ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

You should read the following discussion of the company's financial condition and results of operations in conjunction with the audited financial statements and related notes included in this registration statement. This discussion may contain forward-looking statements, including, without limitation, statements regarding our expectations, beliefs, intentions, or future strategies that are signified by the words "expects," "anticipates," "intends," "believes," or similar language. Actual results could differ materially from those projected in the forward looking statements. You should carefully consider the information set forth above under Item 1 of this Part I under the caption "Risk Factors" in addition to the other information set forth in this registration statement. We caution you that Secure Netwerks' business and financial performance is subject to substantial risks and uncertainties.

Overview

Secure Netwerks is a reseller of technology-related hardware and software, including laptops, desktops, networking devices, telecommunication systems and networks, servers and software. We also provide our clients with some outsourced services necessary to install, educate, run and operate the hardware that we sell our clients. Our clients consist of small to large organizations. Currently, we sell
hardware and outsourced services to an average of 9 clients each month and 43% of our clients have purchased product more than one time over the course of the past calendar year. You can learn more about our business at our website located at www.securenetwerks.com.

Results of Operations

Following is our discussion of the relevant items affecting results of operations for the years ended December 31, 2008 and 2007.

Revenues. Our products and services are broken down into two categories for revenue recognition purposes - (i) off-the-shelf hardware/software product sales, and (ii) outsourced information technology services. Our revenue recognition policy for these categories is as follows:

Revenue is recognized upon completion of services or delivery of goods where the sales price is fixed or determinable and collectibility is reasonably assured. Advance customer payments are recorded as deferred revenue until such time as they are recognized.

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Product sales are derived from the resale of off-the-shelf hardware and software packages. Product sales are not warranted by Secure Netwerks and may be subject only to warranties that may be provided by the product manufacturer. Therefore, product warranties have no effect on the financial statements. We have no sales arrangements encompassing multiple deliverables.

Secure Netwerks generated net revenues of $261,956 for the year ended December 31, 2008, representing a 30% decrease compared to $375,091 in net revenues during the year ended December 31, 2007. During 2008 and 2007, we received $187,889 and $300,941, respectively, in gross revenues from software and hardware product resales and equipment leasing, and $74,067 and $74,150, respectively, in gross revenues from information technology and other miscellaneous services. The decrease in revenues for the year ended December 31, 2008 is mainly the result of three large sales of computer hardware which were associated with equipment leases during 2007. These transactions contributed approximately $96,371 in revenues during 2007. Although Secure Netwerks continues to pursue equipment leases, these transactions are sporadic and no large leases materialized during 2008. We do not anticipate that gross revenues from our base product and services will decrease. Our business model and objective is to receive recurring revenue from established clients. In addition, we procure and resell hardware and software packages to our clients as well as single transaction customers. Sales of software and hardware products are inherently unpredictable, but we anticipate that revenues from this activity will become more consistent as we grow our client base. Over the past twelve months, we have provided hardware sales, outsourced networking, programming, website design and hosting services for 28 clients on a continuous basis and approximately 44 clients for one-time projects.

Cost of Sales. Expenses which comprise cost of sales are the wholesale cost of hardware, software, any accompanying licenses, product sales commissions, and commissions paid in connection with information technology consulting contracts. Also included in cost of sales are personnel and materials costs to administer these information technology services. As more organizations utilize our technology services, future expenses included in cost of goods sold will increase as well as potential fee sharing expenses to organizations that assist us in providing these services.

Cost of sales for the year ended December 31, 2008 was $204,450, a 33% decrease from $305,539 during the year ended December 31, 2007. The decrease is mainly the result of decreased sales and the related need to purchase products. The cost of sales will fluctuate in the future depending on the sales mix of hardware sales and service revenue. Total cost of sales was 78% of revenues in 2008
compared to 81% in 2007. As the company provides more services, cost of sales will decrease as the margins on services is much better than margins on hardware sales.

Salaries and Consulting Expenses. Salaries and consulting expenses consist of salaries and benefits, company paid payroll taxes and outside consulting expenses. Salaries and consulting expenses for the year ended December 31, 2008 were $22,808 compared to $22,870 during the year ended December 31, 2007. No changes were expected to salaries and consulting expenses as the Company has pushed sales commission incentives rather than base salaries. Salaries and consulting expenses could increase if the Company hires additional personnel.

Professional Fees. Professional fees for the year ended December 31, 2008 were $20,057, representing a 30% decrease compared to $28,747 during the year ended December 31, 2007. The decrease was the result of legal and accounting fees associated with the spin-off from the parent company, SportsNuts, Inc. which was affective March 1, 2007.

Selling, General and Administrative Expenses. Selling, general and administrative expenses have been comprised of advertising; bad debts; occupancy and office expenses; equipment leases; travel

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and other miscellaneous administrative expenses. Selling, general and administrative expenses for the year ended December 31, 2008 were $43,631, a 3% increase from $42,542 during the year ended December 31, 2007. We did not anticipate a major change in these expenses, however, we endeavor to decrease certain costs associated with rent and occupancy-related expense. For the years ended December 31, 2008 and 2007, bad debts expense was $15,305 and $11,441, respectively. Although the Company is now reviewing new customers more closely for credit worthiness, the struggling economy has increased the risk of bad debts.

Other Income (Expense). We incurred net other expense of $32,512 for the year ended December 31, 2008 compared to net other expense of $28,998 during the year ended December 31, 2007. Other expenses incurred were comprised primarily of interest expenses related to credit cards as well as promissory notes issued by the Company. Other income in this category is comprised of finance charge income billed to late paying customers. We do not anticipate any major changes in other income and expenses.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Personnel

Secure Netwerks has two full-time employees, one part-time employee, and other project-based contract personnel that we utilize to carry out our business. We utilize contract personnel on a continuous basis, primarily in connection with service contracts which require a high level of specialization for one or more of the service components offered. We expect to hire more full-time employees in the future. Although competition for technology sales personnel in the metropolitan Salt Lake City area is intense, because we offer competitive compensation and maintain a productive and collegial work environmental, we don't believe we will have significant difficulty retaining additional employees or contract personnel in the future.

Liquidity and Capital Resources

Since inception, the Company has financed its operations through a series of loans, credit accounts with hardware vendors, and the use of Company credit to procure goods and services. As of
December 31, 2008, Secure Netwerks' primary source of liquidity consisted of $11,546 in cash and cash equivalents. We may seek to secure additional debt or equity capital to finance substantial business development initiatives or acquire another hardware reseller. At present, however, we have no plans to seek any such additional capital or to engage in any business development or acquisition activity.