UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

(MARK ONE)
         [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                      For Fiscal Year Ended: MARCH 31, 2007

       [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                        For the transition period from to

                         Commission file number: 0-17304

                             CISTERA NETWORKS, INC.
                 (Name of small business issuer in its charter)

          Nevada                                                 91-1944887
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                                Identification No.)

               17304 Preston Road, Suite 975, Dallas, Texas 75252
               (Address of principal executive offices) (zip code)

                    Issuer's telephone number (972) 381-4699

Securities registered under Section 12(b) of the Act: NONE Securities registered
under Section 12(g) of the Act:

                          Common Stock Par Value $0.001
                                (Title of class)

         Check  whether the issuer is not required to file  reports  pursuant to
Section 13 or 15(d) of the Exchange Act [ ]

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days. Yes [X] No [
]

         Check if there is no disclosure of delinquent  filers  pursuant to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will 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-KSB
or any amendment to this form 10-KSB. [ ]

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

         Total revenues for fiscal year ended March 31, 2007: $2,046,319.

         At March 31, 2007,  the aggregate  market value of all shares of voting
and  non-voting   common  equity  held  by   non-affiliates   was  approximately
$8,748,254. In determining this figure the issuer has assumed that all directors
and  executive  officers are  affiliates.  This  assumption  shall not be deemed
conclusive for any other purpose.

         The number of shares  outstanding of each class of the issuer's  common
equity, as of March 31, 2007, was as follows: 8,292,022 common shares, $.001 par
value per share.

Transitional Small Business Disclosure Format (check one): Yes [  ] No [X]

<PAGE>


                                TABLE OF CONTENTS


Item Number and Caption                                                     Page
                                     PART I

Item 1.     Description of Business                                           2

Item 2.     Description of Property                                           11

Item 3.     Legal Proceedings                                                 11

Item 4.     Submission of Matters to a Vote of Security Holders               11


                                     PART II

Item 5.     Market for Common Equity and Related Stockholder Matters          12

Item 6.     Management's Discussion and Analysis or Plan of Operations        13

Item 7.    Financial Statements                                               20

Item 8.    Changes in and Disagreements With Accountants on Accounting and
               Financial Disclosure                                           20

Item 8A.   Controls and Procedures                                            20

                                    PART III

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act               21

Item 10.   Executive Compensation                                             24

Item 11.   Security Ownership of Certain Beneficial Owners and Management     27

Item 12.   Certain Relationships and Related Transactions                     28

Item 13.   Exhibits and Reports on Form 8-K                                   31

Item 14.   Principal Accountant Fees & Services                               31



<PAGE>

                                     PART I
                         ITEM 1: DESCRIPTION OF BUSINESS

HISTORY

         CNH  Holdings   Company,   a  Nevada   corporation  (the  Company)  was
incorporated in Delaware on April 15, 1987, under the name of I.S.B.C. Corp. The
Company subsequently  changed its name first to Coral Companies,  Inc., and then
to CNH Holdings  Company.  Domicile  was changed to Nevada in 1997.  The Company
conducted an initial public and secondary  offerings during the 1980's.  On June
15, 1998, the Company acquired  Southport  Environmental  and Development,  Inc.
This  acquisition  however was subsequently  rescinded by agreement  between the
parties and made a formal  order of the court  effective  April 19,  2000.  This
order put the Company in the position  that it occupied at June 14, 1998,  as if
none of the actions that had occurred  from that time to the date of  rescission
had transpired.

         On May 5, 2003,  Corvero  Networks,  Inc., a Florida  corporation,  was
formed by CNH Holdings  Company as a wholly owned  subsidiary to acquire the use
of certain  technology known as the XBridge  Technology.  This technology has as
its principal  component the Corvero Convergence  Platform.  The acquisition was
accomplished by entering into a license agreement with XBridge Software, Inc., a
Delaware corporation.

         The Company was in the development stage from January 1, 1992 to May 5,
2003. Since May 5, 2003, the Company has commenced planned principal  operations
and is no longer in the development stage.

         On August 31,  2004,  CNH  Holdings  Company  absorbed its wholly owned
subsidiary Corvero Networks,  and began doing business as Cistera Networks.  All
Corvero products adopted the Cistera name.

         On May 19,  2005,  the Company  entered  into a merger  agreement  with
XBridge  Software,  Inc.,  pursuant to which XBridge  Software would be acquired
through a merger  with a wholly  owned  subsidiary  formed by the  Company.  The
merger was completed on May 27, 2005.

         On September 27, 2005, we changed our name to Cistera Networks, Inc.

BUSINESS OVERVIEW

         We provide IP  network-based  application  appliances and services that
add features and enhanced functionality to the telecommunications  services used
by large enterprises, small and mid-sized organizations,  both in the commercial
and  public  sector.  Our  objective  is  to  be  the  leading  provider  of  IP
communications   platforms  and  advanced  application  engines  for  businesses
worldwide.  Our software-based and hardware-based solutions are delivered on our
open-architecture,    component-based    platform    known   as   the    Cistera
ConvergenceServer(TM),  which allows administrators to centrally manage advanced
applications  for  IP  telephony   environments  across  large  single-site  and
multi-site private voice/data  networks.  Because our solutions improve customer
responsiveness,  employee  productivity  and efficiencies for customers using IP
telephony  systems,  we believe that our  convergence  solutions  complement the


                                       2
<PAGE>

efforts of IP telephony solution providers such as Cisco,  Nortel,  Sylantro and
Avaya to  increase  the  overall  return on  investment  and value  contribution
associated  with  IP  telephony  systems.  This  has  allowed  us  to  establish
cooperative relationships with IP telephony solution providers, as well as large
value added resellers (VARs) and systems integrators (SIs) focused on delivering
IP telephony systems and services.

         We began  operations in May 2003, and first  introduced our convergence
solutions in September  2003.  We initially  offered our solutions at discounted
prices, to seed the market and to establish a referenceable  customer base. From
May 2003  through  June  2005,  we staffed  our  operations,  grew our  reseller
channel, built our infrastructure, created, marketed and delivered our solutions
and  obtained an initial  base of paying  customers.  From  January  2005 to the
present  time,  we  increased  expansion  efforts  into Canada and  Europe.  Our
revenues grew from $1,322,675 in fiscal 2005 to $2,046,319 in fiscal 2007.

         We cannot be certain that our revenues will continue to grow or that we
will  achieve  profitability  in the future.  We cannot  accurately  predict our
future growth rate,  if any, or the ultimate size of our market.  Our ability to
increase  revenues  and  achieve  profitability  depends  on a number of factors
outside of our control, including the extent to which:

*        our solutions are able to gain market  acceptance,  particularly  as IP
         telephony increases penetration in the mainstream market;

*        we are able to acquire and retain customers on a cost-effective basis;

*        we are able to  establish  strategic  relationships  with IP  telephony
         platform and services providers;

*        we are able to  successfully  identify,  develop  and  market  enhanced
         applications for the mainstream market;

*        IP telephony platform and service providers develop or bundle competing
         applications; and

*        we become subject to increased regulatory burdens.

         Currently,  we offer new customers a variety of packaged  applications,
and platform tools for customized solutions. We market our software and hardware
solutions  through a VAR  channel,  and  directly  in some cases to Fortune  500
customers.  To ensure  growth  scalability,  our VAR channel is being trained to
deliver professional services for standard installations,  which we believe will
allow us to focus on advanced professional services for complex installations.

         We plan to reinvest  our  earnings  for the  foreseeable  future in the
following  ways:  hiring  additional   personnel,   particularly  in  sales  and
engineering;  expanding  our domestic and  international  selling and  marketing
activities;  increasing our research and  development  activities to upgrade and
extend our solution  offerings and to develop new  solutions  and  technologies;
growing our VAR and systems integration channel; adding to our infrastructure to
support our growth;  and expanding  our  operational  and  financial  systems to
manage a growing business.




                                       3
<PAGE>




KEY TERMS AND DEFINITIONS

*        ENTERPRISE VOICE is defined as the combination of Enterprise  Telephony
         and Enterprise VoIP Gateways.

*        ENTERPRISE  TELEPHONY is defined as the  combination  of  Enterprise IP
         Telephony and traditional telephony (PBX/KTS).

*        ENTERPRISE IP TELEPHONY is defined as the combination of LAN Telephony,
         Converged Telephony, and IP Phones.

*        ENTERPRISE  VOIP  GATEWAY is defined as a Layer 3 network  device which
         provides the interconnection of customer premise equipment  (CPE)-based
         voice and data traffic across a WAN network or the PSTN,  also refereed
         to as trunks.  This device is typically a modular or standalone  router
         specially equipped with voice DSP resources.

*        LAN  TELEPHONY  (IP-ONLY)  is defined as those ports and systems  which
         provide  Enterprise Voice services over a LAN whereby both call control
         and voice traffic  traverse a packet network,  in most cases IP running
         over Ethernet.  The use of a traditional PBX or KTS is not required. In
         most cases the three fundamental  elements to this network architecture
         include a server running call control software,  Ethernet switches, and
         IP Phones.

*        CONVERGED  TELEPHONY  (TDM/IP)  is defined as those  lines and  systems
         which provide voice  services  whereby  voice  traffic  traverses  Time
         Division  Multiplex  (TDM) lines but call control is packet  based.  In
         most cases  this  enables a  traditional  Enterprise  Voice  network to
         migrate its infrastructure to IP incrementally with the prime advantage
         of maintaining prior capital investment in PBXs and traditional phones.
         In most cases call  control  resides on a server,  connected  to a LAN,
         running call control  software which provides call control to a PBX. In
         this case, the end-points  remain TDM but the call control is IP. Also,
         other form  factors of this segment may not include  traditional  phone
         systems,  but an  integrated  standalone  device which  integrates  the
         functions of TDM and IP at a systems level. These standalone  solutions
         are targeted to smaller deployments as found at branch offices or small
         offices.

*        IP PHONE is defined as a packet based  telephone  that has a Layer 3 IP
         address  and a Layer 2 network  connection  (in most cases  Ethernet or
         Voice over  Ethernet).  The  functions  of an IP Phone mirror that of a
         traditional phone. Technically,  an IP Phone transmits voice traffic by
         first  taking the Voice  Payload and adding an RTP  header,  then a UDP
         header,  then an IP header and finally an Ethernet header per frame. An
         IP  Phone  is an IP  appliance,  which  has been  optimized  for  voice
         applications. Given that it is more than a traditional telephone, other
         network  services  may be  available  to the IP Phone such as  Internet
         browsing or other  network  services.  An IP Phone can be a hard phone,
         soft phone, or wireless device.




