $
            0.042008
            
            High
            
            
            LowFirst
      Quarter
            
            $
            0.31
            
            
            $
            0.08Second
      Quarter
            
            $
            0.15
            
            
            $
            0.08Third
      Quarter
            
            $
            0.24
            
            
            $
            0.07Fourth
      Quarter
            
            $
            0.41
            
            
            $
            0.10





Holders




On
December 31, 2009, there were 333 beneficial shareholders of record for our
outstanding common stock.




Dividends




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




Securities
Authorized for Issuance under Equity Compensation Plan




The
following table summarizes those securities authorized for issuance in 2009 in
accordance with 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








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On
February 6, 2003 and as amended on February 14, 2003, the Company adopted the
2003 Equity Compensation Planto attract and retain high
quality personnel. The adequacy of this plan is evaluated annually by Company
management. As of December 31, 2010, no options had been issued under this
plan. The disclosures made in the 2005 Audited Financial Statements (10-KSB
- Item 10. Executive Compensation) and the `Amendment to License Agreement
between RE/MAX and Mortgagebrokers.com Holding Inc.' dated May 25, 2006
(8-K - Schedule `A' 1. Outstanding Options) documenting the equity
compensation of employees has not been implemented as of April 15, 2010. The
Company is currently in the process of amending the existing employment
agreements which are expected to be executed in 2010.  Until the new
employment contracts have been formally and legally executed, the existing
employment contracts of the Company are still in effect.




On March
1, 2005 the Board of Directors approved the Service Compensation Plan ("the
Service Plan"), the purpose of which is to enhance the Company’s stockholder
value and maximize the available capital resources of the company through
allowing non monetary transactions whereby the issuance of stock is granted for
services rendered. This program is expected to support the Company in building a
long term sustainable revenue pipeline, a national sales agency and referral
program as well as provide incentive to service providers to establish long term
relationships with the Company and to encourage stock ownership by such
individuals by providing them with a means to acquire a proprietary interest in
the Company’s success through stock ownership. Under the Service Plan, service
providers, consultants, mortgage agents and strategic alliance partners who
provide services to the Company may be granted options or warrants to acquire
restricted stock of the Company. The total number of shares reserved for
issuance under the Service Plan is 5,000,000, the adequacy of which will be
evaluated annually.




Recent
Sales of Unregistered Securities




The
Company has routinely issued unregistered restricted stock in exchange for cash,
services, compensation and assets.  The relative pricing of our stock
was valued during negotiations, and was predicated on the market price at the
time the sale, purchase or contract was executed.  The following
summarizes these issuances over the past three years:




Exemption
from Registration Claimed




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




Regulation D Rule
506




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




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




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




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




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




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






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




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




Regulation
S




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




Section 4(2) of the
Securities Act




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




2007




On July
7, 2007, the Company issued 125,000 restricted (Rule 144) common shares at
a price of $1 per share and having similar rights and obligations pursuant to
the terms of the 2006 Private Placement offered to executives and franchisees of
RE/MAX Ontario-Atlantic Canada Inc, all third parties. These shares rights
were assigned to the new subscribers by the initial subscribers of the 2006
PPM. These shares were issued in anticipation of the initial participants
shares being cancelled. The private placement shares were issued in
reliance on the exemption under Regulation D, Rule 506 and Regulation S of the
Securities Act of 1933, as amended (the “Act”), as described
heretofore.  The shares were issued at $1.00 per share, the offered
price in the private placement which closed on June 9, 2006.




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




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






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




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




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




2008




On
February 5, 2008, the Company issued 50,000 restricted (Rule 144) common
shares at a price of $0.19 per share, the market close price on the date of
issue, for total value of $9,550 to vFinance, Inc. based on the execution
of an investment banking service agreement.  vFinance, Inc. is an arm’s
length third party consultant. vFinance Inc. provided advisory services with
respect to the review of financing term sheets and investment banking
matters.  The Company relied upon the exemption from registration as
for these shares as set forth in Regulation S of the Securities Act as described
heretofore.




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




On
September 11, 2008, the Company issued 3,272,500 shares of restricted (Rule 144)
Company stock to its employees based upon draft employment agreements that are
expected to be executed by December 31, 2008.  The Company relied upon
the exemption from registration as for these shares as set forth in Regulation S
of the Securities Act as described heretofore.  These shares have not
been released and the release is pending the finalizing and execution of
employment agreements. The shares were valued at $0.11 per share, the share
price on the date of issue.




On
October 20, 2008, the Company issued 150,000 restricted (Rule 144) common shares
at a price of $0.29 per share, based on the market price at the subscription
date, and having similar rights and obligations pursuant to the terms of the
2006 Private Placement offered to executives and franchisees of RE/MAX
Ontario-Atlantic Canada Inc.  These shares were issued in reliance on
the exemption under Regulation D, Rule 506 and Regulation S of the Securities
Act of 1933, as amended (the “Act”), as described heretofore.




On
October 21, 2008, the Company issued 47,078 restricted (Rule 144) common shares
at a price of $0.28 per share, based on the market price at the subscription
date, and having similar rights and obligations pursuant to the terms of the
2006 Private Placement offered to executives and franchisees of RE/MAX
Ontario-Atlantic Canada Inc.  These shares were issued in reliance on
the exemption under Regulation D, Rule 506 and Regulation S of the Securities
Act of 1933, as amended (the “Act”), as described heretofore.




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







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2009




None




Repurchases
of Securities




No
repurchases were made by our Company or an affiliate in a month within the
fourth quarter of the fiscal year 2009.




ITEM 6. SELECTED FINANCIAL DATA




We are
exempt from reporting this item as a smaller reporting company.




ITEM 7.  MANAGEMENT'S DISCUSSION AND
ANALYSIS




The
following is management’s discussion and analysis of the consolidated financial
condition and results of operations of MortgageBrokers.com Holdings, Inc for the
fiscal years ended December 31, 2009 and 2008.  The following
information should be read in conjunction with the audited consolidated
financial statements for the period ending December 31, 2009 and notes thereto
appearing elsewhere in this Form 10K.




Significant
Accounting Policies and New Pronouncements




The
following are the most significant accounting policies that have a substantive
impact on the underlying discussions and analysis:




Revenue
Recognition




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




Share-based
Payment




The Company adopted the disclosure requirements of ASC
718 (formerly SFAS No. 123R) "Share-Based Payment" ("ASC 718") 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 ASC 718. Under the fair value based method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
For stock options, the fair value is determined using an option-pricing model
that takes into account the stock price at the grant date, the exercise price,
the expected life of the option, the volatility of the underlying stock and the
expected dividends on it, and the risk-free interest rate over the expected life
of the option.  For restricted stock, the fair value is determinedbased on the quoted market price.  ASC 718 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 11 of the
accompanying audited consolidated financial statements.




The
following are new pronouncements in accounting policies that may affect the
company’s accounting policies:




Recent Accounting
Pronouncements




In June
2009, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. 2009-01, Generally Accepted Accounting Principles (ASC
Topic 105), which establishes the FASB Accounting Standards Codification (“the
Codification” or “ASC”) as the official single source of authoritative U.S.
generally accepted accounting principles (“GAAP”). All existing accounting
standards are superseded. All other accounting guidance not included in the
Codification will be considered non-authoritative. The Codification also
includes all relevant Securities and Exchange Commission (“SEC”) guidance
organized using the same topical structure in separate sections within the
Codification. The Board will not issue new standards in the form of Statements,
FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will
issue Accounting Standards Updates (“ASU”) which will serve to update the
Codification, provide background information about the guidance and provide the
basis for conclusions on the changes to the Codification.






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The
Codification is not intended to change GAAP, but it will change the way GAAP is
organized and presented. The Codification was effective for our third-quarter
2009 financial statements and the principal impact on the Company’s financial
statements is limited to disclosures as all future references to authoritative
accounting literature will be referenced in accordance with the
Codification.




In
April 2009, the FASB issued ASC 820-10-65-4 (formerly referred to as FSP
SFAS 157-4), "Determining Whether a Market Is Not Active and a Transaction Is
Not Distressed." ASC 820-10-65-4 provides guidelines for making fair value
measurements more consistent with the principles presented in ASC 820-10-65-1.
ASC 820-10-65-4 provides additional authoritative guidance in determining
whether a market is active or inactive, and whether a transaction is distressed,
is applicable to all assets and liabilities (i.e. financial and non-financial)
and will require enhanced disclosures. This standard is effective for periods
ending after June 15, 2009. The Company has adopted this standard and
determined that it does not have an impact on its financial position and results
of operations.




In
April 2009, the FASB issued ASC 825-10-65-1 (formerly referred to as FSP
SFAS 107-1 and  APB 28-1), "Interim Disclosures about Fair Value of
Financial Instruments," and "Disclosures about Fair Value of Financial
Instruments, (formerly referred to as FSP SFAS 107)" to require disclosures
about fair value of financial instruments in interim as well as in annual
financial statements. ASC 825-10-65-1 also includes an amendment to "Interim
Financial Reporting (formerly referred to as APB 28-1)," to require those
disclosures in all interim financial statements. This standard is effective for
periods ending after June 15, 2009. The Company has adopted this standard
and determined that it does not have an impact on its financial position and
results of operations.




In
October 2009, the FASB issued the “Accounting Standards Update (“ASU”) 2009-13
Multiple Deliverable Revenue Arrangements a consensus of EITF” (formerly topic
08-1) an amendment to ASC 605-25. The update provides amendments to the criteria
in Subtopic 605-25 for separating consideration in multiple-deliverable
arrangements. The amendments in this update establish a selling price hierarchy
for determining the selling price of a deliverable. The selling price used for
each deliverable will be based on vendor-specific objective evidence if
available, third-party evidence if vendor-specific objective evidence is not
available, or estimated selling price if neither vendor-specific objective
evidence nor third-party evidence is available. The amendments in this update
also will replace the term “fair value” in the revenue allocation guidance with
the term “selling price” in order to clarify that the allocation of revenue is
based on entity-specific assumptions rather than assumptions of a marketplace
participant. The amendments will also eliminate the residual method of
allocation and require that arrangement consideration be allocated at the
inception of the arrangement to all deliverables using the relative selling
price method. The relative selling price method allocates any discount in the
arrangement proportionally to each deliverable on the basis of each
deliverable’s selling price. The update will be effective for revenue
arrangements entered into or modified in fiscal year beginning on or after June
15, 2010 with earlier adoption permitted. The adoption of this standard is not
expected to have material impact on the Company’s consolidated financial
statements.




