UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 31, 2009

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to ___________________

Commission File Number 001-34106

(Exact name of registrant as specified in its charter)

Delaware		11-3820796
(State of incorporation)		(I.R.S. Employer Identification No.)

3433 West Broadway St, NE, Suite 501 Minneapolis, MN		55413
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (888) 932-3447

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common stock, $.001 par value

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

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

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 the filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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. x

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act).

The aggregate market value of the voting stock held by persons other than officers, directors and more than 5% stockholders of the registrant (non-affiliates) was approximately $5.3 million as of the last day of the Company’s most recently completed second fiscal quarter of April 30, 2009 when the last reported sales price was $0.47 per share. As of January 29, 2010, 33,396,719 shares of common stock were outstanding.

		Page

PART I
Item 1.	Business		3
Item 1A.	Risk Factors		11
Item 2.	Properties		16
Item 3.	Legal Proceedings		17
Item 4.	Submission of Matters to a Vote of Security Holders		17

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		18
Item 6.	Selected Financial Data		21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk
Item 8.	Financial Statements and Supplementary Data		30
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		31
Item 9A.	Controls and Procedures		31
Item 9B.	Other Information		33

PART III
Item 10.	Directors, Executive Officers and Corporate Governance		33
Item 11.	Executive Compensation		35
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		37
Item 13.	Certain Relationships and Related Transactions, and Director Independence		38
Item 14.	Principal Accountant Fees and Services		39

PART IV
Item 15.	Exhibits and Financial Statement Schedules		39
	Signatures		41

Overview of our Business and its History

We are a web-assisted, full service real estate company that offers innovative services to home buyers and sellers via two primary brands: Webdigs.com and IggysHouse.com. With Webdigs.com we share with each buyer up to one-half (50%) of the commission we receive from the seller or listing broker, with a minimum fee of $3,000 per transaction to the Company. We also offer discounted listing services to customers wishing to sell their homes. We provide our sellers a rate as low as 3.9%, compared to a real estate industry full service standard commission of 6% (our estimate is based on informal data collections in Minnesota and Florida). Since according to the 2008 National Association of REALTORS® Profile of Home Buyers and Sellers more than 87% of home buyers today use the internet in their home buying process, we primarily target those home buyers. As part of our website interface and personal service, we also provide home buyers tools to manage their purchase transactions from initial search to the closing of their purchase.

In January 2010, we launched IggysHouse.com, a unique online website that offers consumers an opportunity to have their home listed on the real estate multiple listing service (MLS) in their area and on the IggysHouse.com website completely free for 30 days. If the consumer has not sold their home within the initial 30 day period, IggysHouse.com offers them the option to continue their listing on a month to month basis for a low flat monthly fee. In addition to the basic monthly fee, there are opportunities to generate additional revenues for Webdigs through extra services such as yard signs, enhanced virtual photo tours and assistance with negotiation.

We have been operating since July 2007 in the Twin-Cities (Minneapolis-St. Paul and western Wisconsin) metropolitan area and since November 2007 in south Florida. Our plans include expansion into additional medium to large metropolitan areas throughout the United States as market conditions and financial resources permit. We expect our near term expansion will include metropolitan areas of the upper Midwest and states in the eastern, southeastern and southwestern regions of the United States.

Background and Industry Trends

We believe that the real estate market is undergoing a dramatic change not dissimilar to that previously experienced by traditional stock brokerages. We believe that the most critical aspect driving this change is the advent of the Internet as a tool for searching for and researching real estate, eliminating the commitments of time and expense involved with visiting multiple properties in person. According to the National Association of Realtors’ 2006 “Profile of Home Buyers and Sellers,” the percentage of home buyers using the Internet to search for homes increased from approximately 2% in 1995 to 80% in 2006. In addition, home sellers can use the Internet to check home valuations, track the housing market and research comparable sales information.

The increased use of technology throughout the entire process of a typical residential real estate transaction is an important development in the real estate market. For instance, electronic communication and electronic data storage permits a real estate brokerage to quickly reproduce standard real estate transaction documents, store such documents and store other important information about customers and properties, and communicate quickly with other parties involved in real estate transactions (e.g., title companies, insurers, surveyors, inspectors and governmental agencies), all of which permits increased efficiencies in the process of buying and selling a home. The technological changes and developments generally make it possible to effect a greater volume of transactions with less effort and expense.

We believe the technological developments in the real estate market and the increased amount of information available to and used by ordinary consumers appear to be circumstances that are similar to those developments that eventually gave rise to the non-traditional stock brokerages which have intruded upon the market dominance of traditional stock brokerages over the past two decades. For example, we note that the non-traditional stock brokerages developed their services and products to compete primarily on the bases of price, consumer effort and technology. Their websites, such as TD Ameritrade or e-Trade, provide not only trading capacity for the average consumer, but also a tremendous amount of information about companies. In this regard, we note that there has recently been a proliferation of various Internet-related real estate businesses that seek to provide either specific and limited services or information relating to residential real estate transactions (e.g., ForSaleByOwner.com, BuyOwner.com and Zillow.com). Like the non-traditional stock brokerages, these businesses typically rely on consumer effort, technology and price as the basis for competition. This is the model Webdigs has based its business practices on.

Our Business Model, Products and Services

We are a web-assisted real estate brokerage primarily for residential home buyers and sellers. We utilize the Internet, proprietary technology and efficient business processes to attempt to deliver significant savings to our home sellers and rewards to our home buyers over the traditional “full commission” brokerage model. We attempt to emphasize client service, when and as needed or requested by our clients, to separate us from other discount brokerage models; and we attempt to provide efficiency and cost savings that will differentiate us from traditional brokerage models.

We operate under two brands. Webdigs.com, our first brand, is our discounted, near full-service real estate brokerage. Webdigs offers its customers up to a 50% rebate to its clients who are buying homes and offers listing services starting as low as 3.9% (compared to traditional brokerages which typically charge 6-7% for listing service).

Our second brand, IggysHouse.com, which launched in January 2010, is a month-to-month listing service that allows home sellers to list their home on their local MLS and on the IggysHouse.com website completely free for 30 days. After 30 days, the seller has to option to continue to list their home for a flat fee of $49.99 per month, with various other ala carte services available for purchase. Currently, we market to potential customers principally through internet ad campaigns, limited but highly targeted e-mail, direct mail, and print advertising. Our most consistent source of business, however, has been referrals from previous satisfied customers of our business.

Services for Home Buyers

We provide home buyers with a number of services. Through our website at Webdigs.com, home buyers can search our database of MLS listings, view open house schedules, schedule home visits, make offers and monitor the offer and counteroffer process. Our licensed real estate agents assist buyers by preparing offers, counteroffers and other real estate documents, negotiating purchase contracts, setting up inspections, arranging for financing, and preparing for closings. Our agents support the buyer at each step of this process, until the transaction has closed.

After a closing, we pay our clients their rebate check within 14 days for their portion of the buy-side commission. Our rebate payments are generally one-half of the commission we receive from a transaction.

Using a generally accepted industry average fee of 2.7% (our estimate using informal data collected by our agents in Minnesota and Florida) for buyer representation, any customer purchasing a home for a price exceeding $111,000 may benefit financially from using Webdigs.com as the brokerage. A customer purchasing a home for a price exceeding $222,000 will receive a commission rebate of approximately 1.35% of purchase price (or one-half of the 2.7% buyer’s brokers fee). A buyer purchasing a home with a sales price between $111,000 and $222,000 will pay Webdigs a flat $3,000 broker fee with the remainder of the commission being returned to them as a non-taxable rebate. We believe this gives buyers a financial incentive to use our services.