                                       4
<PAGE>




INDUSTRY BACKGROUND

         The term "IP  telephony"  covers  a range  of  technologies,  including
voice-over-IP (VoIP) and fax-over-IP  services,  which are carried over both the
Internet  and  private   IP-based   networks.   IP  telephony   connects  across
combinations  of PCs,  Web-based  telephones,  and phones  connected  via public
telephone lines to remote voice gateways.  Because information traveling through
an IP-based network travels in discrete  packets,  it does not need to rely on a
continuously  available  switched circuit as does  information  traveling in the
analogue format used in traditional telephony.  Consequently,  IP-based services
are very bandwidth and cost-efficient.

         Users of IP  telephony  typically  can save money  because IP telephony
operates more efficiently  than ordinary plain old telephone  service (POTS) and
because it currently  avoids most of the tariffs and tolls applicable when using
POTS, especially with respect to international telephone service. IP-based voice
conversations require less than 10% of the bandwidth of POTS. This efficiency of
bandwidth  results  from two factors:  First,  compression  techniques,  such as
G.723.1,  a standard  IP  compression  technique,  compresses  a  standard  POTS
transmission  resulting in an overall bandwidth reduction generally in the range
of 6-to-1.  Second,  POTS requires full duplex--a  simultaneous  transmission in
both directions--to support a telephone conversation. Tying up bandwidth in this
fashion is  wasteful  because  in  conversations,  typically  only one person is
speaking at a time.  Voice-over-IP (VoIP) products have the ability to sense the
silence and cease  transmitting  when one party is quiet.  This technique almost
halves the required bandwidth of a typical telephone conversation.  As a result,
IP telephony commonly consumes as little as one-twelfth the bandwidth of POTS to
transmit  conversations.  In addition,  IP telephony  provides carriers with the
ability  to lower  costs by  consolidating  both  voice and data in one  network
instead of necessitating the two separate networks required for traditional POTS
and data.

         VoIP  technologies  convert  digitized voice into data packets that are
encapsulated in Internet protocol, thus allowing IP Phone calls, faxes and voice
traffic to be relayed  over  corporate  intranets or across the  Internet.  As a
result,  VoIP presents an  opportunity  for exciting new uses for IP-based phone
systems,  such as: IP multicast  conferencing  and telephony  distance  learning
applications,  phone directories and customer service monitoring and playback of
calls via IP, and "voice web browsing"  where the caller can interact with a web
page  by  speaking   commands.   The  ability  to  access  enterprise  data  and
applications  through  a device  such as a  web-browser  enabled  IP  Phone  has
presented  an  opportunity  to position  the IP Phone as a peer to the  personal
computer in many work  environments - especially  where PC's are not appropriate
user  interfaces  for employees.  Apart from the economies  provided by moving a
firm's  communications  onto one network,  it is IP convergence,  the uniting of
voice,  video and data that has provided many companies with a compelling reason
to replace legacy phone systems with IP telephony.

Market Highlights:

o        Total IP phone  annual  shipments  are expected to grow from 10 million
         units in 2006 to 164  million  units in 2010 (Still less than 5% of all
         communication devices sold) (According to research firm, In-Sat)



                                       5
<PAGE>

o        Enterprise  converged  mobile device  (SmartPhone)  shipments  were 7.3
         million in 2005, and are projected to reach 63 million units  worldwide
         by 2010 (According to research firm, IDC)

o        Computer-Telephony  Integration  (CTI)  was $5  Billion  in  2005,  and
         projected  to  be  $12  Billion  by  2010  (Telecommunication  Industry
         Association - North America)

o        $7.5  Billion in revenue is expected to be reached by 2010 for the Land
         Mobile Radio  market (LMR)  (Venture  Development  Corporation  - North
         America)

LIMITATIONS OF EXISTING IP TELEPHONY SOLUTIONS

         Existing IP telephony  solutions  have been  criticized for lacking the
broad set of features, or applications,  such as voicemail,  call transfer,  and
three-way  calling,  that  traditional PBX phone systems have developed over the
past century. As an application development company for the IP telephony market,
we bridge the  feature/function gap currently present in many major IP telephony
platforms like those provided by Cisco,  Avaya,  Nortel,  Siemens and others. We
believe that,  just as happened with POTS,  application  providers will flourish
alongside  the  equipment  providers  as the IP  telephony  market  develops and
matures.

THE OPPORTUNITY FOR CONVERGENCE OF VOICE, VIDEO AND DATA

         IP telephony refers to the technology used in transmitting voice over a
network using open,  standards-based  IP. Our Convergence IP telephony solutions
leverage a single network  infrastructure  for the transmission of data,  voice,
and  video  traffic  to  deliver   high-quality   voice  and  fully   integrated
communications  and enable  enterprises  to realize the  business  benefits of a
converged  network.  These benefits  include  increased  productivity,  business
flexibility, and reduced operational costs.

         With  the   mainstream   adoption  of  enterprise  IP   communications,
businesses  are now  embracing the  operational  benefits of  convergence  at an
accelerated  pace.  While the  infrastructure  benefits of IP telephony are well
documented,  the  user-level  benefits are only now  starting to emerge.  Today,
businesses  deploying IP telephony  are looking for benefits  that extend beyond
VoIP  into  ways  to  integrate   existing  business  data  into  the  telephony
environment.

         Collaboration  tools like video  conferencing  and  multicasting can be
delivered  to every  desktop,  enabling  up-to-the  minute  information  sharing
between employees,  partners,  suppliers and customers - improving the company's
ability to respond  and  collaborate  at a fraction  of the cost of other  point
solutions.

         Unified  views of  customer  data also  become a reality  with the true
integration  of  voice,  video and data.  Combined  with the use of  intelligent
communication  devices like IP-based phones,  critical information and important
messages can travel to the employees to enable them to work smarter and faster.

         Finally,  a converged  network is more  capable of  supporting a mobile
workforce. By offering remote access to a corporate network and its information,
geographically  dispersed  locations or traveling employees can access the tools


                                       6
<PAGE>

they need to perform and interact with customers,  thereby increasing per capita
efficiency.

         The movement towards  incorporating voice, video and data into a single
network is referred to as  "convergence".  IP telephony now allows the telephone
to serve up data in a manner similar to a PC or any other web-enabled device.

         Before the introduction of our Cistera  ConvergenceServer(TM),  most IP
data-based  applications  offered via IP Phones were  limited by the phone's own
ability to navigate  and/or  manipulate  data in a  meaningful  way. The Cistera
ConvergenceServer(TM),  coupled with XML,  other  standard  protocols  and an IP
telephony environment, allows an enterprise to achieve unique client-application
integration  through its IP Phones.  This  integration  is  accomplished  in the
network as a peer with other user interface devices such as PCs, PDAs,  wireless
phones and point-of-sale  devices, among others. By coupling an XML browser with
voice  services,  we are able to combine  voice,  video and powerful  data query
applications and deliver them through IP communications devices.

OUR STRATEGY

         Our  objective  is to be  the  leading  provider  of IP  communications
Application Platforms and advanced application engines for businesses worldwide.
To achieve this objective, we are pursuing the following strategies:

         EXTEND  OUR  PRODUCT  AND  TECHNOLOGICAL  LEADERSHIP.  We  believe  our
solution  supports  more  communications  and data format  standards  across the
broadest range of  communications  systems than most other competing  solutions,
allowing us to provide improved  interoperability  within a customer's  existing
network infrastructure. We intend to build upon our IP communications technology
and improve our solution's  functionality and ease of use for rapidly designing,
deploying  and  maintaining  our   communications   solutions  in  a  customer's
environment.  We may also seek to enhance  our  products  through  licensing  or
acquiring complementary  technologies or businesses. We believe that we are also
unique in delivering a full suite of application engines to an IP communications
end point and plan to extend our application engine portfolio.

         EXPAND  SALES  AND  DISTRIBUTION   CHANNELS.  We  intend  to  pursue  a
multi-channel,  distribution  strategy by expanding our key  relationships  with
system  integrators,  VARs,  OEMs and  distributors.  We intend to increase  our
domestic  distribution  by  adding  channel  sales  personnel.  We also  plan to
continue to expand our indirect  distribution  through alliances with additional
system  integrators,  VARs and  OEMs.  We intend  to  launch  our  international
distribution  by  developing   additional   relationships   with   international
distributors  and  creating  strategic   alliances  with  international   system
integrators.  We anticipate that our primary means of addressing the market will
be through our indirect sales force.

         CAPITALIZE  ON  OUR  PROFESSIONAL   SERVICES   CAPABILITIES.   We  have
established what we believe to be highly successful relationships with customers
and  VARs  by  assisting  them  in  designing,   developing  and  deploying  our
convergence  solutions.  Our  professional  services  range from  strategic  and
architectural  planning to complete  integration and deployment of our products.


                                       7
<PAGE>

While we  encourage  our  indirect  channel  partners to build out  professional
services practices to support the Cistera solutions,  we will continue to extend
our professional  services expertise in applying emerging standards,  especially
XML  standards,   to  create   additional   solutions  that  capitalize  on  our
technologies.  By offering a full range of professional  services, we believe we
can  strengthen  our  existing  customer  and VAR  relationships  and foster new
relationships,  creating  opportunities to sell additional products. Our current
expectation  is for our VAR  channel to handle  the  standard  installation  and
configuration  requirements,  thereby  enabling us to focus on the more advanced
customer  services  requirements  and to scale  rapidly to meet the  anticipated
demand for our convergence solutions.

PRODUCTS

         Our convergence  products  consist of application  appliances--hardware
and  software  combined to deliver a broad suite of  feature-sets  on a scalable
architecture:

         HARDWARE  PLATFORMS The Cistera  platforms  combine  advanced  software
engines  with  hardware  devices  that have been  optimized  and in some  cases,
specifically designed to deliver the performance and scalability required for IP
telephony application environments.

*        CISTERA CONVERGENCESERVER(TM) (CCS(TM)) the foundation of a Cistera IPT
         solution is available in six form  factors--the CCS 1000, the CCS 1500,
         the CCS 2500,  the CCS 5500 and the CCS 7500 are  designed  to  support
         "small",   "medium",   "large"  and  "service   provider"   performance
         requirements  for  specific   customer   locations.   The  servers  are
         rack-mountable, open standards-based hardware systems.