Liquidity




At
December 31, 2009, we had $2,012,964 in cash; $2,767 in restricted cash
comprised of referral fees held in trust for the Retirement Savings Plan
accounts owned by RE/MAX sales agents (the funds will be released upon the
completion of certain administrative agreements); $19,236 in prepaid expenses,
$106,935 in equipment and $1,968 in capital leased equipment totalling
$2,143,870 in assets.  Comparatively, at December 31, 2008, we had
$1,262,321 in cash, $17,848 in restricted cash comprised of referral fees held
in trust for the Retirement Savings Plan accounts owned by RE/MAX sales agents
(the funds will be released upon the completion of certain administrative
agreements); $116,211 in prepaid expenses, $112,184 in equipment and $2,424 in
capital leased equipment, totalling $1,510,988 in assets.






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At
December 31, 2009, we had $1,987,786 in accounts payable and accrued liabilities
related to mortgage agent commission fees payable for deferred revenue, bank
indebtedness equal to $65,104, employee tax deductions payable equal to
$219,759, related party loans payable equal to $359,138 accrued stock-based
compensation equal to $98,199, notes payable to an unrelated third party equal
to $65,104, and commissions payable equal to $2,767.  Total
liabilities equalled $2,732,753.  Comparatively, at December 31, 2008,
the Company had accounts payable and accrued liabilities equal to $1,918,178,
bank indebtedness equal to $117,385, employee tax deductions payable equal to
$275,317, related party loans payable equal to $129,425, commissions payable
equal to $17,848 lease obligations due equal to $1,624 accrued stock-based
compensation equal to $432,971 and notes payable to an unrelated third party
equal to $129,425.  Total liabilities equalled
$2,892,748.




Management
makes the following comments regarding the most significant factors affecting
Company liquidity and their measured trends over the reporting period as
compared to 2008:




a)
            Cash
      and cash equivalents increased by 59% from 2008 to
      $2,012,964.  This was primarily due to an increase in Work in
      Progress and a marginal increase in working capital
    resources.




b)
            Prepaid
      expenses decreased by 84% from 2008 to $19,236.  There is no
      trend in pre-paid expenses and pre-paid expenses are based on the amount
      in a given point in time based on current business activities at that
      time.




c)
            Bank
      indebtedness decreased by 45% to $65,104, as compared with 2008. This
      decrease is related to the Company effort to pay off its credit
      facility.




d)
            Accounts
      payable and accrued liabilities increased by 4% to $1,987,786 as compared
      with 2008.




e)
            The
      Company paid-down its employee taxes payable (December 31,
      2009:  $219,759) by approximately $55,000 through
      2009.




f)
            Stock-based
      compensation accruals fluctuate year to year.  The accrual is
      valued based on stock prices at the end of the period, grant prices and
      vesting terms for which the Company has no direct
      influence.  Thus, 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.




g)
            Advances
      from a related party increased 177% to $359,138, as compared with
      2008.




Capital
Resources




Total
revenue for the period ending 2009 was $16,851,224. The Company realized net
cash from operating activities of $355,825 or 2% of total
revenue.  While the Company has grown total revenue by 7% from 2008 to
$16,851,224, net cash from operating activities has not appreciably improved
between the periods as we spend cash resources to fuel our
growth.  The Company increased its total cash and cash equivalent
position at the end of 2009 by $750,643 or 59% as compared to the beginning of
2009.  In the event of unforeseen impacts to cash flow or 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 as the company’s fall-back position to meet working capital requirements
if required.




Results
of Operations




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




1)           Gross
revenue increased by 7% from 2008 to $16,851,224;




2)           Operating
expenses decreased in 2009 by 2% to $15,983,350 as compared with 2008;
and,




3)           We
reported earnings of $867,874 in 2009 as compared to a net loss of $492,593 in
2008.




Unusual
or Infrequent Events that affect Reported Income




a)
            The
      Company cancelled its employee stock-based compensation program at the end
      of 2009 and the majority of staff cancelled their outstanding stock-based
      compensation and accruals.  The Company cancelled employee
      stock-based accruals in the amount of $264,993 in the reporting
      period.




b)
            For
      the period ending December 31, 2009, the Company recorded in the statement
      of operations a recovery of legal judgement in the amount of
      $757,521.  On October 27, 2006, Trisan Equitable Corporation
      (“Trisan”) commenced an action in the Ontario Superior Court in Ontario,
      Canada against several parties including MortgageBrokers.com Holdings,
      Inc. (the ``Company``)  its subsidiary MortgageBrokers.com Inc.,
      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.  In January 2007, the Company filed a statement of
      defense, cross claim and counter claim in response to Trisan`s statement
      of claim.  On October 3, 2007, a partial summary judgment from
      the Ontario Superior Court was awarded to Trisan regarding the matter in
      an aggregate amount of CDN $748,671 plus 500,000 shares of our common
      stock.  The October 3, 2007 partial summary judgment was
      appealed by






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us
      but the judgment was upheld on appeal by the Ontario Court of Appeal on
      March 31, 2008.  On July 8, 2009, a full and final settlement
      agreement was executed between Trisan and the defendants including
      MortgageBrokers.com Holdings, Inc. and its subsidiary, MortgageBrokers.com
      Inc., regarding the prior summary judgment awarded to Trisan and all
      outstanding and related matters.  The Agreement provides for a
      mutual final and full release and discharge regarding the Company and our
      subsidiaries for all matters up to and including July 8, 2009 related to
      the original claim and action, counterclaim, judgment, and appeal between
      Trisan and the Company and its subsidiaries.  The Trisan
      settlement agreement required a third party company, of which our Chief
      Executive Officer is a related party, to be encumbered with a financial
      arrangement.  The settlement agreement does not provide for the
      payment of any monies, the creation of any obligations or any encumbrances
      in favor of Trisan, by or upon Mortgagebrokers.com Holdings Inc. or its
      subsidiary MortgageBrokers.com Inc. other than the release of 500,000
      shares of Mortgagebrokers.com Holdings Inc. common stock which were issued
      in 2006 to Trisan related parties in
escrow.


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




Revenue
Trend Analysis




Gross
revenue in 2009 increased by 7% from 2008 to $16,851,224 and was likely affected
by the recession as this has been the Company’s slowest rate of growth year over
year reported since inception.  Management believes our revenue growth
experienced between 2008 and 2009 was directly related to mortgage agent
recruitment accomplishments, the organic growth of our existing agent’s books of
business and improved revenue management.




As
discussed in more detail in Item 1 within this Form 10-K, our sales management
team increased the number of our mortgage agents by 11% in 2009 as compared to
2008 which would have had a positive impact to top-line growth numbers through
augmenting any lack of performance in our existing book due to recessionary
pressures.




The
following summarizes the factors that affect our revenue and their associated
trends:




1.
            Currently,
      revenue for the Company can be divided into three
      streams:  broker fees charged predominately to private lender
      customers or commercial lender customers where-in the lender does not pay
      an origination commission fee; origination commission fees paid by most
      lenders and trust institutions, and creditor life insurance commissions
      paid by the insurance carrier.  The Table below summarizes
      revenue for the last three fiscal periods by revenue
    stream:




REVENUE
      ORGANIZED BY REVENUE STREAM (CDN $)YE
      2006
            YE
      2007
            YE
      2008
            YE
      2009Revenue
            Fee
      ($) / Volume ($)
            Revenue
            Fee
      ($) / Volume ($)
            Revenue
            Fee
      ($) / Volume ($)
            Revenue
            Fee
      ($) / Volume ($)(bps)
            
            (bps)
            
            (bps)
            
            (bps)Broker
      Fee Revenue
            $158,487
            3.9
            $278,098
            2.4
            $713,814
            4.8
            $1,041,606
            5.98Origination
      Commission Revenue
            $4,404,290
            108.8
            $10,611,556
            89.8
            $15,739,449
            106.6
            $17,799,242
            102.2Insurance
      Revenue
            n/a
            
            $128,050
            1.1
            $392,813
            2.7
            $372,774
            2.14Total
      Revenue
            $4,562,777
            112.7
            $11,017,704
            93.3
            $16,846,076
            114.1
            $19,213,622
            110.31Funded
      Origination Volume
            $404,805,308
            
            $1,181,255,045
            
            $1,476,237,926
            
            $1,741,860,068




a.
            Approximately
      93% of the Company’s revenue in 2009 came from origination commission
      fees, 5% came from broker fees and 2% came from insurance commission
      fees.  This break-down has been relatively consistent over the
      recent past, although the greatest rate of growth, year over year, has
      been in broker fee commission revenue (46% in 2009 over 2008) and
      origination commission revenue (13% in 2009 over 2008).  The
      pricing structure of each revenue stream has remained consistent between
      periods.




b.
            In
      2008, the Company received approximately 102 basis points from lenders
      such as banks and trust companies who pay the Company an origination
      commission fee.  This represents a decrease of 4% of the basis
      point revenue for origination commission fees reported in 2008 likely
      associated with a general lack of streaming of deal flow to optimize
      lender commission premiums associated with volume
    thresholds.




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c.
            We
      currently earn additional commission revenue through the referral and
      placement of creditor insurance with Benesure Canada Inc.  The
      Company earns revenue in the form of an upfront fee as well as an on-going
      trailer fee.  In 2009, the Company earned CDN $372,774 from
      creditor insurance sales which is a notional decrease to sales reported in
      2008 and likely associated with recessionary pressures whereby consumers
      do not want to invest in creditor
insurance.