Since our inception in July 2007 and as of December 31, 2009, our home buying clients have:

closed 175 purchase or sales of properties.

collectively received $631,000 in cash rebates for their purchases (an average of $3,606 per transaction).

Services for Home Sellers

In our Minnesota and Wisconsin markets, Webdigs.com provides our home sellers with a full service listing, including a listing on the Northstar MLS, for a fee of 3.9% of the final sale price at closing; 1.2% is paid to Webdigs, and the standard 2.7% goes to the buyer’s broker. This represents more than a 33% savings compared to the average real estate fee of 6% of sales price. Assuming a sales price of $300,000, a Webdigs listing customer may save 2.1% of the sales price ($6,300) by using Webdigs as their listing brokerage. To ensure that our customers receive the same attention from non-Webdigs agents representing potential buyers of a home listed by Webdigs, we typically offer the standard 2.7% of sales price commission to non-Webdigs brokers who represent buyers purchasing a home listed by Webdigs. The Northstar MLS contains listings from Minnesota, portions of western Wisconsin, northern Iowa, and eastern North and South Dakota. Our listings also appear on Realtor.com and 14 other national home-listing websites. In addition to providing home sellers with a home listing, Webdigs arranges for virtual home tours of our sellers’ homes so that the resulting virtual tour may become a part of the listing on our website. To assist with the pricing of a seller’s home, we provide a comparative market analysis to the seller and individual consultation on pricing strategies. Finally, we also provide a range of individual strategies for readying a seller’s home for sale. We support these services with marketing and advertising campaigns designed to drive traffic to our website. As of December 31, 2009, our home selling clients have sold over 70 homes with us since inception.

Our second brand, IggysHouse.com opens a new chapter for our business. We believe that our “pay as you go model” is unique to the consumer real estate market. It provides the value conscious consumer the ability to tightly control their expenditures and avoid the traditional percentage fee costs charged to sellers (based upon our observations the fee typically is 3.3% to seller + 2.7% for buyers broker = 6.0% total). IggysHouse.com offers its customers the chance to pay for the exact services they want on a fixed monthly fee basis. For a basic MLS listing, IggysHouse.com provides a free 30 day listing through the Webdigs system of affiliated brokers, which can be continued at the election of the consumer on a month to month basis for $49.99 per month. If the customer chooses, they may still offer the buyer’s agent a commission (usually 2.7%). As noted above, IggysHouse.com offers a full menu of add-on services which a customer can choose to purchase on an ala carte basis. These menu selections include yard signs, enhanced photo tours, negotiating assistance, market and price analysis, favored listing placements on selected national realtor websites and several additional options which allow the consumer to be a more informed seller of his home.

The IggysHouse.com business is only possible because of the high powered integrated website. We delegate virtually all paperwork and administration to the sellers through the IggysHouse.com website. The website contains all of the customized legal documents and forms that each customer will need to use and complete for the state in which their home is located. The IggysHouse.com agent merely reviews the documents once everything has passed the integrated online filters that are part of the IggysHouse.com website.

For Webdigs, the IggysHouse.com pricing model allows us to generate steady monthly revenue from each of our IggysHouse.com listing customers. We believe that the basic price of $49.99 per month for a MLS listing is low enough to encourage consumers to patiently maintain their listings over time while at the same time offering a reasonable cash flow to Webdigs. Unlike the traditional closing based real estate fee model (the brokerage only earns income if the home is sold) the IggysHouse.com business model does not depend on the sale of the home for its revenue. As noted above, the ala carte portion of the IggysHouse.com product offering provides consumers great advantages: low monthly fee plus a large selection of individually purchased services. An IggysHouse.com customer who ends up selling their home through IggysHouse.com may save thousands of dollars versus the average full service full priced model. Using a $300,000 sale price as an example, a full service brokerage might typically charge 6% to the seller for a successful listing. The cost to the seller would be $18,000 paid at the closing of the transaction. The same seller could keep his home listed on IggysHouse.com for 12 months for a total cost of $549.89. The same $300,000 sale held on IggysHouse.com for 12 months could end up saving the seller $17,450 (97%) of the fees paid to the traditional brokerage. We believe that certain savvy confident consumers will quickly see the value in the IggysHouse.com product offering and enjoy the power and control our IggysHouse.com website offers and choose to list their homes with us. A secondary benefit to Webdigs of the IggysHouse.com business model is the chance for Webdigs agents and affiliated brokers to speak with IggysHouse.com customers and offer them a full service but still discounted Webdigs listing. Later on after the sale of their home is complete, the consumer will have the chance to buy their next home under the Webdigs 50% cash rebate buyers program.

Our third brand for selling homes is the MLSDirect.com website. The MLSDirect.com website fills a void between our Webdigs and IggysHouse.com listing programs. It offers a flat fee MLS listing for prices starting as low as $299. Like IggysHouse.com, there is also a full menu of add-on services on the website that the customer can choose to purchase.

We also work with preferred partners in the mortgage brokerage industry who help support marketing beneficial in helping to attract customers to Webdigs.

Our long-term goal is to become the leader in comprehensive web-assisted real estate brokerage services for buyers and sellers of residential real estate in the United States and Canada. Initially, however, we are focused on pursuing the following broad strategic initiatives:

Invest in our website interface and technology. Our goal is to make the interfaces of all our websites (primarily Webdigs.com and IggysHouse.com) more easy to use, more intuitive, more enjoyable and distinguishable from the other websites and Internet tools that buyers and sellers of homes are accustomed to. We believe that continuing to update and enhance our website and technology will be a key element in increasing traffic and use of our services. The acquisition of the assets of Iggys House, Inc. and the subsequent enhancement and re-launch of IggysHouse.com represent the current focus of our website investment.

Focus on finding buyers and sellers for Webdigs. We have narrowed our marketing focus to lead generation. We are engaged in marketing to find consumers who could potentially benefit from the services we offer. Our own research indicates to us that our consumers have found the Webdigs product offering to their liking. As indicated previously, we generate a large proportion of our revenue from referrals of previously satisfied customers. Therefore, we are marketing specifically to individuals who are or will be in the market to buy or sell their homes in the very near future using internet advertising, targeted direct mail and print media.

Develop a larger agent base. To grow, we will need more agents. We believe that the positive consumer experience that Webdigs’ past customers report will assist in bringing additional real estate agents into our Company. Furthermore, under a new compensation plan recently enacted, we offer a very competitive compensation package to our agents, and Company supplied leads that should be compelling for certain energetic agents.

Develop an efficient transaction-processing and back-office operation. We believe that one important factor in our overall success, especially given our discounted commissions, will be our ability to process high transaction volumes efficiently. Accordingly, we have begun developing and intend to utilize transaction processes and computer systems more commonly found in high-volume industries such as banking and insurance. The IggysHouse.com website is a prime example of the type of technology that results in efficient back-office processing.

Attain profitability in our current markets. There are a number of Internet-based real estate brokerages presently attempting to capitalize on perceived market, demographic, trade/industry and economic changes. To our knowledge, none of these businesses have reached the sustained profitability needed to validate the discounted Internet-based real estate brokerage model. Therefore, we believe that an initial critical strategic goal is for Webdigs to attain overall profitability across its current markets in Minnesota, Wisconsin, and Florida. We believe that profitability—especially sustained profitability—will buoy consumer confidence in our services and lead to further successes.

If we can attain profitability, we believe that our business model, being predicated on greater efficiency and volume than the traditional model but with an emphasis on expertise and extensive client service, will facilitate our expansion into additional markets and the growth of our business.

We currently operate in one primary operating segment: (1) web-assisted real estate brokerage. In prior years, we had reported mortgage brokerage as a second strategic operating segment. Due to the divestiture of Marquest Financial, Inc. and the dissolution of Marketplace Home Mortgage – Webdigs, LLC in 2009 we no longer own any mortgage brokerage operations, and therefore, we now report as one operating segment.