*        CISTERA  ZONECONTROLLER(TM)(CZC(TM))  enables IP phone  systems to work
         with existing or newly installed  overhead speakers to create a unified
         paging  system.  Cistera's  solution  is the  only  one  that  supports
         simultaneous broadcasting to IP phones and speakers.

         CISTERA 1.7 SOFTWARE  PLATFORM.  The Cistera 1.7 software platform is a
component-based architecture that enables enhanced scalability and management of
advanced IP Phone  applications.  This  platform  has built in media  management
engines that enable third-party application developers to leverage our pre-built
components--a  voice recording  engine, a broadcast  engine, a content streaming
engine,  a pin code and  authentication  engine, a ruleset engine and a grouping
engine--without  having  to  create  each  component  from the  ground  up.  Our
authorized  developers  can  use our  published  APIs to  invoke  many of  these
services  and  therefore  focus  their  development   efforts  on  the  workflow
components  critical  for  specific  industries.  This  platform  also  provides
configurable administration and management tools.

         CISTERA  ADVANCED  IP  PHONE  APPLICATIONS.  We  believe  that  we have
developed the broadest suite of advanced IP Phone applications  available in the
market today. These applications include:

*        QUICKRECORD(TM)  - an IP telephony  on-demand  voice recorder and media
         management service designed to allow phone users to record important or
         malicious  calls when  needed  and play them back from the  phone.  The
         entire call is recorded  regardless of when the user presses the record
         button during the call.



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<PAGE>

*        CALLCENTERRECORD(TM)  - an IP telephony  continuous  voice recorder and
         media management  service with remote  monitoring and quality reporting
         features. It supports standard storage and archival systems.

*        RAPIDBROADCAST(TM)  - an IP telephony  messaging and broadcast  system.
         Instantly  transmit  text or voice  messages or  schedule  pre-recorded
         broadcasts to a defined group or to an entire  organization  through IP
         Phones or external speakers.

*        VIRTUALDIRECTORY(TM)  - a  centralized  directory  system  that  allows
         telephone  users,  both  internal  and  external to traverse  corporate
         information quickly without time consuming tree-based systems.  Callers
         can use  their  touchtone  or voice  to  request  information  or to be
         directed to the  appropriate  extension.  It supports LDAP  integration
         into popular contact management systems.

*        CONTENTSTREAMER(TM)  - an IP telephony streaming solution that delivers
         audio, graphics, music, and data streaming capabilities to the IP Phone
         network.  It enables  targeted  music/messaging  for on-hold callers as
         well.  Cistera's solution uses Real Simple Syndication (RSS) to deliver
         targeted messaging that is delivered as it is updated

*        PHONEASSIST(TM)  - integrates the PC and the IP Phone,  enabling access
         to CRM application  directories from the phone, or "click-to-dial" from
         the computer.

*        PHONEVERIFY(TM) - provides cost effective account code  authentication,
         client matter codes, and forced code  authorization that integrate with
         leading call detail reporting systems.

*        RULESETMANAGER(TM)   -  enables   control  of   behavior  of  IP  Phone
         applications,   IP  Phones  and  other  IP   devices   from  a  central
         administration point. It allows quick configuration to apply rule-based
         call management for an IPT system.

*        GROUPMANAGER(TM)   -  enables  the   organization   and  management  of
         designated  groups  of IP Phone  users  from a  central  administration
         point. It allows the system administrator to assign rights and services
         based upon group association.

         Our convergence  solutions  utilize several key technologies to provide
integration into IP  communications  environments,  including XML, JTAPI,  J2EE,
SIP, H.323, and others.

         Our convergence solutions have been designed to interoperate seamlessly
within network environments,  by aligning with key industry standards. There are
occasions  where  integration  with certain legacy  platforms  requires that our
solutions  interact with some proprietary  protocols.  In these situations,  our
convergence  solution  works to maintain  open  protocols  for the broad network
functions,  while  supporting the  proprietary  codecs for the specific areas of


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interoperability.  An example of this would be in the way our products currently
support Cisco's proprietary SCCP protocol.

         We have  designed  our  solution  to  provide  support  for many of the
emerging  industry  XML  standards  with  minimal  impact to  existing  business
applications.  We believe this  non-intrusive  architecture is a key in enabling
integration  of IP based voice,  video and data;  and will enable  content to be
delivered to a wide array of devices,  like IP Phones,  wireless  phones,  PDAs,
etc.

PRODUCT DEVELOPMENT

         We released our first convergence products in September 2003 at Cisco's
Innovation  Through  Convergence  Expo  in  California.   Using  the  technology
developed  for  our  Cistera   ConvergenceServer(TM),   we  recently  introduced
additional convergence products, extending the breadth and depth of our solution
footprint.  We continue  to enhance our  convergence  products  with  particular
emphasis  on  providing  improved  interoperability,   increased  functionality,
enhanced  security  and  scalability  and  simplified  ease of use.  Our product
development  efforts  currently  focus on enhancing  our  existing  products and
technologies and on developing additional products to extend our position in the
growing voice, video and data convergence market.

         On May 5, 2003, we retained the services of XBridge Software to perform
a substantial portion of our product  development.  XBridge continued to perform
these services for us until May 27, 2005, when we acquired XBridge.

COMPETITION

         We compete with a broad number of companies that extract  revenues from
the  telecommunications  capital  budgets of small and medium business (SMB) and
large companies (Enterprises).  Currently, 100% of our revenues are derived from
equipment purchased as part of an enterprise's telecommunications infrastructure
and aligned CTI  applications.  In 2005,  this was a $5.7B market with about 20%
specifically associated with IP communications.

         We face  competitors  in  three  primary  categories:  Traditional  TDM
application vendors transitioning to IP; PBX vendors extending  functionality to
core  systems;  and,  alternative  application  platforms  focused  on  "custom"
application development capabilities.

         Our principle competitors are companies that have for a number of years
manufactured  telephony  application  products for  traditional  TDM based phone
systems and are  currently  transitioning  their  products to support VoIP phone
systems  otherwise known as IP Telephony.  Examples of companies that we compete
with include Verint,  Interactive  Intelligence  and Nice Systems in the Quality
Assurance and Compliance category; Raytheon,  Alcatel-Lucent and Motorola in the
Event Alerting and Notification category.

         While we believe that the Company's business plan provides  competitive
advantage over competitors,  many of our existing and potential competitors have
stronger brand recognition,  longer operating  histories,  larger customer bases
and greater financial  resources.  As a result, they may be able to respond more


                                       10
<PAGE>

effectively to changing technologies, conditions or customer demands, especially
during market downturns.

                         ITEM 2: DESCRIPTION OF PROPERTY

         Our corporate  offices are located at 17304  Preston  Road,  Suite 975,
Dallas,  Texas. We lease this office space, which contains  approximately  4,264
square feet, from CMD Realty  Investment Fund, L.P. Our rent under this lease is
approximately $7,626 per month and the lease expires November 30, 2009.

                            ITEM 3: LEGAL PROCEEDINGS

         The  Company,  and  certain  of its  current  and former  officers  and
directors are defendants in litigation pending in Dallas,  Texas, styled KINGDON
R. HUGHES VS. GREGORY T. ROYAL,  CYNTHIA A. GARR, JAMES T. MILLER,  JR., CHARLES
STIDHAM, CNH HOLDINGS COMPANY D/B/A CISTERA NETWORKS AND XBRIDGE SOFTWARE, INC.;
Cause No.  DV05-0600-G;  G-134th  District  Court,  Dallas  County,  Texas.  The
plaintiff has alleged a number of complaints  against the defendants,  including
breach of fiduciary duty,  misappropriation of corporate  opportunities,  fraud,
fraudulent inducement,  breach of contract, tortuous interference with contract,
fraudulent transfer,  and shareholder  oppression arising in connection with the
license  agreement  between  the  Company  and  XBridge  in  May  2003  and  the
acquisition  of XBridge by the Company in May 2005. The parties held a mediation
conference in April 2006 and have come to an  understanding  with respect to the
principle elements of a potential settlement. We are currently in the process of
negotiating definitive settlement agreements.

         The  Company is a defendant  in  litigation  pending in Dallas,  Texas,
styled  Collaborative  Search  Partners,  Inc. vs. XBridge  Software,  Inc., and
Cistera  Networks,  Inc.,  Cause No.  07-03189;  J191st District  Court,  Dallas
County,  Texas.  The plaintiff  has alleged a number of  complaints  against the
defendants,  including  breach of  contract,  promissory  estoppel,  and quantum
meruitt arising in connection with two separate employment search agreements. In
May 2007,  the parties came to an  understanding  with respect to the  principle
elements  of a potential  settlement,  and a Rule 11 letter  agreement  has been
filed with the Court,  however, a definitive settlement agreement is still being
negotiated among the parties.  The Rule 11 letter agreement provides for payment
by the defendants of $44,000 to the plaintiff  over a period of six months,  and
in the event the defendants fail to make such payments,  a default  judgment may
be rendered against the defendants.

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

         None.




                                       11
<PAGE>




                                     PART II

                      ITEM 5: MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS

         Our common stock is presently traded in the over-the-counter market and
is listed on the Pink Sheets maintained by the National Quotation Bureau,  Inc.,
and on the Bulletin Board  maintained by the National  Association of Securities
Dealers,  Inc. (NASD), under the symbol CNWT. The following table sets forth the
range of high and low bid  quotations  for the common stock during each calendar
quarter  beginning  April 1, 2005,  and ending March 31, 2007.  The figures have
been rounded to the nearest whole cent.

                                                 HIGH                LOW
June 30, 2005                                   $3.40               $2.39
September 30, 2005                              $2.55               $1.80
December 31, 2005                               $2.45               $1.10
March 31, 2006                                  $1.35               $1.01

June 30, 2006                                   $1.32               $1.13
September 30, 2006                              $2.15               $0.65
December 31, 2006                               $0.80               $0.64
March 31, 2007                                  $1.50               $1.35


         The  above  quotations  reflect  inter-dealer  prices,  without  retail
mark-up,  mark-down,  or commission  and may not  necessarily  represent  actual
transactions.  The number of shareholders of record of the Company's  issued and
outstanding common stock as of March 31, 2007 was approximately 574.

