MortgageBrokers.com posted $2.4 million in revenue this past quarter, an 86% increase over last year. CEO Alex Haditaghi said, “We believe we are well on track to realizing our goal of being a profitable company…”
MB’s agent headcount grew 67% in 2007. Yet, per the company’s press release, “Mortgagebrokers.com common stock is trading at an all time low [about 7-8 cents a share] in spite of the fact that the Company has had twelve consecutive comparative quarters of revenue growth.”
The fact that MB keeps issuing shares doesn’t seem to be helping it’s stock price. The company’s outstanding shares were 38.5 million on May 20, and have increased every year since 2004, when 25.38 million shares were outstanding.
On the upside, the company just hired Gary Laughlin, RBC’s former Ontario mobile sales force manager.
Here’s MBKR’s latest quarterly SEC Filing.
(Full disclosure: Some of our staff have stock in this company. This should not be construed as a recommendation.)
As a long term shareholder, I just wanted to make a few corrections. First, Mortgagebrokers.com didn’t begin trading as a public company until February of 2005 and when they did, there were a total of 32,860 million shares outstanding, NOT 24 million. Second, from what I have read in the filings and news reports, the issuance of additional shares was the result of strategic partners accepting restricted shares in joining with the growth and success that Mortgagebrokers.com is now seeing.
I think that it says quite alot regarding the confidence that these partners have in the current management when they are willing to accept equity in the company versus cash. Like the article says, the company’s growth has been very impressive and when the housing mess has settled, I think these guys will be in a great position.
Hi Janet,
Thank you very much for the feedback. We definitely wish MB the best. They have a very unique model.
Per your comments, companies can and do issue shares despite not being public. This equity still represents proportional ownership in the company, despite not trading on an exchange.
The share totals used here were taken from MarketWatch.
We double checked with Reuters and their data was exactly the same.
So we checked further. In 2004, MBKR’s Annual report (as submited to the SEC) stated less than 2 million shares outstanding.
Whatever the number, the shares outstanding appear to have grown since inception. That’s not the end of the world, but when the lock-ups end, it generally makes it harder for a stock to run up IMO.
If folks have differing information we’d love to hear from you. We’ve emailed the company for official share totals.
Cheers,
Rob
More from the company’s 2005 annual report…
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In February 2003, the Company issued 2,400 shares of common stock to founders of the Company, for cash proceeds of $105 or $0.04 per share. Immediately following the issuance, the shareholders approved a 437.5 for 1 forward stock split to its outstanding common stock. the stock split has been retroactively reflected in the accompanying consolidated financial statements.
In 2004 and 2003 the Company issued 424,000 and 455,000 shares of common stock to various individuals for cash proceeds of $42,400 and $45,500 or $0.10 per share, respectively.
On March 11, 2005, the Company declared a 15:1 forward stock split, resulting in 28,935,000 shares outstanding with a par value of $.0001. The stock split has been retroactively reflected in the accompanying consolidated financial statements.
On March 21, 2005, pursuant to a stock purchase agreement and a share exchange between the Company and Mortgagebrokers.com Inc., the Company received all of the outstanding shares of common stock of Mortgagebrokers.com Inc. In return the Company issued 4,000,000 shares of common stock at par value of $0.0001 to the sole shareholder of Mortgagebrokers.com Inc.
Pursuant to a stock purchase agreement dated October 24, 2005, on November 11, 2005 1,000,000 restricted shares of common stock were issued for cash consideration of $0.63 per share or 45% of the market value of free trading securities of the Company.
On November 8, 2005, the Company approved the issuance of 100,000 shares of restricted common stock for cash consideration of $76,923 (Canadian $100,000). As at December 31, 2005 the consideration received has been included in accounts payable as the shares have not been issued.
Did anyone actually read the SEC filing? I think the question of how many shares are issued is really immaterial.
Here are some excerpts take from the SEC filing:
“As at March 31, 2008, we had $590,441 in cash”
“As at March 31, 2008, we had $599,360 in accounts payable, $281,244 in accrued liabilities”
See for me, not having enough money to pay my obligations would be a problem.
“The Company is in arrears on the tax withholdings due to Canada Revenue Agency…”
Not having enough money to pay CRA is kinda a problem too.
Then there is the Judgement in lawsuit “…CDN $598,636 within 90 days, along with interest in the amount of CDN$136,128 and legal expenses in the amount of CDN$8,907.”
Oops – where is the money for that?
“The Company’s consolidated financial statements are presented on a going concern basis…”
Scary.
“The Company’s ability to continue as a going concern is contingent upon its ability to secure additional debt or equity financing…”
Even more scary.
Basically, the accountants are saying that there is no way for the company to meet its obligations (yes, that includes commissions payable to the brokers) without either issuing more stock, or borrowing from the bank.
This looks like one BIG hole for mortgagebrokers.com.
Mark,
Thanks for the post. For good measure, I’ll remind everyone that you should do your own due diligence before relying on any information herein.
I’d be very suprised if the company could not deal with the financial issues it may or may not be facing. One thing I’d be curious of, is if they plan to issue more stock to raise capital. If so (and I have no idea if they do), then that growth in shares outstanding might not be immaterial.
Rob
Thanks Rob.
I absolutely agree. Everyone should do their due diligence before making a decision or passing judgment. Not every post is based on proven fact. I took the information directly from the SEC filing. If there were errors in my post, please remove the post.
In regards to shares, I was responding to the previous post where there were some questions as to the number of shares issued and the timing of the issue. You are correct that if additional shares are issued (perhaps in the future to generate operating capital), it would dilute the share further and negatively impact the share price.
Will MBKRs stock price ever go up????
IMO, not if they keep issuing more stock.