2.
            In
      2008, approximately 71% of the Company’s revenue came from multi-product
      depository banks and trust institutions.  23% of the Company’s
      revenue came from monoline lenders who have a single product offering and
      sell exclusively through the mortgage broker sales channel.  6%
      of our revenue comes from broker fees associated with private
      lenders.  This break-down has been relatively consistent over
      the past three years, although the fastest growing category is origination
      with private lenders (62% growth in 2009 over 2008) versus the slowest
      growing category being origination through monoline lenders (4% growth in
      2009 over 2008) – possibly attributed to declining credit conditions
      within the general economy and a loss of some monoline lenders in the
      marketplace.  Our contracted mortgage brokers are required to
      find the best terms for a customer that meet the customer’s
      needs.  The Company has no control over directing associated
      deal flow.  In general, the Company earns its highest fees from
      private lenders.  The Table below summarizes revenue for the
      last three fiscal periods by lender
category:




REVENUE
      ORGANIZED BY LENDER CATEGORY (CDN $)F2006
            
            
            
            F2007
            
            
            
            F2008
            
            
            
            F2009LENDER
      CATEGORYDEPOSITORY
      BANKS & TRUSTS (27*)
            
            $
            3,446,518
            
            
            $
            8,629,309
            
            
            $
            11,623,314
            
            
            $
            13,450,421MONOLINE
      LENDERS (26*)
            
            $
            983,121
            
            
            $
            1,990,521
            
            
            $
            4,187,297
            
            
            $
            4,340,545PRIVATE
      LENDERS (24*)
            
            $
            133,138
            
            
            $
            269,824
            
            
            $
            642,652
            
            
            $
            1,041,606TOTALS:
            
            $
            4,562,777
            
            
            $
            10,889,654
            
            
            $
            16,453,263
            
            
            $
            18,832,573*:
            
            Number
      of lending institutions




3.
            The
      Company operates two sales channels for originating
      mortgages.  Approximately 96% of our mortgage origination volume
      is sourced directly through our mortgage broker sales channel which
      consists of 430 mortgage agents (as further described in Item 1 of this
      Form 10-K).  Approximately 4% of our mortgage origination volume
      in 2009 was sourced through our real estate sales channel wherein the
      Company established regional referral contracts with strategic alliance
      partners RE/MAX in Eastern Canada and Maxwell in Western Canada (as
      further described in Item 1 of this Form 10-K).  In general, the
      Company, as well as its agents, in aggregate, earn up to 30 basis points
      less when deal flow is sourced through a strategic alliance partner via
      the real estate sales channel.  The long term intended trade-off
      is that the Company expects to source significant mortgage origination
      volume through the real estate channel, although this is currently being
      monitored for substantiation purposes.  The reported drop in
      mortgage originations sourced through our real estate sales channel from
      2008 to 2009 is likely associated with our termination of the RE/MAX
      agreement in June 2009 as previously described.  The Table below
      summarizes mortgage origination by sales channel over the past three
      years:




Company
      Mortgage Origination Summarized by Sales Channel (CDN $)CHANNEL
            
            YE
      2006
            
            
            YE
      2007
            
            
            YE
      2008
            
            
            YE
      2009Mortgage
      Broker Sales Channel
            
            $
            371,521,881
            
            
            $
            1,025,316,928
            
            
            $
            1,318,536,854
            
            
            $
            1,678,825,663Real
      Estate Sales Channel
            
            $
            33,283,427
            
            
            $
            155,938,117
            
            
            $
            157,701,073
            
            
            $
            63,034,405GRAND
      TOTAL
            
            $
            404,805,308
            
            
            $
            1,181,255,045
            
            
            $
            1,476,237,927
            
            
            $
            1,741,860,068




4.
            The
      Table below summarizes mortgage origination by sales territory across
      Canada over the past three years and we provide the following
      comments:






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Company
      Mortgage Origination summarized by Sales Territory (CDN $)TERRITORY
            
            YE
      2006
            
            
            YE
      2007
            
            
            YE
      2008
            
            
            YE
      2009Ontario
            
            $
            248,985,153
            
            
            $
            737,109,325
            
            
            $
            1,023,862,909
            
            
            $
            1,339,030,063Alberta
            
            $
            146,432,515
            
            
            $
            362,226,815
            
            
            $
            320,782,600
            
            
            $
            286,235,237Atlantic
      Canada
            
            $
            9,387,640
            
            
            $
            81,918,905
            
            
            $
            131,592,418
            
            
            $
            116,594,768GRAND
      TOTAL
            
            $
            404,805,308
            
            
            $
            1,181,255,045
            
            
            $
            1,476,237,927
            
            
            $
            1,741,860,068




a.
            77%
      of our volume in 2009 was originated from the Province of Ontario, 16% our
      volume in 2009 was originated from the Province of Alberta and 7% our
      volume in 2009 was originated from Atlantic
  Canada;




b.
            Commission
      fees (as described in section 1 heretofore) do not vary by geographical
      region as our lenders are typically federally chartered and offer the same
      service in each territory;




c.
            There
      is no difference in per unit revenue on a basis point basis for
      origination from one sales territory to another, although the size of
      mortgages, in general, are greater in Alberta and Ontario than Atlantic
      Canada;




d.
            The
      Company has experienced the greatest consistent growth in mortgage
      origination across Ontario.  Management believes that the
      downturn in mortgage origination volume in Alberta and Atlantic Canada in
      2009 over 2008 was because these regions were most affected by a market
      downturn first in Canada related to the North American economic recession
      in 2008 and 2009.




e.
            The
      Company is able to manage its regional sales management expenses roughly
      in proportion to the respective revenue distribution by
      territory.




Expense
Trend Analysis




The
Company’s operating expenses decreased in 2009 by 2% over 2008 primarily due to
two one time expense recoveries during the period.  The primary
components that comprise the Company’s operating expenses are agent commissions,
salaries and benefits, general and administrative expenses, occupancy costs and
stock-based compensation for which the following trends are observed by
management:




·
            89%
      of the operating expenses in 2009 were associated with agent
      commissions.  Agent commission fees as a percent of revenues
      were fairly consistent between periods increasing by 1% from 2008 to
      2009.




·
            10%
      of the operating expenses in 2009 were associated with salaries and
      benefits.  Costs associated with Salaries and Benefits increased
      by 43% compared to 2008 as the company invested in attracting and
      retaining a strong management team to help in the company’s
      growth.




·
            General
      and administrative expenses were fairly consistent between periods
      decreasing by 0.69% from 2008 to
2009.




·
            Occupancy
      costs decreased 11% from 2008 to $142,521 and is related, in part, to an
      increase in the Canadian dollar relative to the U.S.
    dollar.




Off-Balance
Sheet Arrangements




None




Tabular
Disclosure of Contractual Obligations




We are
exempt from this reporting as a smaller reporting company.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK




We are
exempt from reporting this item as a smaller reporting company.




ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA




The
financial statements of the Company appear at the end of this report beginning
with the Index to Financial Statements on page F-2.




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




The
following describes changes in and disagreements with accountants on accounting
and financial disclosures through 2008 and 2009:




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




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




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




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




ITEM 9A(T). CONTROLS AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures




As of the
end of the period covered by this report, the Company’s principal executive
officer and principal financial officer evaluated the effectiveness of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d -15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).  Based on their evaluation of the Company’s disclosure
controls and procedures, the Company’s principal executive officer and principal





25
 Table
of Contents
 
 financial
officer, with the participation of the Company’s management, have concluded that
the Company’s disclosure controls and procedures were not effective as of
December 31, 2009, to ensure that information required to be disclosed by the
Company in the reports that we file or submit under the Exchange Act is(a)
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and (b) accumulated and communicated to management,
including the Company’s principal executive officer and principal financial
officer, as appropriate to allow for timely decisions regarding required
disclosure, due to the Company’s limited internal resources and lack of ability
to have multiple levels of transactional review.




Management’s
Annual Report on Internal Controls Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f) and 15(d)-15(f).  Under the supervision and with the
participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of
our internal control over financial reporting as of December 31, 2009 based on
the framework in Internal Control – Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission.  Based on that
evaluation, our management concluded that our internal control over financial
reporting was not effective as of December 31, 2009, due to the Company’s
limited internal resources and lack of ability to have multiple levels of
transactional 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.




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.




Changes
in Internal Control Over Financial Reporting




There
have been no changes in the Company’s internal controls over financial reporting
during our fourth quarter ended December 31, 2009, or in other factors that
could significantly affect these controls, that materially affected, or are
reasonably likely to materially affect, the Company’s internal controls over
financial reporting.




ITEM 9B. OTHER INFORMATION




None.







26
 Table
of Contents




PART
III




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




Registrant
Director and Executive Officer




The
following table sets forth, as of April 19, 2010, the name and age of our sole
director and executive officer.  The director will hold such office
until the next annual meeting of shareholders and until his successor has been
elected and qualified.




Name
            Age
            PositionAlex
      Haditaghi
            37
            President,
      CEO, CFO, Chief Accounting Officer and sole
  Director





Business
Experience




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




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




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




Significant
Contributing Management




The
following table sets forth, as of April 19, 2010, the names and ages of our
Canadian operations management team.




Name
            Age
            PositionDong
      Lee
            37
            Vice
      President of OperationsRobert
      Hyde
            46
            Vice
      President of Finance & AdministrationDaniel
      Putnam
            53
            President
      of Sales - CanadaDiana
      Soloway
            45
            Chief
      Strategy OfficerDavid
      Mercer
            50
            Vice
      President of Sales-Alberta





Business
Experience




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




Dong
Lee, Vice President of Operations




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






27
 Table
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Mr. Lee
is a graduate from Queen's University's undergraduate business
program.  During his time at Queen's, Mr. Lee studied international
business at Herstmonceux Castle in Hailsham, England.  Mr. Lee
completed his MBA in 2007 through Dalhousie University.




Robert
Hyde, Vice President of Finance & Administration




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




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




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




Daniel
Putnam, President of Sales - Canada




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




Diana
Soloway, Chief Strategy Officer




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




David
Mercer, Vice President Sales - Alberta




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




28
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Family
Relationships




None.




Involvement
in Certain Legal Proceedings




See Item
3 of this form 10-K.




Promoters
and Control Persons




None.




Code
of Ethics




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




Directors
and Committees




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




Shareholder
Communications




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




Compliance
with Section 16(A) of the Exchange Act




Mr.
Haditaghi has yet to file a Form 5 for 2009 but plans to in the very near
future.







29
 Table
of Contents




ITEM 11.  EXECUTIVE COMPENSATION




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




SUMMARY
      COMPENSATION TABLEName
      and principal position
              (a)
            Year
              (b)
            Salary
      ($)
              (c)1
            Bonus
      ($)
              (d)
            Stock
      Awards ($)
            Option
      Awards ($)
            Non-Equity
      Incentive Plan Compensation ($)
            Nonqualified
      Deferred Compensation Earnings
              ($)
            All
      Other Compensation ($)
            Total
              ($)Alex
      Haditaghi, Chairman and CEO
            2009
              2008
            $4,752
              $31,074
            263,158
              0
            0
              0
            0
              0
            0
              0
            0
              0
            0
              0
            $267,910
              $31,074





Footnotes:




1:  The
executive’s base salary was paid in Canadian dollars.  In Canadian
dollars, the base salary was $33,125 in 2008 and $5,417,125 with a bonus of
$300,000 in 2009.  It was converted to USD for presentation in the
table as required using the conversion factor (USD $1.0 = CDN $1.066), the
annual average exchange rate for 2008 as reported by the Bank of
Canada.  The annual average exchange rate for 2009 as reported by the
Bank of Canada was USD $1.0 = CDN $1.14.