         The  Company  has not  paid  any  cash  dividends  to date and does not
anticipate  paying cash dividends in the foreseeable  future.  It is the present
intention of management to utilize all available  funds for the  development  of
the Company's business.

RECENT SALES OF UNREGISTERED SECURITIES

         On July 1, 2006,  the Company  issued  70,803 shares of common stock in
connection  with the  exercise of  warrants  issued in the merger of the Company
with XBridge  Software,  Inc.  The  exercise  price of the warrants was $.46 per
share. The warrants were exercised for notes payable totaling $32,594.

         On August 1, 2006, the Company issued 4,034 shares of common stock upon
conversion  of  the  principal  and  accrued  interest  on a  previously  issued
convertible  note. The principal amount of the note converted was $1,000 and the
amount of accrued interest  converted  $3,034.  The notes converted at $1.00 per
share.



                                       12
<PAGE>

         On October 25, 2006,  the Company issued 122,028 shares of common stock
in connection  with the exercise of options  issued in the merger of the Company
with XBridge  Software,  Inc. The exercise  price for these options was $.01 per
share.

         On December 13, 2006,  the Company issued 17,931 shares of common stock
upon conversion of certain  outstanding  notes. The amount of principal of notes
converted was $15,000 and the amount of accrued  interest  converted was $2,391.
These notes were converted at $1.00 per share.

         The  foregoing  issuance  of the shares of our common  stock  described
above were made in private  transactions or private placements intending to meet
the requirements of one or more exemptions from registration. In addition to any
noted  exemption  below,  we relied upon  Regulation  D and Section  4(2) of the
Securities Act of 1933, as amended (the "Act"). The investors were not solicited
through any form of general solicitation or advertising,  the transactions being
non-public offerings, and the sales were conducted in private transactions where
the investor  identified an investment  intent as to the  transaction  without a
view to an  immediate  resale of the  securities;  the shares  were  "restricted
securities"  in that they were both legended with  reference to Rule 144 as such
and the  investors  identified  they  were  sophisticated  as to the  investment
decision and in most cases we reasonably believed the investors were "accredited
investors" as such term is defined under  Regulation D based upon statements and
information  supplied  to us in writing  and  verbally  in  connection  with the
transactions. We never utilized an underwriter for an offering of our securities
and no sales  commissions  were paid to any third party in  connection  with the
above-referenced  sales. Other than the securities  mentioned above, we have not
issued or sold any securities during the period covered by this Report.

                       ITEM 6: MANAGEMENT'S DISCUSSION AND
                         ANALYSIS OR PLAN OF OPERATIONS

         The following  discussion  and analysis of our financial  condition and
results  of  operations  should  be read in  conjunction  with our  consolidated
financial  statements and related notes that appear in this filing.  In addition
to  historical   financial   information,   the  following  discussion  contains
forward-looking  statements that reflect our plans,  estimates and beliefs.  Our
actual   results   could  differ   materially   from  those   discussed  in  the
forward-looking  statements.  Factors  that could cause or  contribute  to these
differences have been included throughout the public filings from the company.

OVERVIEW

         We provide IP  network-based  application  appliances and services that
add features and enhanced functionality to the telecommunications  services used
by large enterprises, small and mid-sized organizations,  both in the commercial
and public sector. Our software- and  hardware-based  solutions are delivered on
our   open-architecture,   component-based   platform   known  as  the   Cistera
ConvergenceServer(TM),  which allows administrators to centrally manage advanced
applications  for  IP  telephony   environments  across  large  single-site  and
multi-site   private   voice/data   networks.   Because  our  solutions  improve
productivity  and  efficiencies  for customers  using IP telephony  systems,  we


                                       13
<PAGE>

believe that our  convergence  solutions  complement the efforts of IP telephony
solution  providers  to increase  the  overall  return on  investment  and value
contribution  associated  with IP  telephony  systems.  This has  allowed  us to
establish  cooperative  relationships with IP telephony solution  providers,  as
well as large VARs and systems  integrators  focused on  delivering IP telephony
systems and services.

         Currently,  we  offer  new  customers  a robust  IP-based  applications
platform pre-loaded with a variety of packaged applications (we refer to them as
application  engines).  We market our software and hardware  solutions through a
VAR  channel,  and in some cases  directly to Fortune 500  customers.  To ensure
growth  scalability,  our VAR channel is being  trained to deliver  professional
services for standard installations,  which we believe will allow us to focus on
advanced professional services for complex installations.

         Our  objective  is to be  the  leading  provider  of IP  communications
application   platforms  and  advanced  IP-based   applications  for  businesses
worldwide. To address our market opportunity,  our management team is focused on
a  number  of  short  and  long-term  challenges  including:  strengthening  and
extending our solution  offerings;  adding new customers and expanding our sales
efforts into new  territories;  deepening  our  relationships  with our existing
customers,  VARs,  and SIs;  and  encouraging  the  development  of  third-party
applications on our platform.

         In order to increase  our  revenues  and take  advantage  of our market
opportunity,  we will need to add substantial numbers of customer installations.
We plan to reinvest  our earnings for the  foreseeable  future in the  following
ways:  hiring  additional  personnel,  particularly  in sales  and  engineering;
expanding  our  domestic and  international  selling and  marketing  activities;
increasing  our research and  development  activities  to upgrade and extend our
solution  offerings and to develop new solutions and  technologies;  growing our
VAR and systems implementation  channel; adding to our infrastructure to support
our growth;  and expanding  our  operational  and financial  systems to manage a
growing business.

FISCAL YEAR

         Our  fiscal  year ends on March 31.  References  to  fiscal  2007,  for
example, refer to the fiscal year ended March 31, 2007.

SOURCES OF REVENUES

         We derive our revenues from three sources: (1) product revenues,  which
are  comprised of software and hardware  solutions;  (2)  professional  services
revenues,  consisting  primarily of  installation,  configuration,  integration,
training and VAR support  services;  and (3) support and  maintenance,  which is
comprised of tiered technical  support levels.  Product  revenues  accounted for
approximately  75.6 percent of total  revenues  during fiscal year 2006 and 73.6
percent  of total  revenues  during  fiscal  year  2007.  Professional  services
revenues  accounted  for  approximately  12.5 percent of total  revenues  during
fiscal 2006 and 11.6 percent of total revenues during fiscal year 2007. Revenues
for our support and maintenance  services made up approximately  11.9 percent of
total  revenues  during fiscal 2006 and 14.4 percent of total revenues in fiscal
2007.

         The Company changed its revenue  recognition policy in the third fiscal
quarter  ending  December 31, 2006,  to reflect a more  conservative  accounting
practice.



                                       14
<PAGE>

         Product revenues are recognized once the software and hardware solution
has been shipped  according to the customer  order,  and are fully installed and
operational.  Prior to the  adoption  of this  policy,  the  Company  recognized
revenues once orders were received and shipped.  Professional  services revenues
are  recognized  once the  services  have been  completed  and the  customer has
approved the service.  Support and  maintenance  revenues  are  recognized  on a
monthly  basis over the life of the support  contract.  The typical  support and
maintenance  term is 24 months,  although terms range from 12 to 48 months.  Our
support and maintenance contracts are non-cancelable, though customers typically
have the right to terminate their contracts for cause if we fail to perform.  We
generally invoice our customers in annual or quarterly  installments and typical
payment terms provide that our customers pay us within 30 to 45 days of invoice.
Amounts  that have been  invoiced  are  recorded in accounts  receivable  and in
deferred  revenue,  or in revenue  depending on whether the revenue  recognition
criteria  have been met. In general,  we collect our  billings in advance of the
support and maintenance service period.

         Professional  services and other  revenues  consist of fees  associated
with  consulting and  implementation  services and training.  Our consulting and
implementation  engagements  are  typically  billed in advance of delivery  with
standard rates applied. We also offer a number of classes on implementing, using
and  administering  our  convergence  solutions  that are  billed on a per class
basis.  Our  typical  professional  services  payment  terms  provide  that  our
customers pay us within 30-45 days of invoice.

COST OF REVENUES AND OPERATING EXPENSES

Cost of Revenues

         Cost of convergence  solutions and support revenues  primarily consists
of expenses related to depreciation  expense associated with computer equipment,
allocated   overhead  and  amortization   expense  associated  with  capitalized
software,  and employee-related  costs associated with professional services and
support and  maintenance.  To date,  the  expense  associated  with  capitalized
software  has not been  material to our cost of revenues.  We allocate  overhead
such as rent and occupancy  charges,  employee  benefit  costs and  depreciation
expense  to all  departments  based  on  headcount.  As such,  general  overhead
expenses are reflected in each cost of revenue and operating  expense  category.
Cost  of  professional   services  and  other  revenues  consists  primarily  of
employee-related  costs  associated with these services and allocated  overhead.
The cost associated with providing professional services is significantly higher
as a percentage of revenue than for our  convergence  solutions due to the labor
costs associated with providing professional services.

         To the extent that our  customer  base grows,  we intend to continue to
invest additional resources in building the channel infrastructure to enable our
VARs and SIs to provide the professional  services  associated with the standard
convergence solutions  installation,  configuration and training.  The timing of
these  additional  expenses could affect our cost of revenues,  both in terms of
absolute  dollars and as a  percentage  of revenues,  in a particular  quarterly
period.  For example,  we plan to increase the number of employees who are fully
dedicated to  supporting  and enabling the reseller and  implementation  partner
channel.



                                       15
<PAGE>

Research and Development

         Research and  development  expenses  consist  primarily of salaries and
related  expenses,  and allocated  overhead.  We have  historically  focused our
research and development  efforts on increasing the  functionality and enhancing
the ease of use of our  convergence  platform and  applications.  Because of our
open, scalable and secure component-based  architecture,  we are able to provide
our  customers  with a  solution  based  on a  single  version  of our  software
application platform. As a result, we do not have to maintain multiple versions,
which enables us to have  relatively  low research and  development  expenses as
compared to traditional  enterprise  software business models. We expect that in
the future,  research and development expenses will increase in absolute dollars
as we support additional IP telephony  platforms,  extend our solution offerings
and develop new technologies.