The residential real estate market is highly fragmented and we have numerous competitors, many of which have greater name recognition, longer operating histories, larger client bases, and significantly greater financial, technical and marketing resources than we do. We anticipate that the most critical competitive factors in our business and industry include price, service and the ease of using website tools.

Some of our competitors in the residential real estate brokerage market are traditional brokerage firms, including large national brokerage firms or franchisors, such as Prudential Financial, Inc., and RE/MAX International Inc. We compete with these brokerages primarily on price, service and the ease of use of our website interfaces. Although our commissions are generally lower than other brokerages, consumers may be attracted to other brokerages because they offer or are perceived to offer higher levels of individual attention and service.

We also compete with non-traditional real estate brokerage firms including Zip Realty, Inc., iNest Realty, Inc. (a subsidiary of IAC/Interactive Corp) and Redfin Corporation, each of which pays cash rebates to clients and relies to a large extent on the efficiencies of the Internet. We believe that these competitors generally have greater financial resources than we do, and also have a longer operating history in the realm of online discount real estate brokerage. Here too, we compete with these non-traditional brokerages primarily on price, service and on the ease of use of our website interface. Our commissions are generally equal to or lower than these non-traditional brokerages. For example, ZipRealty and Redfin respectively rebate approximately 20% and 50% of their commissions to home buyers. iNest rebates 1% of the actual home sale price to buyers. We generally rebate up to 50% of our commission to home buyers with a minimum fee for Webdigs of $3,000.

To our knowledge, nobody has developed an automated monthly pay as you go listing service comparable to IggysHouse.com, but we do compete with multiple flat fee discount real estate listing services across a broad spectrum of pricing models, such as ForSaleByOwner.com and BuyOwner.com. We compete with these discount service providers primarily on level of service. Although with Webdigs, we offer traditional services to our clients at a discounted price, highly self-motivated consumers may be attracted to IggysHouse.com or other discount listing services because they are less expensive than our Webdigs branded services. Although we believe our value proposition is better than our competitors, we believe that a consumer can obtain an MLS listing through ForSaleByOwner.com for anywhere from $90 per month to a $900 flat fee.

We compete or may in the future compete with various online services, including Move, Inc., Zillow.com, HouseValues, Inc., HomeGain.com, Yahoo!, Inc., Google Inc. and Trulia, Inc. that also look to attract and monetize home buyers and sellers using the Internet. For instance, Move, Inc. operates the www.Realtor.com website. Move, Inc. is affiliated with the National Association of Realtors, the National Association of Home Builders, the Manufactured Housing Institute and hundreds of MLSs, which may provide Move, Inc. with preferred access to listing information and other competitive advantages. We compete with these service providers primarily on the basis of service and the ease of use of our website interface. We do not provide home valuation data, and some other sites (such as Realtor.com) have more listings and more data about the community. Many of these currently limited competitors and future competitors have significantly more resources than we do.

Environmental Regulation

We are not subject to environmental regulations that have a material effect upon our capital expenditures or otherwise.

We are subject to governmental regulation by federal, state and local regulatory authorities with respect to our real estate operations.

Federal Regulation. Federal laws and regulations govern the real estate brokerage business. These include the Real Estate Settlement Procedures Act of 1974, or RESPA, and federal fair housing laws. RESPA requires disclosures to home buyers and sellers of settlement costs and restricts the payment of kickback or referral fees for settlement services. RESPA does not prohibit referral fees paid by one real estate broker to another broker. Federal fair housing laws generally make it illegal to discriminate against protected classes of individuals in housing or brokerage services. Other federal regulations protect the privacy rights of consumers and affect our opportunities to solicit new clients.

Like real estate brokerage, mortgage brokerage is subject to RESPA and federal fair housing laws. Mortgage brokerage is also regulated by other federal laws such as the Truth in Lending Act, Regulation Z and the Equal Credit Opportunity Act. The provision of title insurance is also highly regulated.

State Regulation. Real estate licensing laws vary from state to state, but generally all individuals and entities acting as real estate brokers or salespersons must be licensed in the state in which they conduct business. A person licensed as a broker may either work independently or may work for another broker in the role of an associate broker, conducting business on behalf of the sponsoring broker. A person licensed as a salesperson must be affiliated with a broker in order to engage in licensed real estate brokerage activities. Generally, a corporation engaged in the real estate brokerage business must obtain a corporate real estate broker license. In order to obtain this license, most jurisdictions require that an officer of the corporation be licensed individually as a real estate broker in that jurisdiction. If applicable, this officer-broker is responsible for supervising the licensees and the corporation’s real estate brokerage activities within the state.

Real estate licensees, whether they are brokers, salespersons, individuals or entities, must follow the state’s real estate licensing laws and regulations. These laws and regulations generally prescribe minimum duties and obligations of these licensees to their clients and the public, as well as standards for the conduct of business, including contract and disclosure requirements, record keeping requirements, requirements for local offices, trust fund handling, agency representation, advertising regulations and fair housing requirements. Although payment of rebates or credits to real estate purchasers of the type we offer are permitted in most states, some states either do not permit these rebates or credits or do not permit them in the form that we currently provide them. Eight states have “minimum service laws” that require realtors to provide a level of service that purely web-assisted real estate businesses typically do not provide (Delaware, Florida, Nevada, New Mexico, Ohio, Pennsylvania, Tennessee and Wisconsin). We presently operate in the State of Florida and we believe the services we offer to residential real estate consumers comply with Florida’s minimum service law because: (i) for our clients buying homes, we show them homes, draw up the related offer paperwork, negotiate the purchase, answer all questions, and close the purchase transaction; and (ii) for our clients selling homes, we help the seller price the home (through a competitive market analysis or otherwise), draw up the listing agreement, negotiate the sale, and coordinate a closing of the sale. Nevertheless, we have not obtained any independent or governmental opinion relating to our compliance with Florida minimum-service laws. Eleven states prohibit rebates of real estate commissions (Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee).

Governmental bodies may change the regulatory framework within which we intend to operate, without providing any recourse for adverse effects that the change may have on our business. In Minnesota, Wisconsin, and Florida (i.e., the states where we currently have operations), we have designated one of our employees as the individually licensed lead broker and we hold a corporate real estate broker’s license where required by law. In addition to state laws regarding real estate brokerage, we must comply with state laws regarding mortgage brokerage, including laws that regulate the timing and content of disclosures.

Local Regulation. Local regulations also govern the conduct of our business. Local regulations generally require additional disclosures by the parties to a real estate transaction or their agents, or the receipt of reports or certifications, often from the local governmental authority, prior to the closing or settlement of a real estate transaction.

Trade Regulation. In addition to governmental regulations, we are subject to rules and regulations established by private real estate trade organizations, including, among others, local MLSs, the National Association of Realtors, and state and local associations of realtors. The rules and regulations of the various MLSs to which we belong vary, and specify, among other things, how we as a broker-member can use MLS listing data, including the use and display of such data on our website.

In 2008, the United States Department of Justice agreed to settle claims it had brought against the National Association of Realtors relating to the ability to access MLS listings. The settlement decree addressed two areas of particular concern to non-traditional real estate brokerage firms such as Webdigs. First, the decree prohibits “selective opt-outs,” which enable a broker involved in a MLS to selectively prohibit certain MLS participants from displaying that broker’s MLS listings on the participants’ website. Second, the decree prohibits “blanket opt-outs,” which enable a broker involved in a MLS to prohibit all other MLS participants from displaying that broker’s MLS listings, even though traditional real estate brokerage firms could easily display or otherwise convey these same listings in other manners. Presently, we are optimistic that the settlement will prohibit conduct that is unfair and potentially harmful to our business.