Narrative
Disclosure to the Summary Compensation Table




The
employment agreements for executive officers are presently being
prepared.  The disclosures made in the 2005 Audited Financial
Statements (10-KSB - Item 10. Executive Compensation) and the `Amendment to
License Agreement between RE/MAX and Mortgagebrokers.com Holding Inc.' dated May
25, 2006 (8-K - Schedule `A' 1. Outstanding Options) documenting the equity
compensation of employees has not been implemented as of April 15,
2010.  The company is currently in the process of preparing employment
agreements which are expected to be executed in 2010.




OUTSTANDING
      EQUITY AWARDS AT 2009 FISCAL YEAR END TABLEOPTION
      AWARDS
            STOCK
      AWARDSName
      and principal position
              (a)
            Number
      of Securities Underlying Unexercised Options
              (#)
              Exercisable
              (b)
            Number
      of Securities Underlying Unexercised Options
              (#)
              Unexercisable
              (c)1
            Equity
      Incentive Plan Awards:
              Number
      of Securities Underlying Unexercised Unearned Options
              (#)
              (d)
            Option
      Exercise Price
              ($)2
              (e)
            Option
      Expiration
              Date
              (f)
            Number
      of Shares or units of Stock that have not Vested
              (#)
              (g)
            Market
      Value of Shares or Units of Stock that have not Vested
              ($)
              (h)
            Equity
              Incentive
      Plan Awards:
              Number
      of Unearned shares, Units or other rights that have not
Vested
              ($)
              (i)
            Equity
      Incentive Plan Awards:
              Market
      or Payout Value of Unearned shares, Units or other rights that have not
      Vested
              ($)
              (j)Alex
      Haditaghi, Chairman and CEO
            0
            0
            0
            0
            0
            0
            0
            0
            0




Compensation
of Directors




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




30
 Table
of Contents




Stock
Option Grants In The Past Fiscal Year




We have
not issued any grants of stock options in the past fiscal year to any officer or
director.  As at December 31, 2009, no options to Company employees,
officers or directors are outstanding.




ITEM 12.   SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT




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





(1)
Based on 42,976,548 shares of common stock issued and outstanding as of December
31, 2009.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.




As of
December 31, 2009, the controlling shareholder and Chief Executive Officer of
the Company had advanced $359,138 (December 31, 2008 - $129,425) to fund the
working capital of the Company. The advances are unsecured, non-interest bearing
and due on demand.




ITEM 14.  PRINCIPAL ACCOUNTING FEES AND
SERVICES




Audit
Fees




For the
Company's fiscal year ended December 31, 2009, we have incurred $69,535 for
professional services rendered for the audit and reviews of our financial
statements.




For the
Company's fiscal year ended December 31, 2008, we had incurred $43,641 for
professional services rendered for the audit and reviews of our financial
statements.




For the
Company's fiscal year ended December 31, 2008, there were no other audit related
fees.




Tax
Fees




To-date,
for the Company's fiscal year ended December 31, 2008, the Company has not
incurred expenses for professional services rendered for tax compliance, tax
advice, and tax planning.




All
Other Fees




None.




ITEM 15.  REPORTS ON FORM 8-K




May 22, 2009 (period:
      May 13, 2009)
            Termination of a
      Material Definitive
Agreement




On May
13, 2009, MortgageBrokers.com Holdings, Inc. (the “Company”) gave notice to
RE/MAX Ontario-Atlantic Canada Inc. (“RE/MAX”) that the Company intends to
terminate its agreement with RE/MAX on June 12, 2009 in accordance with the
provisions of the agreement.




July 14, 2009 (period:
      July 08, 2009
            Other
      Events




On July
8, 2009, a full and final settlement agreement (“The Agreement”) was executed
between Trisan Equitable Corporation and the MortgageBrokers Group regarding the
prior summary judgment awarded to Trisan against the parties and all outstanding
and related matters on October 3, 2007.




31
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PART
IV





ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES





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





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





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








32
 Table
of Contents





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, there unto duly authorized.








MORTGAGEBROKERS.COM
      HOLDINGS, INC.








By:    /s/ Alex
      HaditaghiAlex HaditaghiPrincipal Executive Officer,Principal Accounting Officer,President, Secretary and Director








Dated:
April 19, 2010





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
      19, 2010Alex
      Haditaghi











33
 Table
of Contents








MORTGAGEBROKERS.COM
      HOLDINGS, INC. AND SUBSIDIARIES
              
              
              CONSOLIDATED FINANCIAL STATEMENTS
              
              
              DECEMBER  31,
      2009 AND 2008










-F1-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES








CONSOLIDATED
FINANCIAL STATEMENTS





DECEMBER
31, 2009 AND 2008








CONTENTS








Report
      of Independent Registered Public Accounting Firm
            F3Consolidated
      Balance Sheets
            F4Consolidated
      Statements of Operations and Comprehensive Income (Loss)
            F5Consolidated
      Statements of Stockholders' Deficit
            F6Consolidated
      Statements of Cash Flows
            F7Notes
      to Consolidated Financial Statements
            F8-28











-F2-
 Table
of Contents











Page
1





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Mortgagebrokers.com
Holdings, Inc. and Subsidiaries





We have
audited the accompanying consolidated balance sheets of Mortgagebrokers.com
Holdings, Inc. and Subsidiaries (the “Company”) as of December 31, 2009 and
2008, and the related consolidated statements of operations and comprehensive
income (loss), statements of stockholders’ deficit and cash flows for the years
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 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.  Our
audits 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 audits 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 as at December 31, 2009 and 2008 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles in the United States of
America.





As
discussed in Note 21, the accompanying 2008 consolidated financial statements
have been restated.





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







McGOVERN, HURLEY, CUNNINGHAM,
LLP









Chartered
Accountants


Licensed
Public Accountants


TORONTO,
Canada


April 14,
2010

















-F3-
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of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Balance Sheets


December
31, 2009 and December 31, 2008


2009
            
            
            2008
              Restated
              (Note
      21)ASSETSCurrent
      AssetsCash
      and cash equivalents
            $
            2,012,964
            
            
            $
            1,262,321Referral
      fees held in trust – restricted(note 3)
            
            2,767
            
            
            
            17,848Prepaid
      expenses
            
            19,236
            
            
            
            116,211Total
      Current Assets
            
            2,034,967
            
            
            
            1,396,380Equipment, net (note
      4)
            
            106,935
            
            
            
            112,184Equipment Under Capital Leases(note 5)
            
            1,968
            
            
            
            2,424Total
      Assets
            $
            2,143,870
            
            
            $
            1,510,988LIABIL
      ITIES AND STOCKHOLDERS' DEFICITCurrent
      LiabilitiesBank
      indebtedness – current portion (note 6)
            $
            65,104
            
            
            $
            61,244Accounts
      payable and accrued liabilities (note 7)
            
            1,987,786
            
            
            
            1,918,178Advances
      from related party – current portion (note 8)
            
            359,138
            
            
            
            84,425Trust
      liability  (note 3)
            
            2,767
            
            
            
            17,848Employee tax deductions payable (note 9)
            
            219,759
            
            
            
            275,317Obligation
      under capital leases (note 10)
            
            -
            
            
            
            1,624Stock-based
      compensation accrual - current portion (note 11a)
            
            19,720
            
            
            
            41,562Employee
      stock-based compensation accrual (note 11b)
            
            1,650
            
            
            
            266,642Total
      Current Liabilities
            
            2,655,924
            
            
            
            2,666,840Bank
      Indebtedness
            
            -
            
            
            
            56,141Advances from related
      party(note8)
            
            -
            
            
            
            45,000Stock-based Compensation
      Accrual (note 11c)
            
            76,829
            
            
            
            124,767Total
      Liabilities
            
            2,732,753
            
            
            
            2,892,748Commitments and
      Contingencies (notes 1 and 18)STOCKHOLDERS'
      DEFICITCapital
      StockPreferred
      stock, $0.0001 par value; 5,000,000 shares  authorized, none
      issued
            
            -
            
            
            
            -Capital
      stock, $0.0001 par value; 100,000,000 shares
              authorized; 42,976,548 (2008: 42,976,548) issued and
              outstanding(note
      12)
            
            4,298
            
            
            
            4,298Additional
      Paid-in Capital
            
            5,858,352
            
            
            
            5,923,372Additional Paid-in Capital -
      Warrants (note 13)
            
            335,183
            
            
            
            489,243Subscription
      (Cancellation) of Stock
            
            (220)
            
            
            
            8,240Subscription Receivable
      (note 14)
            
            -
            
            
            
            (227,540)Treasury
      Stock(note 15)
            
            (25,234
            )
            
            
            (25,234
            )Accumulated
      Other Comprehensive Income
            
            142,605
            
            
            
            213,407Accumulated
      Deficit
            
            (6,903,867
            )
            
            
            (7,767,546
            )Total
      Stockholders' Deficit
            
            (588,883)
            
            
            
            (1,381,760)Total
      Liabilities and Stockholders' Deficit
            $
            2,143,870
            
            
            $
            1,510,988




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




-F4-
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of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Statement of Operations and Comprehensive Income (Loss)


Years
Ended December 31, 2009, and 2008




2009
              
              
              2008Restated(Note
      21)Revenue
              
              $
              16,851,224
              
              
              $
              15,802,861ExpensesCommission
      and agent fees
              
              
              14,287,627
              
              
              
              13,314,374Salaries
      and benefits
              
              
              1,668,413
              
              
              
              1,186,658General
      and administrative expenses
              
              
              949,102
              
              
              
              942,602Employee
      stock-based compensation (note 11b)
              
              
              (264,993
              )
              
              
              684,197Legal
      judgement (note 7)
              
              
              (757,521
              )
              
              
              -Stock-based
      compensation (note 18a, 18b, and 18c(i))
              
              
              (47,938
              )
              
              
              (25,052
              )Stock-based
      compensation (note 18c(ii))
              