Marketing and Sales

         Marketing and sales  expenses are  typically one of our largest  costs,
accounting for approximately  33.7 percent of total revenues for fiscal 2006 and
only 16.4 percent of total  revenues in fiscal 2007.  In fiscal 2007 the Company
reduced  spending by leveraging  some of the marketing  programs funded by large
technology  and VAR  partners.  It is expected  that the Company  will  increase
spending in this area,  as the market is  beginning  to show signs of  momentum.
Marketing and sales expenses consist  primarily of salaries and related expenses
for our sales and  marketing  staff,  including  commissions,  payments to VARs,
marketing programs, which include advertising, events, corporate communications,
public relations,  and other brand building and product marketing expenses,  and
allocated overhead.  Since the beginning of fiscal 2005, our sales and marketing
costs as a percentage of total  expenses have increased as a result of increased
market coverage in the U.S., Canada and the U.K.

         As our  revenues  increase,  we plan to continue  to invest  heavily in
marketing  and sales by  increasing  the number of  national  account  sales and
channel  management  personnel  in  order  to add  new  customers  and  increase
penetration  within our  existing  customer  base,  expanding  our  domestic and
international  selling and marketing  activities,  building brand  awareness and
sponsoring additional marketing events. We expect that in the future,  marketing
and sales  expenses  will  increase in absolute  dollars and  continue to be our
largest cost.

General and Administrative

         General and  administrative  expenses  consist of salaries  and related
expenses for  executive,  finance and  accounting,  and  management  information
systems  personnel,  professional  fees, other corporate  expenses and allocated
overhead. We expect that in the future, general and administrative expenses will
increase  in  absolute   dollars  as  we  add  personnel  and  incur  additional
professional  fees and insurance costs related to the growth of our business and
our operations.

         We expect that  general and  administrative  expenses  associated  with
executive  compensation  will  increase  in the  future.  Although  the  current
executive team has foregone full salary payment during the initial stages of the
business, during 2007 the team began to receive full compensation.  In addition,
we believe over the next fiscal year that the compensation  packages required to


                                       16
<PAGE>

attract  the senior  executives  the  Company  requires  to execute  against its
business plan will increase our total general and administrative expenses.

INTELLECTUAL PROPERTY EXCLUSIVE LICENSING AGREEMENT

         In May 2003,  we entered into an  exclusive  licensing  agreement  with
XBridge Software. This agreement provided us with the exclusive worldwide rights
to market,  sell and deliver the  convergence  solutions  based upon the XBridge
technology.  We also  retained  XBridge to provide  additional  development  and
engineering  resources necessary to build,  maintain and service the convergence
solutions.

         As a  continuation  of a  restructuring  plan we  implemented in August
2004, we entered into discussions to acquire XBridge and obtain ownership of the
intellectual  property upon which our products are based.  The XBridge  Software
acquisition was consummated on May 27, 2005.

CRITICAL ACCOUNTING POLICIES

         Our consolidated  financial  statements are prepared in accordance with
accounting  principles  generally accepted in the United States. The preparation
of these  consolidated  financial  statements  requires us to make estimates and
assumptions that affect the reported amounts of assets,  liabilities,  revenues,
costs and expenses,  and related  disclosures.  On an ongoing basis, we evaluate
our  estimates  and  assumptions.  Our  actual  results  may  differ  from these
estimates under different assumptions or conditions.

         We  believe  that of our  significant  accounting  policies,  which are
described in the notes to our consolidated  financial statements,  the following
accounting  policies  involve  a  greater  degree of  judgment  and  complexity.
Accordingly,  these are the policies we believe are the most  critical to aid in
fully  understanding  and evaluating our  consolidated  financial  condition and
results of operations.

Revenue Recognition

         In  an  effort  to  establish  an   accounting   policy  that  provides
shareholders with the most accurate representation of the company's performance,
the company has instated a new policy that only declares  revenue from software,
hardware and  services  once fully  installed  and  implemented.  This method of
revenue  reporting  will not reflect all orders  received and shipped during the
reporting  period,  but only  those  orders  received,  shipped  and  completely
installed within the reporting period. Prior to the adoption of this policy, the
Company  recognized  revenues  when orders for our products and  solutions  were
received and shipped.

         In future earnings reporting,  the Company will continue to provide the
"booked" revenue figures -- the amount based upon purchase orders (POs) received
from  customers  and  delivered to resellers -- during the  reporting  period in
addition to the new recognized revenue reporting policy.

         The Company  recognizes revenue according to SOP 97-2 (Software Revenue
Recognition)  as defined by  paragraphs  07-14 in SOP 97-2 and as amended by SOP
98-9 (Modification of SOP 97-2,  Software Revenue  Recognition,  With Respect to
Certain  Transactions).  This SOP provides  guidance on when  revenue  should be


                                       17
<PAGE>

recognized  and in what  amounts for  licensing,  selling,  leasing or otherwise
marketing computer software (including computer hardware and support services).

         Our total deferred revenue for products and services was $123,611 as of
March 31, 2007.  Technical  support  services revenue is deferred and recognized
ratably over the period during which the services are to be performed,  which is
typically from one to three years.  Advanced services revenue is recognized upon
delivery or completion of performance.

         We make sales to distributors and retail partners and recognize revenue
based on a sell-through method using information provided by them.

Accounting for Deferred Commissions

         We defer commission  payments to our direct and channel sales force for
the professional services and support and maintenance portions of our contracts.
These  commissions  are deferred and amortized to sales expense over the life of
the related  contracts,  which  typically  last 12 to 36 months.  The commission
payments,  which  are paid the month  after  the  service  is  delivered  to the
customer,  are a direct and incremental  cost of the revenue  arrangements.  The
deferred  commission amounts are recoverable  through the future revenue streams
under the customer  support and  maintenance  contracts.  We believe this is the
preferable method of accounting as the commission charges are so closely related
to  the  revenue  from  the  non-cancelable  customer  support  and  maintenance
contracts  that they should be recorded as an asset and charged to expense  over
the same period that the subscription revenue is recognized.

         For the  fiscal  year  2006 and  2007,  the  Company  did not pay sales
commissions except in select agent arrangements. Sales commissions are generally
paid on sales meeting the criteria for sales commission payment.

RESULTS OF OPERATIONS

         The  following  discussion  should  be read  in  conjunction  with  the
consolidated statements of financial operations, in their entirety.

Overview of Results of Operations  for:  Fiscal 2006,  Ended March 31, 2006, and
Fiscal 2007, Ended March 31, 2007.

         Our revenues have grown from $1,587,900 in fiscal 2006 to $2,046,319 in
fiscal 2007, a growth year-over-year of 28.9% on a recognized revenue basis. The
Company  instituted  a new revenue  recognition  policy in the third  quarter of
fiscal 2007, causing the last half of the fiscal year to be reported differently
than the  first  half of the  year.  Had the  Company  continued  to report on a
non-GAAP  "booked"  revenue basis for the entire  fiscal year 2007,  the revenue
would have been reported as $2,169,903,  or 36.7% on a non-GAAP "booked" revenue
basis.

         Our  gross  profit  during  the  fiscal  year  2006 was  $1,251,351  or
approximately  78.8 percent of  revenues,  and the  operating  loss for the same
period was  $2,324,552.  Gross  profit for fiscal  year 2007 was  $1,729,671  or
approximately  84.5 percent of  revenues,  and our  operating  loss for the same
period was $1,090,300.



                                       18
<PAGE>

         During the fiscal year 2007,  we continued to incur  substantial  costs
and  operating  expenses  related to the  expansion  of our  business.  We added
support  services  personnel  to focus on adding new  customers  and  increasing
penetration within our existing customer base,  professional  services personnel
to support our  implementation  and support services,  and developers to broaden
and enhance our convergence solutions.

LIQUIDITY AND CAPITAL RESOURCES

         At March  31,  2007,  we had  cash,  cash  equivalents  and  short-term
marketable  securities  of  $534,871,  as compared to $60,990 at March 31, 2006.
Accounts receivable at March 31, 2007 were $314,178,  as compared to $198,319 at
March 31, 2006.  Deferred revenue was $436,666 as of March 31, 2007, as compared
to $229,159 at March 31, 2006.

         From our  start of  operations  in May 2003  through  the end of fiscal
2007,  we funded our  operations  primarily  through  financing  obtained in two
private placements--the first in the third quarter of fiscal 2005 and the second
initiated in the fourth quarter of fiscal 2007.

         We do not have any special purpose  entities,  and other than operating
leases for office space and computer equipment, which are described below, we do
not engage in off-balance sheet financing arrangements. We currently have a bank
line of credit with JPMorgan  Chase Bank in the amount of $50,000.  In addition,
we have a  factoring  agreement  with  Allied  Capital  Partners,  L.P.  tied to
accounts receivable with a credit line of up to $750,000.

         The Company recently  completed a private  placement to support current
and future  growth  requirements.  Through  this  offering  the  Company  raised
aggregate of $3,625,754.00  through the issuance of Senior Unsecured Convertible
Promissory Notes, and warrants to purchase 3,625,754 shares of our common stock.
Of the  $3,625,754.00 in Notes,  $2,815,000.00 in principal amount of Notes were
issued for cash,  and  $810,754  in  principal  amount of Notes  were  issued in
connection with the cancellation of an equal amount of the Company's outstanding
obligation.

         Our future capital  requirements will depend on many factors including:
our rate of revenue growth; the expansion of our marketing and sales activities;
the timing and extent of spending  to support  product  development  efforts and
expansion into new territories;  the timing of introductions of new services and
enhancements to existing  services;  and the continuing market acceptance of our
services.  To the  extent  that  existing  cash and  securities  and  cash  from
operations are insufficient to fund our future activities, we will need to raise
additional funds through public or private equity or debt financing. Although we
are  currently  not a party to any agreement or letter of intent with respect to
potential investments in, or acquisitions of, complementary businesses, services
or  technologies,  we may enter into these types of  arrangements in the future,
which  could  also  require  us to seek  additional  equity  or debt  financing.
Additional funds may not be available on terms favorable to us or at all. If the
Company  cannot obtain  needed  funds,  it may be forced to curtail or cease its
activities.




                                       19
<PAGE>




                          ITEM 7: FINANCIAL STATEMENTS

         The  financial  statements  of the Company and  supplementary  data are
included beginning immediately preceding the signature page to this report.

              ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

       None.

                        ITEM 8A: CONTROLS AND PROCEDURES

         The Company's Chief Executive  Officer and Chief Financial  Officer are
responsible for establishing and maintaining  disclosure controls and procedures
for the Company.