The National Association of Realtors, as well as the state and local associations of realtors, also have codes of ethics, rules and regulations governing the actions of members in dealings with other members, clients and the public. We are required to comply with these codes of ethics, rules and regulations by virtue of our membership in these organizations.

Intellectual Property

Our success depends significantly upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including trade secrets, copyrights and trademarks, as well as customary contractual protections.

We possess the rights to over 50 website domain names and numerous trademarks and tradenames. Some of the most prominent include:

	·	domain name rights to www.Webdigs.com
	·	domain name rights to www.IggysHouse.com

	·	domain name rights to www.buysiderealty.com
	·	domain name rights to www.MLSDirect.com
	·	trademark and trade name for “Webdigs”;
	·	trademark and trade name for “IggysHouse.com”;

	·	trademark and trade name for “buysiderealty.com”;
	·	trademark and trade name for “theMLSdirect.com”;

trademark for: “The New Way to do Real Estate”

Our ability to enforce our intellectual-property rights is subject to general litigation risks. Typically, when a party seeks to enforce its intellectual-property rights, it is often subjected to claims that the intellectual-property right is invalid, or is licensed to the party against whom the claim is being asserted. We cannot be certain that our intellectual-property rights will not be infringed upon, that others will not develop products in violation of our intellectual-property rights, or that others may assert, rightly or wrongly, that our intellectual-property rights are invalid or unenforceable. In instances where we will rely on trade secrets for the protection of our confidential and proprietary business information, we cannot be certain that we would have adequate remedies for any such breach or that our trade secrets will not otherwise become discovered or independently developed by competitors. In general, defending intellectual-property rights is expensive and consumes considerable time and attention of management. Our involvement in intellectual-property litigation would likely have a materially adverse effect on our business, even if we were ultimately successful in defending our intellectual-property rights.

The Company (including its subsidiaries) currently has six employees, five of whom are full-time and over 5 real estate agents that are contractors.

Corporate Structure and Information

Webdigs, Inc. operates through direct and indirect subsidiaries. The principal operating subsidiary is Webdigs, LLC, a Minnesota limited liability company. Webdigs, LLC was originally organized as a limited liability company in May 2007 under the laws of the State of Minnesota. In October 2007, Webdigs, LLC engaged in a merger transaction with Select Video, Inc., a Delaware corporation incorporated in May 1994. Until the October 2007 merger, Select Video had only nominal assets (consisting of cash) and no meaningful business operations of its own. Following the merger transaction, Select Video, Inc. changed its name to Webdigs, Inc. (which we refer to throughout this document as the “Company”). Webdigs, LLC continues to exist as a wholly owned operating subsidiary of the Company.

Webdigs, LLC determined to engage in the merger transaction with Select Video primarily to obtain a shareholder base sufficiently diversified to enable an application for listing on an automated securities market (Pink Sheets or OTC Bulletin Board).

Webdigs, LLC itself also owns 100% of the ownership interests of Home Equity Advisors, LLC, a currently dormant Minnesota limited liability company.

During the year ended October 31, 2009, we sold Marquest Financial, Inc (a company originally acquired to act as Webdigs’ wholly owned consumer mortgage brokerage) back to its original founder and previous owner Mr. Edward Graca. Additionally, we, along with Marketplace Home Mortgage, LLC dissolved our joint venture Marketplace Home Mortgage - Webdigs, LLC in an effort to focus on our core expertise as a real estate brokerage over the near term.

Our principal offices are located at 3433 Broadway Street NE, Suite 501, Minneapolis, Minnesota 55413, and our telephone number at that office is (888) 932-3447. Our website address is www.Webdigs.com. The information contained on our website or that can be accessed through our website does not constitute part of this document.

As mentioned above, we launched our new “pay as you go” website www.IggysHouse.com on January 6, 2010.

Investment in our common stock involves a high degree of risk and should be regarded as speculative. As a result, you should only consider an investment in Webdigs if you can reasonably afford to lose your entire investment.

ITEM 1A. RISK FACTORS

An investment in our common stock involves significant risks. Before deciding to invest in our common stock, you should carefully consider each of the following risk factors and all of the other information set forth in this document. The following risks could materially harm our business, financial condition or future results. If any such risks materialize, the value of our common stock could decline, and you could lose all or part of your investment.

We are a newly organized start-up company with little history of operations and we expect to incur losses for the foreseeable future.

We began operations in July 2007 and to date have not generated meaningful revenues. As a recently organized start-up company, we are subject to all of the risks associated with a new business enterprise. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, especially in challenging and competitive industries such as residential real estate and mortgage brokerage and particularly in light of current general economic, real estate and credit market conditions.

We do not have a significant operating history which would provide you with meaningful information about our past or future operations. We anticipate incurring losses that will result from costs incurred in organizing our company, research and development, website development, protecting our technology, raising capital, market research and generally poor real estate market conditions. We anticipate incurring operating losses for the foreseeable future. Moreover, we may not be able to generate material revenues in the future, and it is possible that any revenues that we generate will be either insufficient for us to achieve profitability or even continue operations.

We will require additional financing in the future, but such financing may not be available to us.

We will require significant additional capital to continue our operations. To date, our revenues from operations have not generated cash flow sufficient to finance our operations and growth. As a result, we have periodically since our inception sought financing and we will likely continue to require additional financing in the foreseeable future. Since August, 1, 2009 our Chairman and Chief Executive Officer has invested $100,000 in private equity placement and loaned the company $373,000. We expect that we will need approximately $400,000 in additional financing prior to the end of October 2010 to cover salaries, contracted website maintenance and development and other basic working capital needs.

Additional financing could be sought from a number of sources, including but not limited to additional sales of equity or debt securities, or loans from banks, other financial institutions or our affiliates. If additional funds are raised by the issuance of our equity securities, such as through the issuance of stock, convertible securities, or the issuance and exercise of warrants, then the ownership interest of our existing stockholders will be diluted. If additional funds are raised by the issuance of debt or other equity instruments, we may become subject to certain operational limitations (e.g., negative operating covenants), and such securities may have rights senior to those of the existing holders of common stock.

If adequate funds are not available on acceptable terms, we may be unable to fund the operation of our business. As a result, we would likely be forced to dramatically alter or cease operations.

We critically rely on our executive management, and the loss of certain members of management would materially and negatively affect us.

Our success materially depends upon the efforts of our management and other key personnel, including but not limited to Robert A. Buntz, Jr., our Chief Executive Officer. If we lose the services of Mr. Buntz or any other executive managers or significant employees, our business would be materially and adversely affected. We have entered into a formal services and non-competition agreement with Mr. Buntz in the form of a Member Services Agreement. Nevertheless, agreements do not ensure the continued availability to us of Mr. Buntz or any other manager or employee. Furthermore, we do not have “key person” life insurance insuring the life of Mr. Buntz, and we do not presently intend to purchase such insurance.

Our future success also depends upon our ability to attract and retain highly qualified management personnel and other employees. Any difficulties in obtaining, retaining and training qualified employees could have a material adverse effect on our results of operation or financial condition. The process of identifying such personnel with the combination of skills and attributes required to carry out our strategy is often lengthy. Any difficulties in obtaining and retaining qualified managers and employees could have a material adverse effect on our results of operation or financial condition.

There is substantial doubt about our ability to continue as a going concern.

Although we have improved our net loss by nearly 50% from 2008 to 2009, we have had net losses attributed to common shareholders for the years ended October 31, 2009 and 2008 of $1,084,815 and $2,090,232, respectively. Furthermore, we had a working capital deficit as of October 31, 2009 of $1,103,503. Since the financial statements were prepared assuming that we would continue as a going concern, these conditions coupled with our current liquidity position raise substantial doubt about our ability to continue as a going concern. Furthermore, since we are pursuing new business, this diminishes our ability to accurately forecast our revenues and expenses. We expect that our ability to continue as a going concern depends, in large part, on our ability to generate sufficient revenues, limit our expenses without sacrificing customer service, and obtain necessary financing. If we are unable to raise additional capital, we may be forced to discontinue our business.