              
              (21,842
              )
              
              
              (6,549
              )Stock-based
      compensation for services
              
              
              -
              
              
              
              6,479Occupancy
      costs (note 16)
              
              
              142,521
              
              
              
              159,317Depreciation
      expense
              
              
              27,981
              
              
              
              33,428Total
      Operating Expenses
              
              
              15,983,350
              
              
              
              16,295,454Income
      (Loss) from Operations
              
              
              867,874
              
              
              
              (492,593
              )Other
      ExpensesInterest,
      Finance and Other Expenses
              
              
              (4,195
              )
              
              
              (26,759
              )Income
      (Loss) Before Income Taxes
              
              
              863,679
              
              
              
              (519,352
              )Provision
      for income taxes (note 17)
              
              
              -
              
              
              
              -Net
      Income (Loss)
              
              
              863,679
              
              
              
              (519,352
              )Foreign
      Currency Translation Adjustment
              
              
              (70,802
              )
              
              
              246,416Total
      Comprehensive Income (Loss)
              
              $
              792,877
              
              
              $
              (
      272,936
              )Net
      Income (Loss) per Share – Basic (note 19)
              
              
              0.02
              
              
              
              (0.01
              )Net
      Income (Loss) per Share -  Diluted (note 19)
              
              
              0.02
              
              
              
              (0.01
              )Weighted
      Average Number of Shares Outstanding - Basic During the
    Year
              
              
              42,976,548
              
              
              
              39,713,425Weighted
      Average Number of Shares Outstanding - Diluted During the
    Year
              
              
              46,300,265
              
              
              
              39,713,425


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




-F5-
 Table
of Contents





MORTGAGEBROKERS.COM HOLDINGS, INC.
AND SUBSIDIARIES


Consolidated
Statements of Stockholders' Deficit


Years
Ended December 31, 2009 and 2008 (Restated)




Common
                Shares
              
              
              Stock
                Amount
              
              Accumulated
                Additional
                Paid-In
                Capital(
      Restated Note 21)
              
              Additional
                Paid-In
                Capital
      -
                Warrants
              
              
              Subscription
      (Cancellation)
                Of Stock
              
              
              Subscription
                Receivable
              
              
              Treasury
                Stock
              
              
              Accumulated
                Other
                Comprehensive
                Income
      (Loss)(Restated
                Note
      21)
              
              
              Accumulated
                Deficit(Restated
      Note 21)
              
              
              Total
                Stockholders'
                Deficit(Restated
      Note 21)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
              )January
      1, 2008-RereTo
      adjust for
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Restatement
                (note
      21)
              
              
              -
              
              
              
              -
              
              
              495,675
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              (1,091,726)
              
              
              
              (596,051)Shares
      issued for services:February
      5, 2008 – Issued for $0.191 per Share (note 12)
              
              
              50,000
              
              
              
              5
              
              
              9,545
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              9,550September
      11, 2008 – Issued for $0.11 per Share (note 12)
              
              
              3,272,500
              
              
              
              327
              
              
              1,670,538
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,670,865September
      11, 2008 – Issued for $0.11 per Share (note 12)
              
              
              490,500
              
              
              
              49
              
              
              53,906
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              53,955December
      16, 2008 – Issued for $0.16 per Share (note 12)
              
              
              500,000
              
              
              
              50
              
              
              79,950
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              80,000Exercise
      and expiry of Warrants:July  9,
      2008, (note 13)
              
              
              -
              
              
              
              -
              
              
              132,968
              
              
              (132,968
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -October
      20, 2008 – Issuance of stock (note 12)
              
              
              150,000
              
              
              
              15
              
              
              43,485
              
              
              
              
              
              
              (43,500
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -October
      21, 2008 – Issuance of stock (note 12 )
              
              
              47,078
              
              
              
              5
              
              
              13,041
              
              
              
              
              
              
              (13,046
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Subscription  for
      Stock
              
              
              -
              
              
              
              -
              
              
              -
              
              
              -
              
              
              
              700
              
              
              
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              700Foreign
      currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              246,416
              
              
              
              -
              
              
              
              246,416Net
      loss for the year
              
              
              -
              
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (519,352)
              
              
              
              (519,352)Balances
      atDecember 31, 2008
              
              
              42,976,548
              
              
              $
              4,298
              
              $
              5,923,372
              
              $
              489,243
              
              
              $
              8,240
              
              
              $
              (227,540
              )
              
              $
              (25,234
              )
              
              $
              213,407
              
              
              $
              (7,767,546
              )
              
              $
              (1,381,760)September
      30, 2009- subscription receivable; adjustment (note 14)
              
              
              -
              
              
              
              -
              
              
              (211,540)
              
              
              -
              
              
              
              (8,460)
              
              
              
              220,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -September
      30,2009- warrant subscription adjustment(note 14)
              
              
              
              
              
              
              
              
              
              -
              
              
              (7,540)
              
              
              
              -
              
              
              
              7,540
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -September
      30, 2009- expiration of warrants(note 13)
              
              
              -
              
              
              
              
              
              -
              146,520
              
              
              (146,520)
              
              
              
              --
              
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              -
              
              
              
              -Foreign
      currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (70,802)
              
              
              
              -
              
              
              
              (70,802)Net
      Income for the year
              
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              863,679
              
              
              
              863,679Balances
      atDecember 31, 2009
              
              
              42,976,548
              
              
              $
              4,298
              
              $
              5,858,352
              
              $
              335,183
              
              
              $
              (220)
              
              
              $
              -
              
              
              $
              (25,234
              )
              
              $
              142,605
              
              
              $
              (6,903,867)
              
              
              $
              (588,883)




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




-F6-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Consolidated
Statement of Cash Flows


Year
Ended December 31, 2009 and 2008




2009
            
            
            2008Cash
      Flows from Operating Activities
            
            
            
            
            Restated
              (Note
21)Net
      income(Loss)
            
            $
            863,679
            
            
            $
            (519,352
            )Adjustments
      to reconcile net income (loss) to net cash from operating
      activities:Depreciation
            
            
            27,981
            
            
            
            33,428Stock
      issued for services
            
            
            -Employee
      stock-based compensation
            
            
            (264,993
            )
            
            
            684,197Recovery
      of  legal judgment
            
            
            (757,521
            )
            
            
            -Stock-based compensation accrual
            
            
            (69,780
            )
            
            
            (25,122
            )(Increase)
      decrease in net assets:Referral
      fees held in trust
            
            
            (16,588
            )
            
            
            (27,088
            )Prepaid
      expenses
            
            
            104,646
            
            
            
            13,975Accounts
      payable and Employee tax deductions payable
            
            
            451,901
            
            
            
            44,233Trust
      liability
            
            
            16,588
            
            
            
            27,088Net
      Cash provided by Operating Activities
            
            
            355,913
            
            
            
            231,359Cash
      Flows from Investing Activities(Purchase)
      of equipment, net
            
            
            (5,776
            )
            
            
            (16,039
            )Net
      Cash used in Investing Activities
            
            
            (5,776
            )
            
            
            (16,039
            )Cash
      Flows from  Financing Activities(Repayments
      of) obligations under capital leases
            
            
            (1,742
            )
            
            
            (3,020
            )Repayment
      of advances from related party
            
            
            222,846
            
            
            
            (41,266
            )Subscription
      for stock
            
            
            -
            
            
            
            700(Decrease)  in
      bank indebtedness
            
            
            (65,703
            )
            
            
            (5,104
            )Net
      Cash provided by (used in) Financing Activities
            
            
            155,401
            
            
            
            (48,690
            )Net
      Increase in Cash and Cash Equivalents
            
            
            505,538
            
            
            
            166,630Effect
      of exchange rates on cash and cash equivalents
            
            
            245,105
            
            
            
            264,839Cash
      and Cash Equivalents - Beginning of Year
            
            
            1,262,321
            
            
            
            830,852Cash
      and Cash Equivalents - End of Year
            
            $
            2,012,964
            
            
            $
            1,262,321Supplemental
      Cash Flow InformationInterest
      paid
            
            $
            4,195
            
            
            
            26,759Income
      taxes paid
            
            $
            
            
            
            $
            -




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




-F7-
 Table
of Contents








MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





1.
            Nature
      of Business and Going Concern





Nature of
Business





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





Mortgage
brokerage operations are presently conducted through the Company’s subsidiaries,
Mortgagebrokers.com Inc. (an Ontario, Canada company), MortgageBrokers.com
Financial Group of Companies, Inc., MBKR Franchising Inc.  and MBKR
Holdings Inc. (Canadian federal companies), in Canada only.   The
planned operations of the Company consist of becoming a financial services
company centered around mortgage finance, brokerage, sales and consulting in
Canada, the United States and the European Union (“E.U.”).





Going
Concern





The
Company’s consolidated financial statements are presented on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. For the year ended December 31,
2009, the Company generated net income of $863,679 (2008 a loss of $
(519,352).  Certain conditions noted below raise substantial doubt
about the Company’s ability to continue as a going concern.





The
Company’s ability to continue as a going concern is contingent upon its ability
to secure additional debt or equity financing, continue to grow sales of its
services and achieve profitable operations.  Management’s plan is to
secure additional funds through future debt or equity
financings.  Such financings may not be available or may not be
available on reasonable terms to the Company.  The issuance of
additional equity securities by us could result in a significant dilution in the
equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.





The
Company has devoted substantially all of its efforts to establishing its current
business. Management continues to develop and execute its business model,
business plans and strategic marketing plans which includes: organization of the
Company and divisions; identification of the Company’s sales channels and
associated supply chain; development of marketing strategic plans and sales
execution strategies; preparation of a financial plan, risk and capital
structure planning models, and mortgage origination ‘book of business’ models;
hiring mortgage sales agents to build its national sales force and continuing to
develop our referral relationship; developing cash flow forecasts and an
operating budget; identifying markets to raise additional equity capital and
debt financing; embarking on research and development activities; performing
employment searches and preparing agent contracts; and, recruiting and hiring
technicians, management and industry specialists.





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.