         (a)      Evaluation of Disclosure Controls and Procedures

         As of the end of the period covered by this report, the Company carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's  management,  chief  executive and chief  financial  officers,  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures  pursuant to Rule 13a-15  under the  Securities  Exchange Act of
1934, as amended (the "Exchange Act"). Based upon the evaluation,  the Company's
chief  executive and chief financial  officers  concluded that, as of the end of
the period, the Company's  disclosure  controls and procedures were effective in
timely alerting them to material information relating to the Company required to
be included in the reports  that the Company  files and submits  pursuant to the
Exchange Act.

         (b)      Changes in Internal Controls

         There  were  no  significant   changes  subsequent  to  the  evaluation
described in  subparagraph  (a) above, in the Company's  internal  controls over
financial  reporting or in any other areas that could  significantly  affect the
Company's  internal  controls   subsequent  to  the  date  of  his  most  recent
evaluation,   including  any  corrective  actions  with  regard  to  significant
deficiencies and material weaknesses.

         (c)      Limitations.

         The  Company's  management,  including  its chief  executive  and chief
financial officers,  do not expect that the disclosure controls will prevent all
errors or all instances of fraud. A control system,  no matter how well designed
and operated,  can provide only  reasonable,  not absolute,  assurance  that the
control system's objectives will be met. Further, the design of a control system
must reflect the fact that there are resource  constraints,  and the benefits of
controls  must be  considered  relative to their costs.  Because of the inherent
limitations  in all control  systems,  no  evaluation  of  controls  can provide
absolute  assurance  that all control  issues and  instances  of fraud,  if any,
within the Company have been detected.  These inherent  limitations  include the
realities that judgments in  decision-making  can be faulty, and that breakdowns
can occur because of simple error or mistake.  Controls can also be circumvented
by the individual acts of some persons,  by collusion of two or more people,  or
by management override of the controls.  The design of any system of controls is


                                       20
<PAGE>

based in part upon certain  assumptions  about the  likelihood of future events,
and any design may not succeed in achieving its stated goals under all potential
future conditions.  Over time, controls may become inadequate because of changes
in conditions  or  deterioration  in the degree of  compliance  with policies or
procedures.  Because of the  inherent  limitation  of a  cost-effective  control
system, misstatements due to error or fraud may occur and not be detected.

                                    PART III

               ITEM 9 DIRECTORS EXECUTIVE OFFICERS, PROMOTERS AND
                CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF
                                THE EXCHANGE ACT

EXECUTIVE OFFICERS AND DIRECTORS

         The  following  table sets forth the name,  age,  and  position of each
executive  officer and director of the Company as of the period ending March 31,
2007:

DIRECTOR'S NAME (1)    AGE        POSITION WITH COMPANY

Derek P. Downs          38    President, Interim Chief Executive Officer and
                              Director

Greg T. Royal           41    Executive Vice-President/Chief Technology Officer
                              and Director

Cynthia A. Garr         47    Interim Chief Financial Officer, Executive Vice-
                              President of Corporate Development and Director

         Our directors hold office until the next annual meeting of shareholders
and until their respective successors have been duly elected and qualified.  Our
officers  are  elected  by the  Board of  Directors  at the board  meeting  held
immediately  following the  shareholders'  annual  meeting and hold office until
their death or until they either resign or are removed from office. There are no
written or other  contracts  providing  for the election of directors or term of
employment for executive officers, all of whom serve on an at will basis.

         DEREK DOWNS has served as  President  since May 31, 2004 and became our
Interim  CEO for the  Company in June 2005.  Mr.  Downs has been a member of the
Board of  Directors  since  October 1, 2004.  Prior to  becoming  President  and
Interim CEO, Mr. Downs served as the Company's Vice President of Sales Marketing
and Business Development. From January 2003 to May 2003, Mr. Downs held the same
position with XBridge  Software,  Inc. From December 2000 to September 2002, Mr.
Downs held senior executive roles in marketing,  alliances,  product  marketing,
and business development at i2 Technologies  (NASDAQ:ITWO),  a $1 billion supply
chain software company. Before joining i2 Technologies,  he served from December
1999 to December 2000 as VP of Business  Development and Strategic Alliances for
BSI Consulting,  a midsized  technology strategy firm. From May 1995 to December
1999,  Mr. Downs held the  position of Director of  Strategic  Alliances at Baan
Company, a $1+ billion enterprise software company. Mr. Downs graduated from the


                                       21
<PAGE>

University  of Eastern New Mexico in 1990 with a BBA degree in  Marketing  and a
BBA degree in Business Administration.

         GREGORY T.  ROYAL has  served as  Executive  Vice  President  and Chief
Technology  Officer,  and as a member of the Board of Directors  since May 2003.
Mr. Royal is the original founder of XBridge  Software,  and the inventor of the
Convergence  Server(TM)  technology.  Mr.  Royal  has over 18 years of IT Sales,
Marketing and  Management  experience  in New Zealand,  Australia and the United
States..  He has held  Senior  Sales and  Marketing  positions  at Sycom  Office
Equipment,  Eagle  Technology,  Network General Corp.  (NASDAQ:NETG) and Network
Associates Inc  (NASDAQ:NETA).  Mr. Royal has system  certification with Compaq,
IBM, Novell and Hewlett Packard. He also has significant experience in designing
and  deploying  large  scale IT systems  including  experience  in  Banking  and
Finance,  Government, and Retail and Property Services. Mr. Royal graduated from
Victoria University in 1986 and holds an MBA from Rushmore University.

         CYNTHIA A. GARR has served as Interim CFO and Executive  Vice President
of Corporate  Development since June of 2004. She has been a member of the Board
of Directors since May 2003. She is one of the founders of XBridge Software, and
has served as its  President and as a Director from its inception in 1999 to the
present.  She was also  Director  of Sales for  Identify  Software,  a leader in
application  problem resolution  software,  from January 2003 to June 2004. From
January  2000 to August  2001,  Ms Garr served as a Regional  Sales  Manager for
Mercury Interactive,  the leading provider of enterprise testing and performance
management  solutions.  Ms. Garr was President of U.S.  Operations and Executive
Director  of Qronus  Interactive,  a provider  of  automated  testing  solutions
software,  which was ultimately  acquired by Mercury  Interactive  from November
1997 to January 2000.  She graduated from Almeda  University  with a Bachelor of
Science  in   Information   Systems   Technology   and  a  Master  of   Business
Administration in Marketing.

BOARD COMPOSITION AND COMMITTEES

         Our Board of Directors currently consists of three members,  Gregory T.
Royal, Cynthia A. Garr, and Derek P. Downs. We are planning to expand the number
of members  constituting  our Board of  Directors  and will seek persons who are
"independent"  within the meaning of the rules and regulations of NASDAQ to fill
vacancies created by any expansion. Because of our current stage of development,
we do not have any standing audit, nominating or compensation committees, or any
committees performing similar functions. The Board meets periodically throughout
the year as  necessity  dictates.  No current  director has any  arrangement  or
understanding whereby they are or will be selected as a director or nominee.

Audit Committee Financial Expert

         The  Company's  board of  directors  does not have an "audit  committee
financial   expert,"  within  the  meaning  of  such  phrase  under   applicable
regulations  of the  Securities  and Exchange  Commission,  serving on its audit
committee.  The  board of  directors  believes  that all  members  of its  audit
committee are financially literate and experienced in business matters, and that
one or more  members of the audit  committee  are  capable of (i)  understanding
generally accepted accounting principles ("GAAP") and financial statements, (ii)
assessing the general  application  of GAAP  principles  in connection  with our


                                       22
<PAGE>

accounting for estimates,  accruals and reserves, (iii) analyzing and evaluating
our  financial   statements,   (iv)  understanding  our  internal  controls  and
procedures  for  financial  reporting;  and (v)  understanding  audit  committee
functions,  all of which are attributes of an audit committee  financial expert.
However,  the board of directors  believes that there is not any audit committee
member who has obtained these attributes through the experience specified in the
SEC's definition of "audit committee financial expert." Further, like many small
companies,  it is difficult  for the Company to attract and retain board members
who qualify as "audit  committee  financial  experts," and competition for these
individuals is significant.  The board believes that its current audit committee
is able to  fulfill  its  role  under  SEC  regulations  despite  not  having  a
designated "audit committee financial expert."

Indebtedness of Directors and Executive Officers

         None of our  directors or officers or their  respective  associates  or
affiliates is indebted to us.

Family Relationships

         There are no family  relationships  among our  directors  or  executive
officers.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section  16(a) of the Exchange Act,  requires the  Company's  officers,
directors and persons who  beneficially  own more than ten percent of the Common
Stock to file reports of securities ownership and changes in such ownership with
the Securities and Exchange Commission. Officers, directors and greater than ten
percent  beneficial  owners  also  are  required  by  rules  promulgated  by the
Securities  and  Exchange  Commission  to furnish the Company with copies of all
Section 16(a) forms they file.




                                       23
<PAGE>




                         ITEM 10: EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

         The following table sets forth, for our last two fiscal years,  certain
information  concerning  the  compensation  paid  by the  Company  to our  Chief
Executive Officer and our other most highly paid executive officers who received
in excess of $100,000 in compensation during these periods.

<TABLE>
<CAPTION>
                                                   SUMMARY COMPENSATION TABLE
        (a)             (b)    (c)           (d)        (e)             (f)        (g)               (h)          (i)
                                                                                                Nonqualified
                       Year                                                     Non-Equity        Deferred     All Other
                       Ended                           Stock          Option    Incentive       Compensation    Compen-
                                                                                   Plan
      Name and         March  Salary        Bonus      Awards         Awards   Compensation       Earnings      sation      Total
 Principal Position     31     ($)           ($)        ($)             ($)        ($)               ($)          ($)        ($)

<S>                    <C>    <C>           <C>        <C>            <C>      <C>              <C>             <C>         <C>
DEREK P. DOWNS         2007   $127,500           -             -            -             -                 -          -    $127,000
                       2006   $125,000           -   $369,396(1)            -             -                 -          -    $494,396
President/Interim
CEO/Director

CYNTHIA A. GARR        2007    $10,417  -        -             -            -             -                 -          -     $10,417
   Interim CFO/        2006   $125,000           -             -            -             -                 -          -    $125,000
Executive Vice
President/Director

GREG T. ROYAL          2007   $130,500           -             -            -                               -          -    $130,500
   Executive V.P./     2006   $130,000           -             -            -             -                 -          -    $130,000
   Director
</TABLE>

     (1) Represents the grant of 123,132  restricted  shares of our common stock
     on January 3, 2005.  This  grant is still  subject to the  approval  by our
     shareholders of our long term incentive plan.