We may be unable to obtain market acceptance of our services.

The market for residential real estate sales is well-established. However, the market for non-traditional residential real estate sales is relatively new, developing and even more uncertain. As is typical in the case of a new and rapidly evolving industry, demand and market acceptance for products and services are subject to tremendous uncertainty. Our future growth and financial performance will almost entirely depend upon consumers’ acceptance of our “Webdigs solution” to purchase and sell homes at discounted rates. In this regard, the failure of purchasers and sellers of residential property to accept our model or the inability of our services to satisfy consumer expectations, would have a material adverse effect on our business, and could cause us to cease operations.

Our officers and directors, together with certain affiliates, possess controlling voting power with respect to our common stock, which could limit your influence on corporate matters.

Our officers and directors collectively possess beneficial ownership of 12,644,233 shares representing approximately 37.9% of our common stock. In addition, one other significant stockholder, Iggys House, Inc., identified on the beneficial ownership table in this filing (see Item 12, “Security Ownership of Certain Beneficial Owners and Management”) holds beneficial ownership of 2,077,500 shares representing an additional 6.2% of our common stock. As a result, our directors and officers, together with the other significant stockholder, will have the ability to greatly influence, if not outrightly control, our management and affairs through the election and removal of our directors, and all other matters requiring stockholder approval, including the future merger, consolidation or sale of all or substantially all of our assets.

This concentrated control could discourage others from initiating any potential merger, takeover or other change-of-control transaction that may otherwise be beneficial to our stockholders. Furthermore, this concentrated control will limit the practical effect of your participation in our corporate matters, through stockholder votes and otherwise. As a result, the return on your investment in our common stock through the sale of your shares or our business could be adversely affected.

We rely on third parties for key aspects of the process of providing services to our customers, and any failure or interruption in the services provided by these third parties could harm our ability to operate our business and damage our reputation.

We rely on third-party vendors, including data center and bandwidth providers. Any disruption in the network access or co-location services provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business. Any financial or other difficulties our providers face may have negative effects on our business, the nature and extent of which we cannot predict. We exercise little or no control over all of these third-party vendors, which increases our vulnerability to problems with the services they provide.

In addition, we license technology and related databases from third parties to facilitate aspects of our data center and connectivity operations, including, among other things, Internet traffic-management services. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services could materially and negatively impact our relationship with our customers and adversely affect our brand and our business. It is possible that such errors, failures, interruptions or delays could even expose us to liabilities to our customers or other third parties.

Interruption or failure of our information technology and communications systems would impair our ability to effectively provide our services, which could in turn damage our reputation and harm our business.

Our ability to provide our services critically depends on the continuing operation of our information technology and communications systems. Any damage to or failure of our systems would likely result in interruptions in our service to customers and the closings of real estate transactions from which we principally derive revenue. Accordingly, interruptions in our service would likely reduce our revenues and profits, and our brand could be damaged, perhaps irreparably, if people believe our system and services are unreliable.

To our knowledge, our systems are vulnerable to damage or interruption from terrorist or malicious attacks, floods, tornados, fires, power loss, telecommunications failures, computer viruses and other attempts to harm our systems, and similar types of events. Our data centers are subject to break-ins, sabotage and intentional acts of vandalism, and to other potential disruptions. Some of our systems are not fully redundant (i.e., backed up), and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, or a decision to close a facility we are using without adequate notice for financial reasons or other unanticipated problems at our data centers, could result in lengthy interruptions in our service. Any unscheduled interruption in our service would likely place a burden on our entire organization and result in an immediate loss of revenue. The steps we have taken to increase the reliability and redundancy of our systems are expensive, reduce our operating margin and even then may not be successful in reducing the frequency or duration of unscheduled downtime.

We will continue to depend on intellectual property rights to protect our proprietary technologies, although we may not be able to successfully protect these rights.

We rely on our proprietary technology to enhance some of our service offerings. To protect this technology, we employ and rely on trademark, trade secret, and copyright law in addition to contractual restrictions and protections. While we have copywritten our trademarks, it is entirely possible that one or more third parties may independently develop technology that is similar to our technology, or offer or sell products or services that utilize our technology. The development by others of technology that is similar to our technology, or the sale of products or services that incorporate our technology, would likely harm our competitive position and have a material adverse effect on our business.

Finally, we may determine, or a legal proceeding may result in a determination, that our intellectual property infringes the intellectual property rights of others. If our technology infringes the intellectual property rights of others, we may be subject to lawsuits and incur significant liabilities.

Our certificate of incorporation grants our Board of Directors, without any action or approval by our stockholders, the power to issue additional shares of capital stock, including the power to designate additional classes of common and preferred stock.

Our authorized capital consists of 250,000,000 shares of capital stock. Pursuant to authority granted by our certificate of incorporation and applicable state law, our Board of Directors, without any action or approval by our stockholders, may designate and issue shares in such classes or series (including other classes or series of preferred stock) as it deems appropriate and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of other classes or series of capital stock, including preferred stock that may be issued could be superior to the rights of the shares of common stock offered hereby. The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to the shares of our common stock. Finally, any issuances of additional capital stock (common or preferred) will dilute the percentage of ownership interest of our stockholders and may dilute the per-share book value of the Company.

There is limited public market for our common stock.

We commenced trading on the OTC Bulletin Board on December 19, 2008. To date, however, our stock has been thinly traded with some days having no shares sold.

We are required to comply with governmental regulations, which will increase our costs and could prohibit us from conducting business in certain jurisdictions.

We are subject to governmental regulation by federal, state and local regulatory authorities with respect to our real estate brokerage and mortgage lending operations. As is standard in the residential real estate brokerage industry, our real estate agents must be licensed. In some states, our proposed business activities are prohibited and we may not operate in those states. Eight states have “minimum service laws” that require realtors to provide a level of service that web-assisted real estate businesses typically do not provide. Eleven states outrightly prohibit rebates of real estate commissions. Governmental bodies may change the regulatory framework within which we intend to operate, without providing any recourse for adverse effects that the change may have on our business.

We can give no assurance that we will be able to comply with existing laws and regulations, that additional regulations that harm our business will not be adopted, or that we will continue to maintain our licenses, approvals or authorizations. Our failure to comply with applicable laws and regulations, or the adoption of new laws and regulations restricting our intended operations, could have a material adverse effect on our business and could cause us to cease operations.

The efforts of the National Association of Realtors or other organizations could prevent us from operating our business, and could lead to the imposition of significant restrictions on our operations.

The online residential real estate sales model generally, and the Webdigs business model specifically, is based on the assertion that full-commission real estate brokers and agents do not provide an acceptable level of value to consumers and that consumers are willing to engage in online home search activities via the internet if they can reduce the dollar amount of commissions paid on home sales and purchases. This model is a direct and significant threat to traditional residential real estate brokers and agents.

In response to previous and ongoing efforts by discount web-assisted real estate companies, the National Association of Realtors, which represents real estate brokerages, has issued rules that attempt to block access of web-assisted real estate companies to the Multiple Listing System (MLS) and may adopt additional rules intended to reduce or eliminate competition from online discount real estate businesses such as Webdigs. Our business is dependent upon the ability to access the MLS to be competitive. We can give no assurance that the National Association of Realtors will not be successful in preventing our access to the MLS, or that it or another organization will not be successful in adopting rules or imposing other restrictions on web-assisted real estate businesses such as Webdigs. Such adoption or imposition of regulations or restrictions would have a material adverse effect on our business.

