SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): March 21, 2005
MORTGAGEBROKERS.COM HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-49998 554486
(STATE OR OTHER JURISDICTION OF COMMISSION FILE NO.) IRS EMPLOYEE
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
45 Vogell Road, Suite 101
Richmond Hill, Ontario L4B-3P6
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(416) 410-4848
(ISSUER TELEPHONE NUMBER)
(FORMER NAME AND ADDRESS)
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FORWARD LOOKING STATEMENTS
This Form 8-K and other reports filed by Registrant from time to time with
the Securities and Exchange Commission (collectively the "Filings") contain or
may contain forward looking statements and information that are based upon
beliefs of, and information currently available to, Registrant's management as
well as estimates and assumptions made by Registrant's management. When used in
the filings the words "anticipate", "believe", "estimate", "expect", "future",
"intend", "plan" or the negative of these terms and similar expressions as they
relate to Registrant or Registrant's management identify forward looking
statements. Such statements reflect the current view of Registrant with respect
to future events and are subject to risks, uncertainties, assumptions and other
factors relating to Registrant's industry, Registrant's operations and results
of operations and any businesses that may be acquired by Registrant. Should one
or more of these risks or uncertainties materialize, or should the underlying
assumptions prove incorrect, actual results may differ significantly from those
anticipated, believed, estimated, expected, intended or planned.
Although Registrant believes that the expectations reflected in the forward
looking statements are reasonable, Registrant cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, Registrant
does not intend to update any of the forward-looking statements to conform these
statements to actual results.
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On March 21, 2005 (the "Effective Date"), pursuant to a Stock Purchase Agreement
and Share Exchange between (the "Agreement") between the Company and
Mortgagebrokers.com, Inc ("Mortgagebrokers"), a Delaware corporation, the
Company purchased all of the outstanding shares of Mortgagebrokers.com for the
issuance of 4,000,000 shares of the Company's common stock to Alex Haditaghi,
the sole shareholder of Mortgagebrokers.
Pursuant to the Agreement, Mortgagebrokers became a wholly owned subsidiary of
the Company. The acquisition was approved by the unanimous consent of our Board
of Directors on March 21, 2005.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On March 21, 2005 (the "Effective Date"), pursuant to a Stock Purchase Agreement
and Share Exchange between (the "Agreement") between the Company and
Mortgagebrokers.com, Inc ("Mortgagebrokers"), a Delaware corporation, the
Company purchased all of the outstanding shares of Mortgagebrokers.com for the
issuance of 4,000,000 shares of the Company's common stock to Alex Haditaghi,
the sole shareholder of Mortgagebrokers. Pursuant to the Agreement,
Mortgagebrokers became a wholly owned subsidiary of the Company.
MortgageBrokers is a mortgage brokerage firm serving the lending needs of real
estate professionals, builders, and individual home buyers. The company has
access to a full range of mortgage sources, and is dedicated to finding the
right loan with the best rates, terms and costs--to meet each client's unique
needs.
The aim of the company is to provide its customers fair mortgage rates at
reasonable prices, while keeping each client informed and educated throughout
the process. Mortgagebrokers will ultimately launch an in-house lending
division, while bringing new and innovative products to the market place.
The company is led by a team whose experience spans every facet of the mortgage
lending industry. At the helm of the Mortgagebrokers is Alex Haditaghi, CEO. Mr.
Haditaghi is a founding member of MortgageBrokers.com, and a successful serial
entrepreneur. Mr. Haditaghi is one of the foremost mortgage specialists in the
online mortgage industry, With Lending Tree Canada (www.lendingtree.ca) and
founder of the successful InfoSoft Media - one of Canada's premier information
technology providers. Michael Williams, VP Operations, and Rosa Lamanna, Senior
Sales Manager, complete the team with extensive real estate lending, mortgage,
and management experience (See: 5.0 Management Summary for additional
information).
The company will serve Canadians' mortgage needs across the country. The Company
will base its operations in Toronto, Ontario, a city considered to be the
finance center of Canada, and home many of the country's largest corporations.