-F8-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





2.
            Summary
      of Significant Accounting Policies





The
accounting policies of the Company are in accordance with accounting principles
generally accepted in the United States of America, and their basis of
application is consistent. Outlined below are those policies considered
particularly significant:





a)         Basis
of Consolidation and Presentation





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





b)         Cash
and Cash Equivalents





Cash and
cash equivalents consist of cash on account and short-term investments with
remaining maturities at acquisition of three months or less.





c)         Equipment,
net





Equipment
is stated at cost. Depreciation is calculated using the following annual rates
and methods based on the estimated useful lives of the assets:





Furniture
      and equipment
            20%
      decliningComputer
      equipment
            30%
      decliningComputer
      software
            30%
      decliningLeasehold
      improvements
            Over
      the remaining term of the lease





d)    Revenue Recognition





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





e)    Use
of Estimates





Preparation
of financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
related notes to financial statements. These estimates are based on management’s
best knowledge of current events and actions the Company may undertake in the
future. Actual results may ultimately differ from estimates, although management
does not believe such changes will materially affect the consolidated financial
statements in any individual year.








-F9-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008




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





f)    Financial Instruments





In
accordance with ASC 825-10-50,  (formerly 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, 2009, the carrying value of accounts payable and
accrued liabilities, advances from related party  and all other
current liabilities and long term debt approximate their fair value because of
the limited terms of these instruments.





In accordance with ASC 820-10, (formerly SFAS No. 157),
“Defining Fair Value Measurement”, the  Company adopted the standard
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about fair
value measurements.





g)         Impairment
of Long-lived Assets





In
accordance with ASC 360-10-05 (formerly 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 ASC
718 (formerly SFAS No. 123R) "Share-Based Payment" ("ASC 718") 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
ASC 718. Under the fair value based method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. For stock options, the fair value
is determined using an option-pricing model that takes into account the stock
price at the grant date, the exercise price, the expected life of the option,
the volatility of the underlying stock and the expected dividends on it, and the
risk-free interest rate over the expected life of the option.  For
restricted stock, the fair value is determinedbased on the quoted market
price.  ASC 718 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
11.








-F10-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





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





i)         Income
Taxes





The
Company accounts for income taxes pursuant to ASC 740-10, (formerly SFAS No.
109), Accounting for Income
Taxes. Deferred tax assets and liabilities are recorded for differences
between the financial statements 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
year increased or decreased by the change in deferred tax assets and liabilities
during the year.





j)         Earnings
or Loss Per Share





The
Company accounts for earnings per share pursuant to ASC 260-10-05 (formerly SFAS
No. 128), Earnings per
Share, which requires disclosure on 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
stock outstanding for the year. Diluted earnings (loss) per share is computed by
dividing net income (loss) by the weighted average number of common stock
outstanding plus potentially dilutive securities (if dilutive) related to stock
options and warrants for the year.





k)         Foreign
Currency Translation





The
Company accounts for foreign currency translation pursuant to ASC
830-10,(formerly SFAS No. 52), “Foreign Currency Translation”.  The
Company’s functional currency is the Canadian dollar. All assets and liabilities
are translated into United States  dollars using the exchange rates
prevailing at the end of the period. Revenues and expenses are translated using
the average exchange rates prevailing throughout the year.





Unrealized
foreign exchange amounts resulting from translations at different rates
according to their nature are included in accumulated other comprehensive
income.





Realized
foreign currency transaction gains and losses are recognized in
operations.





l)         Comprehensive
Income or Loss





The
Company adopted ASC 220-10, (formerly SFAS No. 130) which 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 ASC 715-10 (formerly SFAS No. 87). ASC 220-10 requires only additional
disclosures in the financial statements and does not affect the Company’s
financial position or results of operations.








-F11-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





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





m)         Concentration
of Credit Risk





ASC
815-10, (formerly 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 June
2009, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. 2009-01, Generally Accepted Accounting Principles (ASC
Topic 105), which establishes the FASB Accounting Standards Codification (“the
Codification” or “ASC”) as the official single source of authoritative U.S.
generally accepted accounting principles (“GAAP”). All existing accounting
standards are superseded. All other accounting guidance not included in the
Codification will be considered non-authoritative. The Codification also
includes all relevant Securities and Exchange Commission (“SEC”) guidance
organized using the same topical structure in separate sections within the
Codification. The Board will not issue new standards in the form of Statements,
FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will
issue Accounting Standards Updates (“ASU”) which will serve to update the
Codification, provide background information about the guidance and provide the
basis for conclusions on the changes to the Codification.





The
Codification is not intended to change GAAP, but it will change the way GAAP is
organized and presented. The Codification was effective for our third-quarter
2009 financial statements and the principal impact on the Company’s financial
statements is limited to disclosures as all future references to authoritative
accounting literature will be referenced in accordance with the
Codification.





In
April 2009, the FASB issued ASC 820-10-65-4 (formerly referred to as FSP
SFAS 157-4), "Determining Whether a Market Is Not Active and a Transaction Is
Not Distressed." ASC 820-10-65-4 provides guidelines for making fair value
measurements more consistent with the principles presented in ASC 820-10-65-1.
ASC 820-10-65-4 provides additional authoritative guidance in determining
whether a market is active or inactive, and whether a transaction is distressed,
is applicable to all assets and liabilities (i.e. financial and non-financial)
and will require enhanced disclosures. This standard is effective for periods
ending after June 15, 2009. The Company has adopted this standard and
determined that it does not have an impact on its financial position and results
of operations.





In
April 2009, the FASB issued ASC 825-10-65-1 (formerly referred to as FSP
SFAS 107-1 and  APB 28-1), "Interim Disclosures about Fair Value of
Financial Instruments," and "Disclosures about Fair Value of Financial
Instruments, (formerly referred to as FSP SFAS 107)" to require disclosures
about fair value of financial instruments in interim as well as in annual
financial statements. ASC 825-10-65-1 also includes an amendment to "Interim
Financial Reporting (formerly referred to as APB 28-1)," to require those
disclosures in all interim financial statements. This standard is effective for
periods ending after June 15, 2009. The Company has adopted this standard
and determined that it does not have an impact on its financial position and
results of operations.








-F12-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





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





In
October 2009, the FASB issued the “Accounting Standards Update (“ASU”) 2009-13
Multiple Deliverable Revenue Arrangements a consensus of EITF” (formerly topic
08-1) an amendment to ASC 605-25. The update provides amendments to the criteria
in Subtopic 605-25 for separating consideration in multiple-deliverable
arrangements. The amendments in this update establish a selling price hierarchy
for determining the selling price of a deliverable. The selling price used for
each deliverable will be based on vendor-specific objective evidence if
available, third-party evidence if vendor-specific objective evidence is not
available, or estimated selling price if neither vendor-specific objective
evidence nor third-party evidence is available. The amendments in this update
also will replace the term “fair value” in the revenue allocation guidance with
the term “selling price” in order to clarify that the allocation of revenue is
based on entity-specific assumptions rather than assumptions of a marketplace
participant. The amendments will also eliminate the residual method of
allocation and require that arrangement consideration be allocated at the
inception of the arrangement to all deliverables using the relative selling
price method. The relative selling price method allocates any discount in the
arrangement proportionally to each deliverable on the basis of each
deliverable’s selling price. The update will be effective for revenue
arrangements entered into or modified in fiscal year beginning on or after June
15, 2010 with earlier adoption permitted. The adoption of this standard is not
expected to have a  material impact on the Company’s consolidated
financial statements.





3.
            Referral
      Fees Held in Trust and Trust
Liability





Pursuant
to service agreements, a portion of RE/MAX referral fees charged to the Company
will be payable to RE/MAX agents and will be paid into a Registered Retirement
Savings Plan ("RRSP") account on behalf of the respective agent, administered as
the RE/MAX Agent Retirement Plan by Manulife Financial. The aforementioned
referral fees to date have been deposited into a temporary in-trust account that
has signing officers from both the Company & RE/MAX, until the Manulife
Financial administered program is fully established for new entrants to the
program. It is expected that these funds will be deposited into the respective
agents' RRSP’s during 2010.

















-F13-
 Table
of Contents








MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





4.
            Equipment,
      net





Net
      Book Value
            
            Net
      Book ValueAccumulated
            
            December
      31,
            
            December
      31,Cost
            
            Depreciation
            
            2009
            
            2008Furniture
      and equipment
            
            $
            175,338
            
            
            $
            92,217
            
            
            $
            83,121
            
            
            $
            87,936Computer
      equipment
            
            
            33,676
            
            
            
            19,474
            
            
            
            14,202
            
            
            
            12,751Leasehold
      improvements
            
            
            19,533
            
            
            
            9,921
            
            
            
            9,612
            
            
            
            11,497$
            228,547
            
            
            $
            121,612
            
            
            $
            106,935
            
            
            $
            112,184





5.
              Equipment
      Under Capital Leases


2009
            
            
            2008Computer
      equipment
            
            $
            6,748
            
            
            $
            5,819less:
      accumulated depreciation
            
            
            (4,780
            )
            
            
            (3,395
            )$
            1,968
            
            
            $
            2,424





The
equipment under the capital leases is depreciated on a 30% declining
balance.





6.
            Bank
      Indebtedness





On November 22, 2005, the Company
obtained a line of credit in the amount of $150,000 CDN. The line of credit
bears interest at Royal Bank of Canada's prime plus 0.5% per annum, and is
collaterized by a general security agreement in all assets except real
property.   On November 20, 2008, the credit facility was
converted to a 24 month term loan whereby the Company pays principal of CDN
$6,250 per month plus interest at the Royal Bank of Canada prime plus 1.5% per
annum.




















-F14-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008








7.
            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
MortgageBrokers.com Holdings, Inc. (the ``Company``)  its subsidiary
MortgageBrokers.com Inc., 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.





In
January 2007, the Company filed a statement of defense, cross claim and counter
claim in response to Trisan`s statement of claim.  On October 3, 2007,
a partial summary judgment from the Ontario Superior Court was awarded to Trisan
regarding the matter in an aggregate amount of CDN $748,671 plus 500,000 shares
of our common stock.  The October 3, 2007 partial summary judgment was
appealed by us but the judgment was upheld on appeal by the Ontario Court of
Appeal on March 31, 2008.





On July
8, 2009, a full and final settlement agreement was executed between Trisan and
the defendants including MortgageBrokers.com Holdings, Inc. and its subsidiary,
MortgageBrokers.com Inc., regarding the prior summary judgment awarded to Trisan
and all outstanding and related matters.  The Agreement provides for a
mutual final and full release and discharge regarding the Company and our
subsidiaries for all matters up to and including July 8, 2009 related to the
original claim and action, counterclaim, judgment, and appeal between Trisan and
the Company and its subsidiaries.  The Trisan settlement agreement
required a third party company, of which our Chief Executive Officer is a
related party,   to be encumbered with a financial
arrangement.  For the period ending December 31, 2009, the Company
recorded in the statement of operations a recovery of legal judgement in the
amount of $757,521.





