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TWENTYFOUR/SEVEN VENTURES, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.

August 14, 2014

Trends and Uncertainties.

There are no known trends, events or uncertainties that have or are reasonably likely to have a material impact on the registrant's short term or long term liquidity. Sources of liquidity both internal and external will come from the sale of the registrant's services and products as well as the private sale of the registrant's stock. There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from the registrant's continuing operations. There are no known causes for any material changes from period to period in one or more line items of the registrant's financial statements.

Capital Resources and Source of Liquidity:

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. During the six months ended June 30, 2014 the Company incurred losses of $92,251 and used cash of $40,991 in its operating activities. As at June 30, 2014 the Company had a working capital deficit of $198,089 and an accumulated deficit of $49,376. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that these events will be satisfactorily completed.

Our cash balance is $23,675 as of June 30, 2014. . We have two notes payable to shareholders for a total of $108,000 due on June 1, 2014. On May 30, 2014, the note holders agreed to change these promissory notes into convertible demand notes although the terms of such conversion are yet to be finalized. During the six months ended June 30, 2014, we received $53,000 from convertible notes payable and $15,000 from convertible notes payable from related parties.

Cash Flow used in Operating Activities

For the six months ended June 30, 2014, we had a net loss of $92,251. We had the following adjustments to reconcile net loss to net cash provided by or used in operating activities: $3,036 for depreciation and amortization, $1,014 for the amortization of deferred debt issuance costs, $1,057 for noncash interest expense, $17,918 for the amortization of debt discount, $7,919 for the amortization of debt discount for related parties, $18,764 for the increase in allowance for bad debt, $48,880 for loss on origination of derivative liability, and a $51,040 gain on revaluation of derivative liability. We had the following changes in current assets and liabilities: $(3,880) on

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accounts payable, $1,104 on accrued interest payable, $6,728 on accrued interest payable to related parties, and $(240) on income taxes payable. As a result, we had net cash used in operating activities of $40,991 for the six months ended June 30, 2014.

For the six months ended June 30, 2013, we had a net loss of $8,876. We had an adjustment to reconcile net loss to net cash provided by operating activities of $1,250 for depreciation. We had the following changes in current assets and liabilities: $(8,692) for accounts receivable, $706 for accounts payable, $3,000 for accrued interest payable for related parties, $(1,210) for income taxes payable, and $(2,674) for deposits. As a result, we had net cash used in operating activities of $16,496 for the six months ended June 30, 2013.

Cash Flow Used in Investing Activities

For the six months ended June 30, 2014, we spent $459 on fixed asset purchases, $12,000 on acquisition of intangible assets, and $4,788 on increased restricted cash reserves. As a result, we had net cash used in investing activities of $17,247 for the six months ended June 30, 2014.

For the six months ended June 30, 2013, we spent $672 on fixed asset purchases and $2,786 on restricted cash reserves. As a result, we had net cash used in investing activities of $3,458 for the six months ended June 30, 2013.

Cash Flow Provided by Financing Activities

For the six months ended June 30, 2014, we spent $3,000 on debt issuance costs.

We received $53,000 from notes payable and $15,000 from notes payable from related parties. As a result, we had net cash provided by financing activities of $65,000 for the six months ended June 30, 2014. We did not pursue any financing activities for the six months ended June 30, 2013.

Results of Operations

Three months ended June 30, 2014 compared to the three months ended June 30, 2013

For the three months ended June 30, 2014, we earned revenues of $144,086. Our cost of sales was $110,540, resulting in gross profit of $33,546. We incurred the following operating expenses: $2,832 for depreciation and amortization, $3,750 for rent, $44,633 for professional fees, and $24,668 for other operating expenses, resulting in total operating expenses of $75,883. For other income and expenses, we had a gain on revaluation of derivative liability of $51,040.

We lost $48,880 on the origination of the derivative liability, $17,918 for debt discount amortization, $7,919 for debt discount amortization for related parties, $3,176 for interest expense, and $4,068 for interest expense for related parties. As a result, we had a net loss of $73,258 for the three months ended June 30, 2014.

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Comparatively, for the three months ended June 30, 2013, we earned revenues of $156,631. Our cost of sales was $142,573, resulting in a gross profit of $14,058. We incurred the following operating expenses: $582 for depreciation, $2,600 for rent, $645 for professional fees, and $36,819 for other operating expenses, resulting in total operating expenses of $40,646. We incurred $1,500 for interest expense for related parties. We had an income tax benefit of $3,811. As a result, we had a net loss of $24,277 for the three months ended June 30, 2013.

The $48,981 difference in net loss for the three months ended June 30, 2014 compared to the three months ended June 30, 2013 is primarily due to an increase in operating expenses and a large increase in other expenses. Our revenues decreased by $12,545, or 8%, but out cost of sales decreased by $32,033, or 22%, which resulted in an increase in gross profit of $19,488. The largest other cost was the gain of $51,040 from the revaluation of our derivative liability and the loss on origination of our derivative liability of $48,880. These two increases and decreases are due to the convertible promissory entered into on March 27, 2014.

Six months ended June 30, 2014 compared to the six months ended June 30, 2013

For the six months ended June 30, 2014, we earned revenues of $263,143. Our cost of sales was $191,730, resulting in a gross profit of $71,413. We incurred the following operating expenses: $3,036 for depreciation and amortization, $7,500 for rent, $51,761 for professional fees, and $67,786 for other operating expenses, resulting in total operating expenses of $130,083. For other income and expenses, we had a gain on revaluation of derivative liability of $51,040.

We lost $48,880 on origination of the derivative liability, $17,918 on debt discount amortization, $7,919 on debt discount amortization for related parties, $3,176 on interest expense and $6,728 on interest expense for related parties.

As a result, we had a net loss of $92,251 for the six months ended June 30, 2014.

Comparatively, for the six months ended June 30, 2013, we earned revenues of $302,773. Our cost of sales was $234,776, resulting in a gross profit of $67,997. We paid the following operating expenses: $1,250 for depreciation, $5,176 for rent, $1,345 for professional fees, and $66,102 for other operating expenses, resulting in total operating expenses of $73,873. We paid $3,000 for interest expense for related parties. As a result, we had a net loss of $8,876 for the six months ended June 30, 2013.

Our revenues decreased by $39,630, or 19.5% during the six months ended June 30, 2014 compared to the six months ended June 30, 2013. However, the cost of sales decreased by $43,046, or 18.3%, resulting in an increase in gross profit of $3,416 for the six months ended June 30, 2014 compared to the six months ended June 30, 2013. The increased professional fees were paid as a result of the increased costs of being a reporting

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company. The largest other items were the gain of $51,040 from revaluation of our derivative liability and the loss on origination of derivative liability of $48,880. These two increases and decreases are due to the convertible promissory entered into on March 27, 2014.

Off-Balance Sheet Arrangements

The registrant had no material off-balance sheet arrangements as of June 30, 2014.


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Source: Edgar Glimpses


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