Competition in the traditional and online residential real estate industry is intense.

The residential real estate industry is highly competitive. We believe that important competitive factors in this industry include (but are not limited to) price, service, and ease of use. We presently face competition from numerous companies engaged in traditional residential real estate brokerage services and several online residential real estate sales companies, and we expect online competition to increase in the future from existing and new competitors. Most of our current and potential competitors have substantially greater financial, marketing and technical resources than us, as well as significant operating histories. Accordingly, we may not be able to compete successfully against new or existing competitors. Furthermore, competition may reduce the prices we are able to charge for our services, thereby potentially lowering revenues and margins, which would likely have a material adverse effect on our results of operation and financial condition.

The online residential real estate industry is subject to significant and rapid technological change.

The online residential real estate industry is subject to rapid innovation and technological change, shifting customer preferences, new service introductions and competition from traditional real estate brokerage firms. Competitors in this market have frequently taken different strategic approaches and have launched substantially different products or services in order to exploit the same perceived market opportunity. Although we believe that we are offering a unique solution, there can be no assurance that our services will be competitive technologically or otherwise, or that any other services developed by us will be competitive.

Our ability to compete in this industry will depend upon, among other things, broad acceptance of our services and on our ability to continually improve current and future services we may develop to meet changing customer requirements. There can be no assurance that we will successfully identify new service or product opportunities and develop and bring to the market new and enhanced solutions in a timely manner, that such products or services will be commercially successful, that we will benefit from such development, or that products and services developed by others will not render our products and services noncompetitive or obsolete. If we are unable to penetrate markets in a timely manner in response to changing market conditions or customer requirements, or if new or enhanced products or services do not achieve a significant degree of market acceptance, our business would be materially and adversely affected.

Consumer access to mortgage financing has been affordable and widely available by historic standards and any tightening in the availability of credit will have the potential to negatively impact our operating results.

The affordability and availability of mortgage financing is influenced by a number of factors, including interest rates, lender underwriting criteria, loan product availability and the performance of mortgage backed securities in the secondary market. While the federal government has supported programs to make loans easier to obtain in recent months, we believe that the mortgage market still remains tight despite these efforts and near record low interest rates. While home sales have increased in the latter half of 2009, transaction volume remains significantly below levels of the market’s peak in 2006.

We may be impacted by general economic conditions within the United States residential real estate market.

The residential real estate market has experienced vast fluctuations in recent times. In some years, real estate home sales are brisk, while in other years the residential real estate market has been stagnant. Our ability to attract home sellers and buyers to use our website will, in part, depend upon consumers’ willingness in general to buy or sell a home. When consumers sense that the overall economy is not doing well, they are less likely to make an expensive purchase such as a home. We are encouraged by recent data in consumer confidence, but again recognize that unemployment remains at the highest levels in the last 25 years. The high level of unemployment and the fact that current home sales have been propped up by the government’s $8,000 first time home buyers credit and the more recently approved $6,500 for repeat home buyers makes the current improvement in the market tenuous.

The growth and expansion of our business could have a negative effect on our Company.

We believe that in order to be successful, we must grow and expand our operations. To grow, we believe we must expand, train and manage our employee base, particularly our marketing, management and skilled technical personnel, within a short time period. Rapid growth will also require an increase in the level of responsibility for both existing and new management and will require us to implement and improve operational, financial and management information procedures and controls. We compete with many companies in seeking to attract qualified personnel. We can give no assurance that the management skills and systems currently in place will be adequate, be able to effectively manage any significant growth we experience, or be able to hire or assimilate new personnel necessary to pursue our growth strategy. Our inability to adequately manage growth could have a material adverse effect on us.

Failure to achieve and maintain effective internal controls could limit our ability to detect and prevent fraud and thereby adversely affect our business and stock price.

Effective internal controls are necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our most recent evaluation of our internal controls resulted in our conclusion that our disclosure controls and procedures were not effective due to a lack of segregation of duties in our accounting and financial functions, including financial reporting and our quarterly closing process. In our case, our failure to achieve and maintain an effective internal control environment could cause us to be unable to produce reliable financial reports or prevent fraud. This may cause investors to lose confidence in our reported financial information, which could in turn have a material adverse effect on our stock price.

Important Note: The foregoing risks are not a complete list of all risks that do or may affect the results of operation, financial condition or business prospects of Webdigs, but do represent management’s understanding and belief of the material risks associated with the Company, its business and any investment in securities of the Company. In addition to the above risks, businesses are often subject to risks not foreseen or fully appreciated by management. In reviewing this document, potential investors should keep in mind other possible risks that could be important. In sum, investors are urged to make their own evaluation of Webdigs.

We lease approximately 3,000 square feet of space at 3433 Broadway Street NE, Suite 501, Minneapolis, Minnesota 55413, on a month-to-month basis and at a per-month cost of approximately $3,500. The landlord for this office space is MoCo, Inc. which is a minority shareholder of the Company. Other than our agreement respecting our month-to-month lease, we do not have any written agreements with MoCo, Inc. The Company does rely on MoCo, Inc. to provide website development and support services to the Company. This arrangement, however, is not set forth in a written contract. Instead, MoCo, Inc. generally provides website development and support services at hourly rates that depend on the nature of the services provided. MoCo, Inc. typically bills the Company within 10-20 days after the end of each calendar month. At October 31, 2009, the Company owed Moco $562,858.

We conduct our IggysHouse.com operations in a leased facility at 1121 East Commercial Boulevard, Suite 47, Oakland Park, Florida 33334, under an operating lease on a month-to-month basis. Monthly base rent expense for this lease is $300 per month.

ITEM 3. LEGAL PROCEEDINGS

We are not currently a party to any material litigation and are not aware of any threatened litigation that would have a material effect on our business.

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

During our fiscal years ended October 31, 2009 and 2008, no matters were submitted to our stockholders for approval.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is listed on the OTC Bulletin Board and began trading under the symbol “WBDG” on December 19, 2008. The following table shows our high and low closing prices of our common stock at the end of each quarter for the fiscal year 2009.

Year Ended October 31, 2009	High		Low
First quarter	$	0.55	$	0.10
Second quarter	$	0.55	$	0.10
Third quarter	$	0.75	$	0.10
Fourth quarter	$	0.16	$	0.09

Our closing stock price on January 27, 2010 was $0.21. As of the date of this filing, we had approximately 269 holders of record of our common stock.

We have not paid any dividends on our common stock and do not anticipate paying any such dividends in the near future. Instead, we intend to use any earnings for future acquisitions and expanding our business. Nevertheless, at this time there are not any restrictions on our ability to pay dividends on our common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

The table below sets forth certain information, as of the close of business on October 31, 2009, regarding equity compensation plans (including individual compensation arrangements) under which our securities were then authorized for issuance.

	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Issuance Under Equity Compensation Plans (excluding securities reflected in column a)
	(a)		(b)	(c)
Equity compensation plans approved by shareholders		0	N/A		0

Restricted Stock Plan and Stock Option equity compensation plans not approved by shareholders (1) (2)		1,000,000	$0.25		None

(1)

In May 2008, the Board of Directors approved the issuance of incentive stock options totaling 600,000 shares to three of its non-employee directors, expiring in May 2013. An additional 200,000 options were granted to a new director on October 31, 2009, expiring in October 2011. An employee was also granted 200,000 options on October 31, 2009 expiring October 31, 2014.

(2)

(see Note 11 of the financial statements for more information on restricted stock grants).

Presently, we are not required by applicable state law or the listing standards of any self-regulatory agency (e.g., the OTC Bulletin Board, NASD, AMEX or NYSE) to obtain the approval of our security holders prior to issuing any such compensatory options, warrants or other rights to purchase our securities.