The
settlement agreement does not provide for the payment of any monies, the
creation of any obligations or any encumbrances in favor of Trisan, by or upon
Mortgagebrokers.com Holdings Inc. or its subsidiary MortgageBrokers.com Inc.
other than the release of 500,000 shares of Mortgagebrokers.com Holdings Inc.
common stock which were issued in 2006 to Trisan related parties in
escrow.  The company had accrued for this legal judgment plus interest
in 2007.  Upon the  settlement of this judgment, the Company
reversed the accrual and recorded a recovery to the statement of operations in
2009.





8.
            Advances
      from Related Party





As of
December 31, 2009, the controlling shareholder and Chief Executive Officer of
the Company had advanced $359,138 (2008 - $129,425) to fund the working capital
of the Company. The advances are unsecured, non-interest bearing and due on
demand.





9.
            Employee
      Tax Deductions Payable





The
Company is in arrears on the tax withholdings due to Canada Revenue Agency
(“CRA”) related to employee salaries.  The Company has negotiated an
agreement with CRA which, if certain conditions are met, allows the Company to
pay down the balance in monthly payments of $5,000.  In the event that
the Company secures funding, the balance is to be paid off in full shortly after
receipt of the funds. In addition, CRA has registered a Certificate in the
Canadian Federal Court and the Property Register of Ontario for the amount owing
to CRA. These afore-mentioned conditions are related to paying all ongoing
collected employee payroll tax deductions to CRA in a timely manner on a go
forward basis as well as communicating with CRA on a regular and ongoing basis
with respect to the Company’s financial condition via forwarding copies of our
quarterly and year end financial reports as well as keeping CRA informed with
respect to our efforts in securing financing.  To date, the company
has maintained in good standing the terms of its agreement with CRA.  The
liability currently bears interest at 9% annually.





-F15-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





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:





2009
            
            
            20082009
            
            
            -
            
            
            
            2,212Total
      minimum lease payments
            
            
            -
            
            
            
            2,212Less:
      amount representing interest at approx. 30%
            
            
            -
            
            
            
            (588
            )Total
      obligation under capital leases
            
            
            -
            
            
            
            1,624Less:
      current portion
            
            
            -
            
            
            
            (1,624
            )Long-term
      portion
            
            $
            -
            
            
            $
            -





11.
            Stock-based
      Compensation Accrual





The
Company has accrued expenses for stock-based compensation:





a.
            As
      of December 31, 2009, the Company has accrued, as stock-based compensation
      payable, 493,000(2008 – 377,838) common shares at a price of $0.04(2008 -
      $0.11) per share for a total of $19,720 (2008 - $41,562) payable to the
      parties referred to in note 18c(
ii).





b.
            As
      of December 31, 2009, the Company has accrued employee stock-based
      compensation of 15,000 (2008- 628,611) common shares for a total of $1,650
      ( 2008 - $266,642) under its Equity Compensation Plan referred to in note
      12.  In December 2009, employees agreed to return and cancel all
      previously issued stock  and cancel all 2009 Employee stock
      based compensation in regards to employee stock based compensation.
      Employee stock based compensation is valued at the fair market value at
      the date of grant.   The stock certificates will be
      returned to the company and will be cancelled subsequent to December 31,
      2009. The employee stock based compensation included a recovery of stock
      compensation expense of $669,928 and is netted against the  2009
      expense of $ 404,935 on  the statement of
      operations.





c.
            As
      of December 31, 2009, the Company has accrued, as stock-based compensation
      1,970,729 (December 31, 2008 – 1,134,242) common shares at a price of
      $0.04 (December 31, 2008 - $0.11) per share for a total of $76,829 (2008 -
      $124,767) payable to the parties referred to in note 18a, 18b and
      18c.




-F16-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008




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,
2009.





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;





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





2009
            
            
            2008Number
      of Warrants Outstanding at Beginning of Period:
            
            
            1,267,482
            
            
            
            1,682,976Number
      of Warrants Exercised:
            
            
            -
            
            
            
            10,000Warrants
      Expired:
            
            
            422,494
            
            
            
            405,494Number
      of Warrants Outstanding  at End of Period:
            
            
            844,988
            
            
            
            1,267,482





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.








-F17-
 Table
of Contents











MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
the  Consolidated Financial Statements


December
31, 2009 and 2008





12.
            Capital
      Stock(cont’d)





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





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





Based
upon the sale of 2,112,470 shares in our placement which closed on
June  9, 2006, and pursuant to the January 30, 2006 agreement with
RE/MAX which was modified on May 25, 2006, a maximum number of 528,117 shares
could be issued each anniversary of the placement closing date for a total of
5,281,170 shares over 10 years.  As at December 31, 2009, the Company
has issued 968,500 of these common shares.  The issuance of the
anniversary shares is subject to the good standing of the RE/MAX January 30,
2006 and amended May 25, 2006 agreements for RE/MAX affiliates as well as the
continued good standing of a one year renewable service level agreement for the
RE/MAX Franchisee.  The Company and RE/MAX terminated the agreement
June 9, 2009 and as such the obligation to issue anniversary shares following
this period has been removed from the Company.





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





On July
7, 2007, the Company issued 125,000 restricted (Rule 144) common shares at
a price of $1 per share and having similar rights and obligations pursuant to
the terms of the 2006 Private Placement offered to executives and franchisees of
RE/MAX Ontario-Atlantic Canada Inc.  These shares rights were assigned
to the new subscribers by the initial subscribers of the 2006 Private
Placement. These shares were issued in anticipation of the initial
participants shares being cancelled. The shares were issued at $1.00 per
share, the offered price in the private placement which closed on June 9,
2006.





On
October 20, 2008, the Company issued 150,000 restricted (Rule 144) common shares
at a price of $0.29 per share, based on the market price at the subscription
date, and having similar rights and obligations pursuant to the terms of the
2006 Private Placement offered to executives and franchisees of RE/MAX
Ontario-Atlantic Canada Inc.





On
October 21, 2008, the Company issued 47,078 restricted (Rule 144) common shares
at a price of $0.28 per share, based on the market price at the subscription
date, and having similar rights and obligations pursuant to the terms of the
2006 Private Placement offered to executives and franchisees of RE/MAX
Ontario-Atlantic Canada Inc.





Equity
Compensation Plan





On
February 6, 2003 and as amended on February 14, 2003, the Company adopted the
2003 Equity Compensation Plan to attract and retain high quality personnel.
The adequacy of this plan is evaluated annually by Company management. As
of December 31, 2009, no options had been issued under this plan. The
disclosures made in the




-F18-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
the Consolidated Financial Statements


December
31, 2009 and 2008





12.
            Capital
      Stock(cont’d)





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 December 31, 2009. The Company is currently in the
process of amending the existing employment agreements which are expected to be
executed in 2010. 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.





Non
Monetary Transactions





The
following non monetary transactions were completed by the Company on a service
for stock basis. It is the Company’s accounting policy that in certain
circumstances, stock, generally valued at the 5 day moving average price of the
trading value of the stock at the time the associated agreement was executed,
might be issued for the procurement of assets, provision of advisory and other
services.





On February 5, 2008, the Company issued 50,000restricted (Rule 144) common shares at
a price of $0.19 per share, the market close price on the date of issue,
for total amount of $9,550 to vFinance, Inc. based
on the execution of an investment banking service agreement. vFinance, Inc. is
an arm’s length third party consultant. vFinance Inc. provided advisory services
with respect to the review of financing term sheets and investment banking
matters.





On September 11, 2008, the Company issued 490,500
restricted(Rule 144) common shares
under the terms of its Mortgage Service Licence Agreement with RE/MAX
Ontario-Atlantic Canada Inc, and its franchisee and broker owners, all
third parties,that participated in the private
placement offering which closed on June 9, 2006.  The shares were
issued at $0.11 per share, the market close share price on the date of
issue.





-F19-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





12.
            Capital
      Stock (cont’d)





On September 11, 2008, the Company issued 3,272,500
shares of restricted (Rule 144) Company stock to its employees based upon draft
employment agreements that are expected to be executed by December 31,
2009.  These shares have not been released and the release is pending
the finalizing and execution of employment agreements.  These shares
were issued under the Company’s Equity Compensation Plan.  The shares
were issued at $0.11 per share, the market close share price on the date
of issue. These shares will be returned back to
the company as further discussed in note 11.





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





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. 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.   As of December 31, 2009, 233,078 of the
warrants were exercised at an average price of $0.28.





During
the year ended December 31, 2009,  422,494(2008-405,494) warrants
expired with a value of $146,520 (2008-$132,468) and have been allocated to
Additional Paid in Capital. As of December 31, 2009, 1,034,404 warrants have
expired, 233,078 warrants have been exercised and 844,988 warrants remain
outstanding and exercisable.





14.
            Subscription
      Receivable





On June
9, 2006, the Company completed an offering in which it issued a total of
2,112,470 shares of its common stock to accredited investors including
executives and franchisees of RE/MAX Ontario-Atlantic Canada Inc., at a price
per unit of $1.00 for an aggregate offering price of $2,112,470. Payment of
$1,870,169 was received during the year ended December 31, 2006 and promissory
notes were executed for the balance of $242,301.  As of December 31
2009, $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. On September 30,
2008 two new participants subscribed for 125,000 shares under the private
placement and as of December 31, 2009, $60,000 of the new participants’
promissory notes have been paid and $65,000 remains
outstanding.





-F20-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





14.
            Subscription
      Receivable (cont’d)





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





As of
December 31, 2009, the balance owing of the subscription receivable and
subscription for stock was written off and the balance was allocated
back to Additional Paid in Capital, Additional Paid in Capital-Warrants and
subscriptions receivable.  The share certificates will be cancelled
subsequent to December 31, 2009.





15.
            Treasury
      Stock





During
2007, the Company acquired 12,500 common shares of the Company, on the open
market, at an average price of $0.60 per share for a total of
$7,455.  In 2006, the Company acquired 31,600 common shares of the
Company, on the open market, at an average value of $0.56 per common share, for
a total of $17,779.