         Except as described below under  "Employment  Contracts,"  there are no
compensatory  plans  or  arrangements,  with  respect  to any  of our  executive
officers,  which result or will result from the  resignation,  retirement or any
other  termination of such  individual's  employment with us or from a change in
control  of  the  Company  or a  change  in  the  individual's  responsibilities
following a change in control.  No stock options,  stock appreciation  rights or
other stock based incentives were awarded to any of our named executive officers
during fiscal 2006 and 2007.

EMPLOYMENT CONTRACTS

         On January 1, 2005,  we entered into an employment  agreement  with Mr.
Downs pursuant to which we agreed to employ him as President at an annual salary
of  $125,000.  Although  the initial term of the  agreement  has expired,  if we
terminate  our  employment  relationship  with Mr. Downs  agreement  (a) without
cause, or (b) for any reason within twelve months of a change in control; or Mr.
Downs terminates the agreement with just cause, then Mr. Downs shall be entitled
to receive two times his then current salary, payable in equal installments over
the course of the immediately following eighteen months.



                                       24
<PAGE>

         On October 1, 2004,  Cistera Networks Canada,  one of our subsidiaries,
entered into an employment  agreement  with Mr. Royal  pursuant to which Cistera
Networks Canada has agreed to employ him as its President at an annual salary of
$130,000.  Although the initial term of the  agreement  has expired,  if Cistera
Networks  Canada  terminates  its  employment  relationship  with Mr.  Royal (a)
without  cause,  or (b) for any  reason  within  twelve  months  of a change  in
control;  or Mr. Royal terminates the agreement with just cause,  then Mr. Royal
shall be entitled to receive two times his then current salary, payable in equal
installments over the course of the immediately following eighteen months.

         The  employment  agreements  for  both Mr.  Downs  and Mr.  Royal  were
terminated by the parties, effective March 31, 2007. An employment agreement for
Ms.  Garr,  with  terms  similar to that of Mr.  Downs,  was  terminated  by the
parties, effective April 1, 2006.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Outstanding Equity Awards at Fiscal Year-End
----------------------------------------------------------------------------------------------------
Option Awards
----------------------------------------------------------------------------------------------------
Name                    Number of        Number of        Number of
                       Securities        Securities       Securities
                       Underlying        Underlying       Underlying
                       Unexercised      Unexercised      Unexercised     Option
                         Options          Options      Unearned Options  Exercise        Option
                           (#)              (#)              (#)           Price       Expiration
                       Exercisable     Unexercisable                        ($)           Date
------------------- ------------------ --------------- ----------------- ----------- ---------------
<S>                 <C>                <C>             <C>               <C>         <C>
Derek Downs         0                  0               275,000(3)        1.30        2/6/2009
------------------- ------------------ --------------- ----------------- ----------- ---------------
Cynthia Garr        41,831(1)          0               0                 0.46        4/1/2009
                                                       275,000(3)        1.10        10/1/2009
------------------- ------------------ --------------- ----------------- ----------- ---------------
Gregory Royal       271,174(2)         0               0                 0.46        5/3/2009
                                                       275,000(3)        1.10        10/1/2009
------------------- ------------------ --------------- ----------------- ----------- ---------------
</TABLE>

         (1) Prior to the Company's acquisition of XBridge,  XBridge awarded Ms.
Garr  options to  purchase  shares of 15,426  shares of XBridge  Software  at an
exercise price of $1.25 per share.  As part of the acquisition of XBridge by the
Company,  these options were  converted  into options to purchase  shares of our
common stock, on a basis of 2.71174 shares of our common stock for each share of
XBridge.  This conversion ratio was the same ratio received by all other XBridge
stockholders.

         (2) Prior to the Company's acquisition of XBridge,  XBridge awarded Mr.
Royal  options to purchase  shares of 100,000  shares of XBridge  Software at an


                                       25
<PAGE>

exercise price of $1.25 per share.  As part of the acquisition of XBridge by the
Company,  these options were  converted  into options to purchase  shares of our
common stock, on a basis of 2.71124 shares of our common stock for each share of
XBridge.  This conversion ratio was the same ratio received by all other XBridge
stockholders.

         (3) Granted  pursuant to the Company's 2004 Long Term  Incentive  Plan.
These  options  were  subject  to  shareholder  approval  of the  plan  and were
terminated by the parties, effective April 1, 2007.

         None of our executive officers exercised options to purchase our common
stock during fiscal 2006 or 2007.

DIRECTOR COMPENSATION

         We do not pay our directors a fee for  attending  scheduled and special
meetings of our board of  directors.  We intend to reimburse  each  director for
reasonable  travel expenses  related to such  director's  attendance at board of
directors  and  committee  meetings.  In the  future we might have to offer some
compensation to attract the caliber of independent  board members the Company is
seeking.




                                       26
<PAGE>




                ITEM 11: SECURITY OWNERSHIP OF BENEFICIAL OWNERS
                                 AND MANAGEMENT

PRINCIPAL SHAREHOLDERS

         The table below sets forth, as of March 31, 2007,  certain  information
with respect to the beneficial  ownership of our common stock by (i) each of our
directors  and  executive  officers,  (ii)  each  person  known  to us to be the
beneficial owner of five percent or more of the outstanding shares of our common
stock, and (iii) all of our officers and directors as a group.  Unless otherwise
indicated,  the person or entity listed in the table is the beneficial owner of,
and has sole voting and investment power with respect to, the shares indicated.

Title of    Name And Address             Nature and Amount
Class       Of Beneficial Owners         of Beneficial Ownership    Percent

Common      Derek P. Downs(1)                        125,199(2)          1.3%

Common      Cynthia A. Garr(1)                     1,330,191(3)         13.9%

Common      Gregory T.  Royal(1)                   1,396,159(4)         14.6%

Common      Kingdon Hughes                         1,465,593(5)         15.2%
            16475 Dallas Pkwy, Suite 440
            Addison, TX 75001

Common      Artis Capital Management                  560,250           5.85%
            One Market Plaza
            Spear Street Tower, Suite 1700
            San Francisco, CA  94105

Common      Roaring Fork Capital Management        1,000,000(6)        10.45%
            5350 South Roslyn St., Suite 380
            Greenwood Village, CO 80111

All Officers and Directors as a Group              2,851,549            29.8%

         (1) The business address for each Ms. Garr and Messrs.  Downs and Royal
         is 17304 Preston Road, Suite 975, Dallas, Texas 75252.
         (2)  Includes  123,132  shares  granted to Mr.  Downs  pursuant  to the
         Company's  long term  incentive  plan.  This grant is still  subject to
         shareholder approval of the plan.
         (3) Includes  options to purchase 41,831 shares resulting from the post
         merger conversion of options to purchase shares of XBridge common stock
         that are presently exercisable.
         (4) Includes options to purchase 271,174 shares resulting from the post
         merger conversion of options to purchase shares of XBridge common stock
         that are presently exercisable..
         (5) Includes  189,822  shares  subject to warrants  that are  presently
         exercisable.
         (6)  Consists  of  warrants  to   purchases   shares  of  common  stock
         exercisable within 60 days.


                                       27
<PAGE>


             ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On  May 5,  2003,  the  Company,  Corvero  Networks,  Inc.,  a  Florida
corporation formed by CNH Holdings as a wholly owned subsidiary  (Corvero),  and
XBridge Software, Inc., a Delaware corporation, entered into a license agreement
pursuant to which  Corvero  agreed to license  from XBridge  Software,  Inc. all
rights,  title,  and  interest  of XBridge in and to  certain  technologies  and
intellectual  properties (the "XBridge  Technology").  The exclusive license was
worldwide in scope and had a term of twenty  years,  and  included,  but was not
limited  to,  the  right to make  alternations  and/or  derivative  works and to
license, sublicense,  cross-license or otherwise transfer the XBridge Technology
for  commercial  purposes,  and all  rights  to  derivative  works  would be the
Company's sole and exclusive property.  This license did not, however,  give the
Company  the right to  transfer  or resell the  XBridge  Technology  without the
consent of XBridge.

         As  consideration  for the  license,  the  Company  agreed  to issue to
XBridge 500,000 shares of our common stock,  immediately upon Corvero  obtaining
$250,000 in equity  financing for its operations and the  implementation  of the
business plan.  These 500,000 shares were equal to 25% of our total  outstanding
shares at the execution date of the agreement.

         In addition to the 500,000  shares of our common stock,  Corvero agreed
to pay royalties to XBridge royalties based on the following sliding scale:

------------------------------------------ -------------------------------------
Cumulative Corvero Networks Revenue        Royalty Payments
------------------------------------------ -------------------------------------
                   $1 Million                            No Royalties
------------------------------------------ -------------------------------------
                   $2 Million                        5% of Gross Revenue
------------------------------------------ -------------------------------------
                   $3 Million                        4% of Gross Revenue
------------------------------------------ -------------------------------------
                   $4 Million                        3% of Gross Revenue
------------------------------------------ -------------------------------------
                   $5 Million                        2% of Gross Revenue
------------------------------------------ -------------------------------------
      Cumulative Greater than $5 Million             1% of Gross Revenue
------------------------------------------ -------------------------------------

         In addition, when cumulative gross revenue for Corvero Networks reached
$10,000,000,  XBridge was then to receive an additional  1,500,000 shares of our
common stock.

         On May 7, 2003, in lieu of the required  $250,000 in equity  financing,
XBridge agreed to accept a lesser sum of equity financing  without  penalties in
exchange for the immediate  issuance of 500,000  shares of our common stock.  In
connection  with this  modification  of the license  agreement,  the Company and
XBridge also entered into a letter agreement  whereby we agreed to purchase from
XBridge  certain  assets at a purchase  price of $125,500.  At May 7, 2003,  the
purchase  price of our  common  stock  was $.75 a  share.  At $.75 a share,  the
500,000  shares  of  common  stock  issued  to  XBridge  would  have a value  of
approximately  $375,000.  This value  equates to the sum of the proposed  equity
raise and the asset  purchase  price of  approximately  $375,000 at the time the
agreements were executed.

