Shares of MortgageBrokers.com Holdings Inc. (OTCBB: MBKR) rebounded sharply yesterday after a freefall from its 52-week high of $2.23 on May 1, 2007. MBKR closed Wednesday at a 52-week low of 45 cents and garnered much attention with its press release announcing a research report from Dutton Associates raising its rating from “Neutral” to “Speculative Buy.”
Why would a company receive a ratings bump while its stock is in a freefall? The simple answer is that MBKR is a solid company with unrealized potential that has plans in place to overcome the obstacles of the SmallCap arena … but evidence must support.
First we take a look at the obvious reason for MBKR’s freefall through shorting of its stock by non-believers. The company has thrown a counter-punch by retaining the law firm of Applbaum & Zouvas to seek a temporary restraining order and preliminary injunction on MBKR’s behalf. The restraining order will allege that several market makers and depositories have acted in conjunction for the purpose of creating a naked short. Allegations will include several business torts such as unfair competition, deceptive business practices and conversion, among other causes of action.
Alex Haditaghi – founder and CEO of MBKR – told Market News First that they are in the process of identifying the “shorters” and took this action because they are a fundamentally strong company with solid management and nothing to hide.
Another indication that MBKR is serious about its projections is the three-for-one forward stock split planned for May 24, 2007. “This forward stock split is intended to lay the groundwork for the anticipated growth of the Company,” Haditaghi stated in a press release. “It is also part of our ongoing efforts to improve trading liquidity, broaden ownership and enhance shareholder value.”
Haditaghi told Market News First that they are still on track for the forward split.
The latest financials for MBKR come from its 10-KSB filed on April 18, 2007. Results were mixed, showing a big jump in revenue accompanied with a bottom-line hit as net loss increased. Revenue for the year ended December 31, 2006, jumped to $4,023,281 from $229,603 in 2005, and net loss for 2006 increased to $2,019,307, or 6 cents per share, from $1,140,368, or 4 cents per share, for 2005.
Investors should be chomping at the bit for a look at MBKR’s upcoming 10-QSB, due on May 15, 2007, considering its fiscal 2007 revenue projections of $40 million. Haditaghi told Market News First he expects double digit growth in revenues, and the quarterly results will be released by the May 15 deadline. Only time and 10-Q’s will tell if MBKR is on pace for a tenfold revenue increase.
Haditaghi will join host Steve Kanaval and Mike “The Analyst” Willingham on Market News First today at 11:00 am CDT for a live interview.
Rich Hefter of Dutton Associates told Market News First that their research analysts have chosen not to participate in the interview.