Toronto has more than 76,000 businesses generating a gross domestic product of
$98 billion, and employs over 1.3 million people. Forty percent of Canadian
companies on Fortune's Global 500 are in Toronto. The standard of education is
high, with 34.87% of the population having a University degree. The standard of
living is also high and retail spaces catering to this population fair well in
the city. The Company plans to implement four corporate offices in Toronto in
2005. The Canadian mortgage industry is a $500 billion industry with an
estimated $40 billion in new mortgages this past year. In USA the mortgage
finance market increased 53.4% to US$3.8 trillion in 2003 from US$2.4 trillion
in 2002, due to the extremely favourable interest rate environment in 2003. All
of the leading companies profiled achieved positive asset growth over the 1999
to 2003 review period.
Mortgagebrokers.com plans to obtain mortgage broker licenses across all 50
states in the USA. This process has already begun and the company expects to
have these licenses by the end of summer 2005.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On March 21, 2005, pursuant to the Agreement, the Company issued 4,000,000
shares of its common stock to Alex Haditaghi in exchange for the shares of
Mortgagebrokers. These shares were issued in reliance on an exemption from
registration under Section 4(2) of the Securities Act of 1933.
These shares of our common stock qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance of 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, the size
of the offering, and the manner of the offering. We did not undertake an
offering in which we sold a high number of shares to a high number of investors.
In addition, Alex Haditaghi had the necessary investment intent as required by
Section 4(2) since he 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 this transaction.
ITEM 9.01 FINANCIAL STATEMENT AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Financial statements of the business acquired are included herein.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
2.1 Stock Purchase Agreement and Share Exchange dated as of March 21, 2005
between the Company and Mortgagebrokers.com Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MORTGAGEBROKERS.COM HOLDINGS, INC.
By: /s/ Alex Haditaghi
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ALEX HADITAGHI
CEO
Dated: March 21, 2005
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
FINANCIAL STATEMENTS
Table of Contents
Report of Independent Registered Public Accounting Firm........................ F - 2
Balance Sheet .................................... ............................ F - 3
Statement of Operations for the period from October 5, 2004 (inception) F - 4
through December 31, 2004......................................................
Statement of Changes in Shareholder's Equity for the period from October F - 5
5, 2004 (inception) through December 31, 2004 .................................
Statement of Cash Flows for the period from October 5, 2004 (inception) F - 6
through December 31, 2004......................................................
Notes to Financial Statements.................................................. F - 7 -11
Report of Independent Registered Public Accounting Firm
To the shareholder and board of directors of MortgageBrokers.com, Inc.
We have audited the accompanying balance sheet of MortgageBrokers.com, Inc.
as of December 31, 2004 and the related statements of operations, changes in
shareholder's equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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 provided 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, Inc. as
of December 31, 2004, and for the period of October 5, 2004 (inception) through
December 31, 2004 in conformity with accounting principles generally accepted in
the United States.
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As more fully
described in Note 1, the Company needs to seek new sources or methods of
financing or revenue to pursue its business strategy, raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
as to these matters are also described in Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Jewett, Schwartz, & Associates
Hollywood, Florida
February 1, 2005
F-2
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEET
DECEMBER 31, 2004
ASSETS
Current Assets:
Cash $ 10
---------------
TOTAL ASSETS $ 10
===============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities: $ -
---------------
TOTAL LIABILITIES -
---------------
SHAREHOLDER'S EQUITY
Common Stock $.01 par value; 1,000 shares authorized,
issued and outstanding
10
Additional paid-in capital -
Retained earnings -
---------------
TOTAL SHAREHOLDER'S EQUITY 10
---------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 10
===============
The accompanying notes are an integral part of these financial statements.
F-3
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM OCTOBER 5, 2004 (INCEPTION) TO DECEMBER 31, 2004
Revenue $ -
Cost of goods sold -
-----------------
Gross profit -
OPERATING EXPENSES
Selling, general and administrative expenses -
Other expenses -
-----------------
TOTAL OPERATING EXPENSES -
LOSS BEFORE TAXES -
INCOME TAXES -
-----------------
NET INCOME $ -
=================
Net income (loss) per share - basic and diluted $ -
=================
Weighted average shares outstanding - baisc and diluted 1,000
=================
The accompanying notes are an integral part of these financial statements.