16.
            Occupancy
      Costs - Related Party





On August
1, 2007, the Company’s current office space was sold to a related party of the
Chief Executive Officer, the Company`s majority shareholder. The Company’s lease
agreement obligation was extended from two to five years.  Please see
note 18(f) for further details.





17.
            Income
      Taxes





The
Company has paid no federal, state or provincial income taxes. As of December
31, 2009, the Company had net operating loss carry forwards for federal income
tax reporting purposes of $3,991,587 which, if unused, will expire in various
years. The tax effect of the operating loss carry forwards and temporary
differences at December 31, 2009 and 2008 are as follows:





2009
            
            
            2008Deferred
      Income Tax Assets:Net
      Operating loss carry forward
            
            $
            1,317,224
            
            
            $
            1,500,053Net
      book value and tax value differences
            
            
            (34,392)
            
            
            
            (35,434
            )Valuation
      allowance for deferred income tax assets
            
            
            (1,282,832)
            
            
            
            (1,464,619
            )Total
      deferred tax effect
            
            $
            -
            
            
            $
            -








-F21-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





17.
            Income
      Taxes (Cont’d)





The
following is a reconciliation of the income tax benefit computed using the
combined Canadian federal and provincial statutory rate of 33% (2008 - 34%) rate
to the provision for income taxes:





2009
            
            
            2008Deferred
      Tax Provision:Expected
      income tax (expense) benefit
            
            $
            (285,014
            )
            
            $
            171,386Legal
      judgement
            
            
            249,902
            
            
            
            -Stock
      based compensation
            
            
            110,475
            
            
            
            (217,495
            )Valuation
      allowance
            
            
            75,443
            
            
            
            (46,109
            )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.





Effective
January 1, 2007, we adopted the provisions of FASB Accounting Standards
Codification Topic 740, Accounting for Uncertainty in Income
Taxes.  ASC 740 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise's financial statements. The standard
prescribes a recognition and measurement method for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The standard also provides guidance on recognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition.  We consider many factors when evaluating and estimating
our tax positions and tax benefits, which may require periodic adjustments and
which may not accurately forecast actual outcomes.





Based on a review of our tax positions,
the Company was not required to record a liability for unrecognized tax benefits
as a result of adopting ASC 740 on January 1, 2007.  Further, there
has been no change during the years ended December 31, 2009 and
2008.  Accordingly, we have not accrued any interest and penalties
through December 31, 2009.











-F22-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008








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-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





18.
            Commitments
      and Contingencies (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

























-F24-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





18.
            Commitments
      and Contingencies (Cont’d)





b)  Maxwell
Realty Inc.





Per a
three year renewable agreement dated April 12, 2006 and pursuant to the
execution of a service level agreement by the Maxwell Franchisee, the
Company is committed to issuing to Maxwell at no cost, warrants for common stock
of the Company based on referrals leading to funded mortgage origination volume.
The Maxwell Warrant-Based Compensation Program, which issue warrants (“SERIES
III Warrants”) that are divided amongst the Maxwell Franchisor, Franchisee and
referring Sales Agent.





Annual
      Volume:
            defined
      as the total funded mortgage origination volume from Maxwell lead referral
      executed per 12 month period following the Effective Date and subsequent
      12 month periods following the anniversary dates of the Effective
      Date





Number
      of Warrants:
            $3,000
      worth of warrants divided by the Strike Price per CDN $10 million in
      Annual Volume, adjusted on a pro rata basis, no minimum or maximum
      thresholds. The warrants are convertible in common shares on a 1:1
      basis.





Earnings
      Period:
            Series
      III warrants are earned in the first 5 years following the Effective
      Date





Additional
      Vestment:
            SERIES
      III warrants are fully vested on the fifth anniversary of the Effective
      Date





c)    REMAX





The REMAX
agreement was cancelled June 2009 and the following commitments are no longer
applicable after June 30, 2009.





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
      DateNumber
      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.Additional
      Vestment:
            SERIES
      IV warrants are fully vested on the 5th anniversary of the Effective
      Date





-F25-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


December
31, 2009 and 2008





18.
            Commitments
      and Contingencies (Cont’d)





Earnings
      Period:
            Series
      IV warrants are earned in the first 3 years following 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 the signed lease agreements for computer and office equipment.
Committed annual payments are as follows:





2010
            
            $
            5,5062011
            
            $
            3,9202012
            
            $
            3,467





e)    On
February 8, 2007, the Company entered into a lease to rent office space in
Calgary, Alberta, Canada for maintaining the Company's western Canada
operations. The agreement is effective commencing May 1, 2007 for a five year
term.





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





2010
            
            $
            8,3412011
            
            $
            10,0102012
            
            $
            3,337





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 is effective commencing April  1,
2007 for a five year term.





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





2010
            
            $
            100,3022011
            
            $
            100,3022012
            
            $
            100,302








-F26-
 Table
of Contents




MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
the Condensed Consolidated Financial Statements


December
31, 2009 and 2008





18.
            Commitments
      and Contingencies (Cont’d)








g)    In
October 2009, the Company entered into a lease in Glace Bay, Nova Scotia, for
maintaining the Company’s Atlantic Canada offices and records.  The
lease agreement was effective November 1, 2009 for a one year
term.  Committed annual payments for 2010 amounts to
$2,840.





h)    Contingencies





The
Company is party to various other claims and proceedings arising in the normal
course of business.  Management does not expect the disposition of
these matters to have a material adverse effect on the Company’s results of
operations or financial condition.





i)  Management
is of the opinion that employee stock based compensation accrued under an
employment contract is no longer owing to an employee who has left the
company.  As at December 31, 2009, shares were potentially owing to
employees who have left the company under employment contracts where the
employees have not signed final releases of any amounts owing.  These
common shares have not been accrued in these consolidated financial statements
as there ultimate issuance is not determinable.





19.
            Earnings
      or Loss Per Share





The
Company calculates basic earnings per common share using net income divided by
the weighted-average number of common shares outstanding. The Company calculates
diluted earnings per common share in the same manner as basic, except we use the
weighted-average number of diluted common shares outstanding in the denominator,
when the stock options and warrants are not anti-dilutive.





2009
            
            
            2008Weighted
      average number of common shares outstanding
            
            
            42,976,548
            
            
            
            39,713,425Warrants
            
            
            844,988
            
            
            
            1,267,482Stock
      Based Compensation payable (RE/MAX)
            
            
            493,000
            
            
            
            377,838Stock
      Based Compensation payable (Other)
            
            
            1,970,729
            
            
            
            1,134,242Stock
      Based Compensation payable (Employee)
            
            
            15,000
            
            
            
            628,611Weighted-average
      number of diluted common shares outstanding
            
            
            46,300,265
            
            
            
            43,121,598





20.
            Comparative
      Figures





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





-F27-
 Table
of Contents





MORTGAGEBROKERS.COM
HOLDINGS, INC. AND SUBSIDIARIES


Notes to
the Condensed Consolidated Financial Statements


December
31, 2009 and 2008





21.
            Restatement
      of Previously Issued Consolidated Financial
  Statements





A
)  The Company has determined that its accounting treatment of
employee stock based compensation was not in accordance with ASC
718.  As a result, the company has decided to adjust its accounting
policy to reflect the fair market value of the employee stock based compensation
at the date of grant per ASC 718.  As a result, the Company has
restated its 2008 fiscal year.





B) The
Company has determined that its accounting treatment of employee vacation pay
was not consistent with its stated vacation pay accounting policy.  As
a result, the Company has restated its 2008 fiscal year.





All
stock compensation expenses, accounts payable, accumulated deficit and stock
compensations accruals which were recorded prior to 2008 have been adjusted as
at January 1, 2008.  The adjustment to accumulated deficit as at
January 1, 2008 was $1,091,726 with a $495,675 adjustment to accumulated
additional paid in capital for a net adjustment to total shareholders’ deficit
of $595,051.  The effect on the consolidated balance sheet,
consolidated statement of operations and comprehensive loss and consolidated
statement of cash flows for the year ended December 31, 2008 is as
follows:





Consolidated
      Balance sheet
            
            As
      reported
            
            
            As
      restated
            
            
            AdjustmentAccounts
      Payable
            
            $
            1,948,009
            
            
            $
            1,918,178
            
            
            $
            (29,831
            )Employee
      stock based compensation accrual
            
            
            143,779
            
            
            
            266,642
            
            
            
            122,863Additional
      Paid-in-Capital
            
            
            4,116,807
            
            
            
            5,923,372
            
            
            
            1,806,565Accumulated
      Deficit
            
            
            (5,818,394
            )
            
            
            (7,767,546
            )
            
            
            (
      1,949,152
            )Accumulated
      Other Comprehensive Income
            
            
            163,852
            
            
            
            213,407
            
            
            
            49,555Consolidated
      Statement of Operations and Comprehensive Income(Loss)Employee
      stock based compensation expense
            
            
            (153,506
            )
            
            
            684,197
            
            
            
            837,703Net
      Income(Loss)
            
            
            338,074
            
            
            
            (519,352
            )
            
            
            (857,426
            )Salaries
      and benefits
            
            
            1,166,935
            
            
            
            1,186,658
            
            
            
            19,723Foreign
      Currency Translation Adjustment
            
            
            196,861
            
            
            
            246,416
            
            
            
            49,555Net
      Income(Loss) per share-basic
            
            
            0.01
            
            
            
            (0.01
            )
            
            
            (0.02
            )Net
      Income(Loss) per share-diluted
            
            
            0.01
            
            
            
            (0.01
            )
            
            
            (0.02
            )Consolidated
      Statement of Cash FlowsNet
      Income(Loss)
            
            
            338,074
            
            
            
            (519,352
            )
            
            
            (857,426
            )Employee
      stock based compensation
            
            
            (153,506
            )
            
            
            684,197
            
            
            
            837,703Accounts
      Payable
            
            
            74,064
            
            
            
            44,233
            
            
            
            (29,831
            )Effect
      of exchange rates on cash and cash equivalents
            
            
            193,789
            
            
            
            264,839
            
            
            
            71,050





22.
            Subsequent
      Events





Subsequent
to December 31, 2009, the Company received signed agreements from various
employees agreeing to cancel 4,085,000 common shares for Nil consideration and
to terminate any past and future stock-based compensation accrual arrangements
without further consideration.  The cancellation of the common shares
will not have a material affect on the consolidated financial statements as the
cancelled common shares will be recorded as a charge against the Additional
Paid-in Capital when the cancellation occurs.


-F28-