Minneapolis-based discount real estate brokerage Webdigs Inc. has racked up a $2.7 million net loss since it was founded in the spring of 2007, but still plans to seek up to $6 million to expand into additional markets, the company said in a regulatory filing.

Webdigs offers commission rebates of up to 50 percent to buyers and flat-fee MLS listings in the Minneapolis-St.Paul market for $3,000. The company’s Web site allows clients to schedule home visits, as well as make offers and monitor the offer and counteroffer process.

Minneapolis-based discount real estate brokerage Webdigs Inc. has racked up a $2.7 million net loss since it was founded in the spring of 2007, but still plans to seek up to $6 million to expand into additional markets, the company said in a regulatory filing.

Webdigs offers commission rebates of up to 50 percent to buyers and flat-fee entry in a multiple listing service in the Minneapolis-St.Paul market for $3,000. The company’s Web site allows clients to schedule home visits, as well as make offers and monitor the offer and counteroffer process.

With one part-time and seven full-time employees, Webdigs and its joint venture with Marketplace Home Mortgage currently offer services in Minnesota, Wisconsin and South Florida.

In its annual report to investors, the company said it sees opportunities to expand in St. Louis, Dallas-Fort Worth, Las Vegas, Denver, Detroit, Boston, New York City, Atlanta, Philadelphia, Phoenix, Austin and Chicago, and parts of Canada, but has "no firm plans or commitments to commence operations in those other markets."

During the year ending Oct. 31, Webdigs closed 79 sales in which the company represented buyers, generating $567,000 in commissions. Of that, $315,000 was refunded to clients — about $4,000 each.

During the same period, Webdigs said it represented sellers in 20 closed transactions, generating $58,000 in revenue. In addition to a listing, Webdigs says it provides a comparative market analysis and individual consultations on pricing, and sell-side services like staging.

Webdigs said it was able to plow through its $2.1 million operating loss for the year ending in October in part by selling $960,000 in sales of common stock, but also by letting about $650,000 in unpaid bills pile up.

At the end of October, Webdigs said it owed its landlord, MoCo Inc., $550,000. MoCo’s owners are minority shareholders in Webdigs, owning less than 2 percent of the company. In addition to leasing Webdigs a 3,000-square-foot office for $3,500 a month, MoCo also provides the company with Web site development and support services.

Webdigs became a publicly traded company through an October 2007 merger with Select Video Inc., which at the time was a 13-year-old company that had "no meaningful business operations of its own," Webdigs said. The merger was a faster and more cost-efficient means of becoming a publicly traded company than attempting to engage in an initial public offering, according to the annual report.

Webdigs says it sought to become a publicly traded company because the company’s business plan is to expand as rapidly as possible, which will require it to raise additional capital. In December, Webdigs took out a $250,000 loan from Lantern Advisers LLC at 12 percent interest.

If the company is able to raise $5 million to $6 million to fund an expansion, its managers think they will have sufficient capital to fund operations through the end of October 2011.

For now, continued operating losses and a working capital deficit of $1.04 million at the end of October "raise substantial doubt about our ability to continue as a going concern," the company reported to investors.

Webdigs began trading on the over-the-counter bulletin board on Dec. 22, but because of the small number of shares currently available to the public, trading "remains severely limited," the company said.

Webdigs’ subsidiary Webdigs LLC owns mortgage brokerages Marquest Financial Inc. and Home Equity Advisors LLC. Those companies’ operations have been consolidated in a joint venture, Marketplace Home Mortgage-Webdigs LLC, which Webdigs owns a 49 percent stake in.

Marketplace Home Mortgage-Webdigs began operations in August, and racked up a $20,048 net loss through the end of October, Webdigs said, adding that it expects the venture to become profitable.

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