F-4
MORTGAGEBROKERS.COM, INC. (A Development Stage
Enterprise)
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
Common Stock
1,000 shares authorized
--------------------------- Additional
Shares Par Value Paid-in Retained
Issued $.01 per share Capital Earnings Total
--------- ----- ------------- ------------- --------
BALANCE - OCTOBER 5, 2004 (Inception)
Issuance of common shares to founder 1,000 $ 10 -- -- $ 10
Net income -- -- -- -- --
--------- ----- ------------- ------------- --------
BALANCE - DECEMBER 31, 2004 1,000 $ 10 $ -- $ -- $ 10
========= ===== ============= ============= ========
The accompanying notes are an integral part of these financial statements
F-5
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM OCTOBER 5, 2004 (INCEPTION) TO DECEMBER 31, 2004
Cash Flows from Operating Activities
Net income $ -
------------------
Net cash used by operating activities -
------------------
Cash Flows from Investing Activities
Net cash used by investing activities -
------------------
Cash Flows from Financing Activities
Proceeds from sale of common stock to founder 10
------------------
Net cash provided by financing activities 10
------------------
Change in Cash -
Cash - Beginning of period -
------------------
Cash - End of period $ 10
------------------
==================
The accompanying notes are an integral part of these financial statements.
F-6
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD FROM OCTOBER 5, 2004
(INCEPTION) TO DECEMBER 31, 2004
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
MortgageBrokers.com, Inc. (the "Company") was incorporated On October 5, 2004
under the laws of the State of Delaware to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has had no operations to date other than issuing shares to its
original shareholders.
Development Stage Enterprise: The Company is currently devoting substantially
- ----------------------------
all of its efforts to establishing a new business and its planned principle
operations have not commenced as of December 31, 2004. In their efforts to
establish a new business, management is commencing with design of its business
and marketing plans that include the following: preparation of a financial plan,
cash forecast and operating budget; identifying markets to raise additional
equity capital and debt financing; embarking on research and development
activities; performing employment searches, recruiting and hiring technicians
and management and industry specialists; acquiring operational and technological
assets; and, developing market and distribution strategies. General and
administrative expenses include professional fees, internet service charges, and
other related operating expenses. Marketing and promotional expenses include
costs incurred in connection with raising capital and promoting the Company.
Basis of Presentation and Going Concern: In accordance with SFAS No.7, the
- ---------------------------------------
Company's policy regarding the preparation of these financial statements
includes the presenting, in addition to its statement of operations, changes in
shareholder's equity and cash flows, the cumulative amounts of revenues and
expenses, shareholder's equity transactions and cash flows since inception
through December 31, 2004.
The Company's independent accountants are including a "going concern" paragraph
in their accountants' report accompanying these financial statements that
cautions the users of the Company's financial statements that these statements
do not include any adjustments that might result from the outcome of this
uncertainty because the Company is a development stage enterprise that has not
commenced its planned principal operations. Furthermore, the "going concern"
paragraph states that the Company's ability to continue is also dependent on its
ability to, among other things, obtain additional debt and equity financing,
identify customers, secure vendors and suppliers, and establish an
infrastructure for its operations.
Even though the Company has not commenced planned principal operations or
generated revenues from prospective customers nor has it secured the funding
necessary to meet its current working capital needs, management believes that,
despite the extent of the
F-7
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD FROM OCTOBER 5, 2004
(INCEPTION) TO DECEMBER 31, 2004
financial requirements and funding uncertainties going forward, it has a
business plan under development that, if successfully funded and executed as an
integral part of a financial structuring, the Company can overcome the concerns
of the independent accountants within the next twelve months. Management
continues to actively seek various sources and methods of short and long-term
financing and support; however, there can be no assurances that some or all of
the necessary financing can be obtained. Management continues to explore
alternatives that include seeking strategic investors, lenders and/or technology
partners and pursuing other transactions that, if consummated, might ultimately
result in the dilution of the interest of the current shareholders.
Because of the nature and extent of the uncertainties, many of which are outside
the control of the Company, there can be no assurances that the Company will be
able to ultimately consummate planned principal operations or secure the
necessary financing.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid debt securities purchased with original
or remaining maturities of three months or less to be cash equivalents. The
carrying value of cash equivalents approximates fair value.
Revenue Recognition
- -------------------
The Company has adopted and follows the guidance provided in the Securities and
Exchange Commission's Staff Accounting Bulletin ("SAB") No. 104, which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities, at the date of these financial statements,
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income Taxes
- ------------
The Company uses the asset and liability method of accounting for income taxes
as required by SFAS No. 109 "Accounting for Income Taxes". SFAS No. 109 requires
the
F-8
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD FROM OCTOBER 5, 2004
(INCEPTION) TO DECEMBER 31, 2004
recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of certain assets and liabilities. Deferred income tax assets and
liabilities are computed annually for the difference between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future, based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period, plus or minus the change during the period
in deferred tax assets and liabilities.