Potential Anti-Takeover Effects

Certain provisions set forth in our Amended and Restated Certificate of Incorporation, as amended, in our bylaws and in Delaware law, which are summarized below, may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market price for the shares held by stockholders.

Blank Check Preferred Stock. Our Certificate of Incorporation and bylaws contain provisions that permit us to issue, without any further vote or action by the stockholders, up to 125,000,000 shares of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting the series and the designation of the series, the voting powers, if any, of the shares of the series, and the preferences and relative, participating, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such series.

Special Meetings of Stockholders. Our bylaws provide that special meetings of stockholders may be called only by the chairman or by our board. Stockholders are not permitted to call a special meeting of stockholders, to require that the board call such a special meeting, or to require that our board request the calling of a special meeting of stockholders.

While the foregoing provisions of our certificate of incorporation, bylaws and Delaware law may have an anti-takeover effect, these provisions are intended to enhance the likelihood of continuity and stability in the composition of the Board of Directors and in the policies formulated by the Board of Directors and to discourage certain types of transactions that may involve an actual or threatened change of control. In that regard, these provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

Delaware Takeover Statute

In general, Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation that is a public company from engaging in any “business combination” (as defined below) with any “interested stockholder” (defined generally as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with such entity or person) for a period of three years following the date that such stockholder became an interested stockholder, unless: (1) prior to such date, the Board of Directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (2) on consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (3) on or subsequent to such date, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 of the Delaware General Corporation Law defines “business combination” to include: (1) any merger or consolidation involving the corporation and the interested stockholder; (2) any sale, transfer, pledge or other disposition of ten percent or more of the assets of the corporation involving the interested stockholder; (3) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; (4) any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or (5) the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

Transfer Agent and Registrar

Our transfer agent is Florida Atlantic Stock Transfer, Inc., located at 7130 Nob Hill Road, Tamarac, Florida 33321. The transfer agent’s telephone number is (954) 726-4954. The transfer agent is registered under the Securities and Exchange Act of 1934.

Our common stock is currently traded on the OTC bulletin board under the symbol WBDG.OB.

Sales of Unregistered Securities

During the year ended October 31, 2009, we sold 3,136,091 shares (which include 909,091 of shares purchased via conversion of a portion of convertible note proceeds received from our CEO) in a series of private placements for aggregate proceeds of $435,500 at effective prices ranging between $0.10 and $0.40 per share. We also issued additional shares as follows: 7,262,500 to acquire selected assets of Iggys House, Inc., 273,244 to vendors for services, 200,000 shares to Lantern Advisors, LLC as part of the cost to Webdigs of entering into a promissory note agreement, 100,000 to acquire assets of the MLSDirect.com, 157,143 to officers of the company in lieu of cash compensation, 50,000 shares to a new employee as an incentive to join our company , and 150,000 shares to Webdigs’ CEO as compensation to him for the personal guarantee he offered to Lantern Advisors, LLC to repay the $250,000 convertible promissory note. In total, we issued 11,328,978 new shares during the 12 months ended October 31, 2009. In summary:

In September 2009, Webdigs’ CEO converted $100,000 in principal of a convertible note payable he had with the Company to 909,091 shares ($0.11 per share).

In June 2009, in connection with the Iggys House asset purchase, the Company sold 375,000 shares of stock to 11 accredited investors for $150,000 ($0.40 per share). To reduce the investor’s net purchase price to $0.125 per share, 2.2 shares of Webdigs stock received by Iggys House in the acquisition were transferred by Iggys House to these investors. Included in the 375,000 shares are purchases from the Company’s Chairman and CEO of 43,750 shares and an outside director of an additional 43,750 shares.

During May-July 2009, four accredited investors purchased an aggregate of 1,850,000 shares of stock for $185,000 ($0.10 per share).

In January 2009, one accredited investor acquired 2,000 shares for $500 ($0.25 per share).

In October 2009, we issued 44,444 shares to a vendor for services. The 44,444 shares satisfied a $4,889 payable ($0.11 per share) to the vendor.

In January 2009, we issued 200,000 shares (100,000 each) to two separate vendors for consulting services. The 200,000 shares were valued at $0.40 per share ($80,000 total) based upon the trading price of the Company’s shares at the time of issuance.

In November 2008, we issued 28,800 shares to a vendor for services. The 28,800 shares satisfied a $7,000 contracted fee we owed the vendor ($0.24 per share).

Acquisition of Assets of Iggys House

In June 2009, the Company also issued 7,102,500 shares to Iggys House Inc. for the acquisition of all of its assets for a value of $1,775,625 ($0.25 per share). The Company also issued 160,000 shares to a securities brokerage for services provided in connection with the Iggys House asset acquisition for a value of $40,000 ($0.25 per share).

In December 2008, we issued 200,000 shares to Lantern Advisors, LLC as part of the promissory note agreement we signed with them. The 200,000 shares were assigned a value of $20,000 ($0.10 per share).

Acquisition of the MLSDirect.com

In May 2009, the Company issued 100,000 shares to a third-party accredited investor at a value of $47,000 ($0.47 per share). These shares were issued in connection with the acquisition of theMLSDirect.com.

Shares in Lieu of Cash Compensation

In May 2009, the Company’s CEO converted $50,000 of his accrued but unpaid compensation owed to him by the Company into shares at a per-share price of $0.35, receiving 142,857 shares. The Company’s CFO also converted $5,000 of his accrued but unpaid compensation into shares at the same price, receiving 14,286 shares.

In June 2009, the Company issued 50,000 shares to an employee of the Company at a value of $12,500 or $0.25 per share.

In September 2009, the Company’s CEO was granted 150,000 shares at a per share price of $0.11 as compensation for the personal guarantee he provided for Webdigs for the $250,000 convertible/promissory note agreement the Company entered into on December 12, 2008.

For these issuances of common stock in the private placement offering, we relied on the exemption from federal registration under Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder. We relied on this exemption and the safe harbor thereunder based on the fact that the investors who purchased these securities qualified as an “accredited investors” under Rule 501 of the Securities Act of 1933 and who had knowledge and experience in financial and business matters such that it was capable of evaluating the risks of the investment. The securities offered and sold in the transactions were not registered under the Securities Act of 1933 and therefore may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The disclosure about the private placement offering contained in this information statement is not an offer to sell or a solicitation of an offer to buy any securities of the Company.

ITEM 6. SELECTED FINANICAL DATA

As a smaller reporting company, we are not required to provide the information required by this item.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our audited consolidated financial statements and related notes that appear elsewhere in this filing.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements made in this section of our report are forward-looking statements. These forward-looking statements generally relate to and are based upon our current plans, expectations, assumptions and projections about future events. Our management currently believes that the various plans, expectations, and assumptions reflected in or suggested by these forward-looking statements are reasonable. Nevertheless, all forward-looking statements involve risks and uncertainties and our actual future results may be materially different from the plans, objectives or expectations, or our assumptions and projections underlying our present plans, objectives and expectations, which are expressed in this section.

In light of the foregoing, prospective investors are cautioned that the forward-looking statements included in this filing may ultimately prove to be inaccurate—even materially inaccurate. Because of the significant uncertainties inherent in such forward-looking statements, the inclusion of such information should not be regarded as a representation or warranty by Webdigs, Inc. or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. The risks discussed in the Item 1A of this filing should be considered in evaluating our prospects and future performance.

Our business as a web-assisted full service real estate company has been operational for slightly greater than 2 years. We launched our services for buyers and sellers via Webdigs.com in October 2007. In January 2010, we added a second brand to our portfolio via the launch of IggysHouse.com. For the years ended October 31, 2009 and 2008, over 99% of our real estate revenue was produced by our Webdigs brand in our Minnesota and Florida markets.