Loss Per Share
- --------------
The Company computed basic and diluted loss per share amounts for December 31,
2004 pursuant to the Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings per Share." There are no potentially dilutive shares outstanding
and, accordingly, dilutive per share amounts have not been presented in the
accompanying statements of operations.
Stock-Based Compensation
- ------------------------
The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of
current market price of the underlying stock over the exercise price. Such
compensation amounts are amortized over the respective vesting periods of the
option grant. The Company adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," and SFAS No. 148, "Accounting for
Stock Based Compensation - Transition and Disclosure,' which allows entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 has been applied.
The Company accounts for stock options or warrants issued to non-employees for
goods or services in accordance with the fair value method of SFAS 123. Under
this method, the Company records an expense equal to the fair value of the
options or warrants issued. The fair value is computed using an options pricing
model.
Fair Value of Financial Instruments
- -----------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosures of information regarding
the fair value of
F-9
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD FROM OCTOBER 5, 2004
(INCEPTION) TO DECEMBER 31, 2004
certain financial instruments for which it is practicable to estimate the value.
For purpose of this disclosure, the fair value of a financial instrument is the
amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced sale of liquidation.
Recent Authoritative Pronouncements
- -----------------------------------
In May 2003, the FASB issued Statement No. 149; "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This Statement establishes
standards for certain changes in the accounting treatment of derivative
contracts. SFAS 149 is effective for contracts entered into or modified after
June 30, 2003, except for certain provisions that relate to Statement No. 133
implementation issues that have been effective for fiscal quarters that began
prior to June 15, 2003, which should continue to be applied in accordance with
their respective effective dates. The guidance should be applied prospectively.
The adoption of Statement No. 149 is not expected to have a material impact on
the Company's financial position, results of operations, or liquidity.
In May 2003, the FASB issued Statement No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. The
Statement requires that an issuer classify a financial instrument that is within
its scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. The Company is currently
classifying financial instruments within the scope of this Statement in
accordance with this Statement. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. Management does not believe that this Statement will have a material
impact on the Company's financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities". This interpretation represents an interpretation of
Accounting Research Bulletin No. 51. The accounting research bulletin requires
that a Company's financial statements include subsidiaries in which the Company
has a controlling financial interest. Financial statement interpretation No. 46
gives guidance on identifying variable interest entities and on assessing
whether a Company's investment in a variable interest entity requires
consolidation thereof. This interpretation is effective immediately for
investments made in variable interest entities after January 31, 2003 and it is
effective in the first fiscal year or interim period beginning after June 15,
2003 for investments in variable interest entities made prior to February 1,
2003. The adoption of FASB Interpretation No. 46 is not expected to have a
material impact on the Company's financial position, results of operations or
liquidity.
F-10
MORTGAGEBROKERS.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD FROM OCTOBER 5, 2004
(INCEPTION) TO DECEMBER 31, 2004
NOTE 3 - INCOME TAXES
There was no income tax expense for the years ended December 31, 2004 and for
the period October 5, 2004 (inception) through December 31, 2004 due to the
Company's net losses.
The Company's tax expense (benefit) differs from the "expected" tax expense
(benefit) for the years ended December 31, 2004 (computed by applying the
Federal Corporate tax rate of 34% to loss before taxes), as follows:
October 5,
2004
(inception)
Through
December
2004 2003 31, 2004
----------------------------------------------------
Computed "expected" tax expense (benefit) $ ( - ) $ ( - ) $ ( - )
Benefit of operating loss carry forwards - - -
----------------------------------------------------
$ - $ - $ -
====================================================
The effects of temporary differences that gave rise to significant portions of
deferred tax assets and liabilities at December 31, 2004 are as follows:
Deferred tax assets: 2004
--------------
Current deferred tax assets $ -
Net operating loss carry forward -
--------------
Total gross deferred tax assets -
Less valuation allowance (-)
--------------
Net deferred tax assets $ -
--------------
The Company has a net operating loss carry forward of approximately $-0-
available to offset future taxable income.
The valuation allowance at December 31, 2004 was $-0-. The net change in
valuation allowance during the year ended December 31, 2003 was an increase of $
- -0-.
F-11