Significant Trends and Uncertainties

Given our relatively low cash position, our near term focus for the current fiscal year ending October 31, 2010 continues to be creating positive operating cash flow from our web-assisted real estate brokerage operations in our core markets of Minnesota, Wisconsin, and Florida. We will also continue to expand into additional metropolitan areas as the year progresses and as funding permits.

We believe that our year over year revenue growth will remain strong for the current fiscal year provided we have sufficient operating capital to fund operations. Supporting us in our efforts will be the addition of our IggysHouse.com operation, a revised compensation plan which we expect will attract more agents to our Company and support from the Federal Government in terms of extending the first time home owner tax credit and creating a new repeat buyer tax credit of $6,500 which will be in effect for homes purchased and closed prior to June 30, 2010.

We believe we will require an additional $5 to $6 million to fund expansion. If we succeed in raising such amount, we believe that we would have sufficient capital to fund our operations and expansion plans indefinitely. To achieve a more accelerated growth strategy, however, we would likely require additional financing to fund acquisitions and development of related business opportunities.

If our efforts to raise additional capital take longer than we expect or we are unsuccessful in securing capital, we expect to decrease our advertising, identify other areas to reduce current costs, while continuing to build market share and real estate revenue in our markets. Due to the difficult markets for obtaining equity and debt financing, we are exploring a wide variety of potential financing sources and arrangements.

The continued economic softness facing the United States and the difficulties which remain in obtaining equity capital could continue to present us with uncertainty for our business in the year ahead. Despite the incentives offered by the federal government, obtaining a home mortgage is not as easy or realizable as it was 2-3 years ago. Home prices still are not showing stable long term uptrend. Our business and our viability may be threatened if any of these conditions persist or any other global economic upheaval should arise in the first half of calendar year 2010.

Results of Operation

The following information should be read in conjunction with the audited financial statements and notes thereto appearing elsewhere in this Annual Report.

From October 31, 2008 to October 31, 2009:

Historically, the Company has reported two strategic operating segments; (1) web-assisted real estate brokerage and (2) mortgage brokerage. Due to the divestiture of Marquest Financial, Inc. and the dissolution of our joint venture Marketplace Home Mortgage – Webdigs, LLC (MHMW) in 2009, the Company has determined that the mortgage segment is no longer significant to its operations and therefore, now reports and operates as one strategic reporting segment. Primarily all activity for the years ended October 31, 2009 and 2008 related to the mortgage segment is reported separately as 1) Equity in income (loss) from MHMW, 2) Income (loss) from discontinued operations and 3) Net assets of discontinued operations in the table below.

Selected financial information about our operations for the fiscal years ended October 31, 2009 and 2008:

							Change
	2009			2008			2009 vs 2008

Net revenues	$	503,777		$	401,778			25	%
Operating expenses		1,491,233			2,294,733			-35	%
Operating loss		(987,456	)		(1,892,955	)		-48	%
Equity in income (loss) from MHMW		13,279			(9,064	)		-247	%
Interest expense		(332,139	)		(285	)		116440	%
Depreciation & amortization		236,716			213,767			11	%
Loss on change in fair value of
derivatives and warrants		(63,708	)		-
Income (loss) from discontinued operations		284,409			(187,928	)		-251	%
Identifiable assets - real estate brokerage		2,200,524			362,184			508	%
Net assets discontinued operations -
mortgage brokerage		-			92,035			-100	%
Capital expenditures		187,085			18,216			927	%

Consolidated net revenues for the year ended October 31, 2009 totaled $503,777, representing a 25% increase over the $401,778 in net revenues for the year ended October 31, 2008. During fiscal 2009, we closed 131 transactions in representation of 85 buyers and 46 transactions representing sellers, in comparison to having closed 99 transactions during the fiscal year ended October 31, 2008. Looked at on a percentage basis, our net real estate brokerage transactions grew by 33% for the fiscal year ended October 31, 2009.

Office equipment	2 to 5 years
Furniture and fixtures	3 to 7 years

		PAGE

Report of Independent Registered Public Accounting Firm		F-1

Consolidated Financial Statements:

Consolidated Balance Sheets		F-2

Consolidated Statements of Operations		F-4

Consolidated Statements of Stockholders’ Equity (Deficit)		F-5

Consolidated Statements of Cash Flows		F-6

Notes to Consolidated Financial Statements		F-8

	October 31,
	2009		2008
ASSETS

Current assets:
Cash and cash equivalents	$	36,023	$	37,802
Commissions and fees receivable		9,449		12,467
Prepaid expenses and deposits		10,847		14,011
Other current assets		10,284		6,125

Total current assets		66,603		70,405

Investment in Marketplace Home Mortgage Webdigs, LLC		-		2,182

Office equipment and fixtures, net		30,678		30,202

Intangible assets, net		2,103,243		351,430

Total assets	$	2,200,524	$	454,219

	October 31,
	2009			2008
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Current portion of capital lease obligations	$	4,197		$	3,828
Accounts payable		259,064			377,538
Accounts payable - minority stockholder		562,858			550,206
Due to officers		58,606			27,277
Convertible notes payable to officer/stockholder		173,000			-
Accrued expenses:
Professional fees		39,000			50,000
Payroll and commissions		53,207			32,269
Lease expense for vacated office space		-			55,913
Other		20,174			15,170

Total current liabilities		1,170,106			1,112,201

Long term liabilities:
Capital lease obligation, less current portion		6,233			10,431

Total liabilities		1,176,339			1,122,632

Stockholders' equity (deficit):
Common stock - $.001 par value; 125,000,000 shares authorized as common stock and an additional 125,000,000 shares designated as common or preferred stock; 33,396,719 and 22,308,711 common shares issued and outstanding at October 31, 2009 and 2008, respectively.		33,397			22,309
Treasury stock - $.001 par value: 1,063,628 shares and 0 shares held in treasury as of October 31, 2009 and 2008, respectively		(265,907	)		-
Additional paid-in capital		5,034,458			2,002,226
Accumulated deficit		(3,777,763	)		(2,692,948	)

Total stockholders' equity (deficit)		1,024,185			(668,413	)

Total liabilities and stockholders' equity (deficit)	$	2,200,524		$	454,219

	Years Ended
	October 31,
	2009			2008

Revenue:
Gross revenues	$	863,505		$	739,031
Less: customer rebates and third-party agent commissions		(359,728	)		(337,253	)

Net revenues		503,777			401,778

Operating expenses:
Selling		666,025			1,453,551
General and administrative		632,198			693,066
Amortization of intangible assets		193,010			148,116

Total operating expenses		1,491,233			2,294,733

Operating loss from continuing operations		(987,456	)		(1,892,955	)

Other income (expense):

Equity in income (loss) from Marketplace Home Mortgage Webdigs, LLC		13,279			(9,064	)
Interest expense		(332,139	)		(285	)
Loss on change in fair value of derivatives and warrants		(63,708	)		-
Other income (expense)		800			-

Total other income (expense)		(381,768	)		(9,349	)

Loss from continuing operations before income taxes		(1,369,224	)		(1,902,304	)

Income tax provision		-			-

Loss from continuing operations		(1,369,224	)		(1,902,304	)

Income (loss) from discontinued operations of Marquest Financial, Inc. (including gain on disposal of $297,412 in 2009) net of applicable taxes of zero		284,409			(187,928	)

Net loss	$	(1,084,815	)	$	(2,090,232	)

Net loss per common share - basic and diluted
Loss from continuing operations		(0.05	)		(0.09	)
Income (loss) from discontinued operations		0.01			(0.01	)
Net loss	$	(0.04	)	$	(0.10	)

Weighted average common shares outstanding - basic and diluted		26,584,547			21,071,802