         On June 20, 2003, we entered into a second amendment  pursuant to which
XBridge agreed to formally accept a lower equity financing amount and cancel the
asset purchase obligation, in exchange for 1,500,000 shares of our common stock.
This amendment also released us from any and all further  responsibilities under
the license agreement. The shares, however, were subject to a three-year trading
restriction.  The net effect of this  amendment  was to place the parties in the
same  position  they  would  have been had all the terms and  conditions  in the


                                       28
<PAGE>

original  license   agreement  been  fulfilled,   the  $125,500  asset  purchase
obligation was cancelled and XBridge  received an aggregate of 2,000,000  shares
of our common stock.

         When the second  amendment  was  executed,  our shares were  trading at
$1.65 per share.  At that time,  the  1,500,000  shares  issued to XBridge had a
market value of $2,475,000. Subsequent to the second amendment, the officers and
directors of XBridge became our officers and directors.

         Prior to our acquisition of XBridge, XBridge still maintained ownership
of all  intellectual  property  licensed to us.  XBridge also  continued to hire
software  developers  to  expand  product  lines  in the IP  Telephony  suite of
services. On June 30, 2003, Corvero and XBridge entered an agreement pursuant to
which  Corvero  agreed  to retain  XBridge  on a task by task  basis to  perform
consulting  services.  Both parties  would agree upon  statements  of work to be
performed and the appropriate  billing rates. The following tables summarize the
work performed and the fees applicable:

<TABLE>
<CAPTION>
-------------------------- ----------------- ------------------------------------------------------------
        Agreement            Execute Date                         Agreement Purpose
-------------------------- ----------------- ------------------------------------------------------------
<S>                        <C>               <C>
Master Contracting         6/30/03           Framework for Future Statement of Work (SOW) Agreements
Agreement
-------------------------- ----------------- ------------------------------------------------------------
         SOW #1            6/30/03           Software Development and Support for Recording, Broadcast,
                                             Directory and Ruleset Engines
-------------------------- ----------------- ------------------------------------------------------------
         SOW #2            8/1/03            Software Development and Support for Dynamic Dialer and
                                             Security Manager
-------------------------- ----------------- ------------------------------------------------------------
         SOW #3            10/1/03           Software Development and Support for Conference Bridge
-------------------------- ----------------- ------------------------------------------------------------
         SOW #4            1/1/04            Software Development and Support for Phone Verify, Content
                                             Streamer and Phone Modeler
-------------------------- ----------------- ------------------------------------------------------------
         SOW #5            3/1/04            Software Development and Support for CCS Platform O/S
                                             Software and CCX O/S Software
-------------------------- ----------------- ------------------------------------------------------------
         SOW #6            04/1/04           Support Services for Corporate Operations and Financial
                            Services
-------------------------- ----------------- ------------------------------------------------------------
         SOW #7            7/1/04            Software Development and Support for Cistera Screen Capture
-------------------------- ----------------- ------------------------------------------------------------
         SOW #8            10/1/04           Replacement Support Agreement to Cover all Previous
                                             Agreements (SOW #1 - SOW #7)
-------------------------- ----------------- ------------------------------------------------------------
         SOW #9            1/3/05            Software Development and Support for CCS Property Manager,
                                             Phone Modeling and Web Infrastructure tools
-------------------------- ----------------- ------------------------------------------------------------
</TABLE>




                                       29
<PAGE>




         The following  table details the financial  breakdown of each SOW under
the Master Services Agreement:

<TABLE>
<CAPTION>
------------------------------- ------------------------ -----------------------------------------
          Agreement                  Execute Date                 Amount Invoiced to CNH
------------------------------- ------------------------ -----------------------------------------
<S>                             <C>                      <C>
            SOW #1                     06/30/03                          $ 85,813
------------------------------- ------------------------ -----------------------------------------
            SOW #2                     08/01/03                          $171,625
------------------------------- ------------------------ -----------------------------------------
            SOW #3                     10/01/03                          $257,438
------------------------------- ------------------------ -----------------------------------------
            SOW #4                     01/01/04                          $617,426
------------------------------- ------------------------ -----------------------------------------
            SOW #5                     03/01/04                      (see note below)
------------------------------- ------------------------ -----------------------------------------
            SOW #6                     04/01/04                          $280,800
------------------------------- ------------------------ -----------------------------------------
            SOW #7                     07/01/04                          $ 15,000
------------------------------- ------------------------ -----------------------------------------
            SOW #8                     10/01/04                          $285,000
------------------------------- ------------------------ -----------------------------------------
            SOW #9                     01/03/05                          $130,500
------------------------------- ------------------------ -----------------------------------------
            Totals                                                      $1,843,602
------------------------------- ------------------------ -----------------------------------------
</TABLE>

         (note:  SOW #5 was paid through the  issuance of 150,000  shares of our
common stock)

         Effective  May  27,  2005,  we  acquired   XBridge   through  a  merger
transaction  in exchange for  4,150,000  shares of our common stock (which after
the  cancellation of the 2,150,00  originally  issued to XBridge resulted in the
issuance of only  2,000,000  new shares) and the  elimination  of  approximately
$1.86 million on  inter-company  payables owed to XBridge.  The Company believes
that the  structure  of the merger  agreement  with  XBridge and the issuance of
shares  were  comparable  to  what  the  Company  would  have  received  through
arms-length negotiations with an unaffiliated party. At the time of the services
agreement and the issuance of the shares, XBridge owned approximately 51% of our
outstanding shares of common stock, and a majority of our officers and directors
were also  officers and  directors of XBridge.  This  transaction  enabled us to
obtain outright  ownership of the XBridge  intellectual  property upon which our
products are based and eliminate  future  product  development  and  maintenance
payments to XBridge.  Costs  associated with  maintenance and support related to
the license  agreement  totaled $1.86 million  during the first two years of the
twenty-year life of the agreement.  In addition,  we believed that the Company's
ownership of the XBridge  intellectual  property would prove to be invaluable in
both securing  agreements with tier-one channel reseller  partners and in giving
the Company flexibility for future growth and product line expansion. Based upon
client  driven  product  acceptance  and sales order  growth,  the Company  also
believed that funding  maintenance  efforts through its research and development
facility in India and eliminating potential royalty commitments were in the best
interest of the Company's shareholders.

         Including the new shares issued in the merger,  the  elimination of the
$1.86  million in  inter-company  payables  and  XBridge's  outstanding  debt of
approximately  $200,000 at the time of the merger,  the total purchase price for
the XBridge acquisition was approximately  $5,500,000.  Subsequent to the merger
transaction,  Cistera Networks commissioned Navigant Capital Advisors to issue a
fairness  opinion  regarding  the merger with XBridge  Software.  As part of its
portfolio of financial  services,  Navigant Capital provides  valuation services
and  fairness  opinions  on large  financial  transactions.  Navigant  Capital's
position on the merger supported the Company's  assertion around the fairness of
the equity merger transaction.



                                       30
<PAGE>

         Prior to entering  into the  agreement  governing  the merger,  (a) Ms.
Cynthia Garr, the Company's  Executive Vice  President,  acting Chief  Financial
Officer and a director,  was also the President and a director of XBridge,  (b),
Mr. Gregory Royal,  the Company's Chief Technology  Officer and a director,  was
also a Vice  President  and a  director  of  XBridge,  (c) Mr.  Derek  Downs the
Company's acting Chief Executive  Officer and a director,  was also a consultant
to XBridge.

         At the time of the  merger,  Ms. Garr owned  451,000  shares of XBridge
common stock and held options to purchase  another 15,426 shares,  and Mr. Royal
owned  375,000  shares of XBridge  common  stock and held  options  to  purchase
another  100,000  shares.  At an exchange  ratio of 2.71174 shares of our common
stock for each share of XBridge  stock  outstanding,  post merger,  (1) Ms. Garr
owned 1,222,997  shares of our common stock and held options to purchase another
41,831 shares; (2) Mr. Royal owned 1,016,904 shares of our common stock and held
options to purchase an additional  271,174  shares.  Ms. Garr's  options  expire
April 1, 2009, and Mr. Royal's  options expire May 3, 2009. With regard to these
stock options and all other  outstanding  options to purchase  XBridge shares at
the time, the original  provisions for the XBridge stock options were applied in
a carry-forward manner to the options to purchase shares of our stock.

         Ms. Garr and Mr. Royal did not have employment  agreements with XBridge
and were employed on an at-will basis. Subsequent to the acquisition of XBridge,
employment  agreements were entered into by Messrs. Downs and Royal and Ms. Garr
reflecting  the  company  as  their  employer.  See  "Executive  Compensation  -
Employment  Contracts"  for a description  of the terms and  conditions of these
employment agreements.

         At the  time of the  XBridge  acquisition,  there  was  one  additional
significant  shareholder of XBridge,  Kingdon Hughes, who held 390,461 shares of
XBridge's  common stock and warrants to purchase  another  82,217  shares.  As a
result of the merger,  Mr. Hughes owned 1,058,831 shares of our common stock and
warrants to purchase  another  222,951shares.  Mr.  Hughes's  warrants expire in
2009.

                                ITEM 13: EXHIBITS

         The following exhibits are included as part of this report:

Exhibit
Number           Title of Document

31.1     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.
31.2     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.
32.1     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.
32.2     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.

                  ITEM 14: PRINCIPAL ACCOUNTANT FEES & SERVICES

         The following is a summary of the fees billed to us by Robison,  Hill &
Company for  professional  services  rendered for the years ended March 31, 2007
and 2006:



                                       31
<PAGE>

           Service                     2007                   2006
------------------------------   ------------------     ------------------
Audit Fees                                 $32,885                $28,212
Audit-Related Fees                               -                      -
Tax Fees                                       615                    288
All Other Fees                                   -                      -
                                 ------------------     ------------------
Total                                      $33,500                $28,500
                                 ==================     ==================

AUDIT FEES.  Consists of fees billed for professional  services rendered for the
audits  of  our  consolidated  financial  statements,  reviews  of  our  interim
consolidated  financial  statements  included  in  quarterly  reports,  services
performed in connection  with filings with the Securities & Exchange  Commission
and related  comfort  letters and other  services that are normally  provided by
Robison,  Hill & Company in connection with statutory and regulatory  filings or
engagements.

TAX FEES. Consists of fees billed for professional  services for tax compliance,
tax  advice  and tax  planning.  These  services  include  assistance  regarding
federal,  state and local tax compliance  and  consultation  in connection  with
various transactions and acquisitions.

Audit  Committee  Pre-Approval of Audit and  Permissible  Non-Audit  Services of
Independent Auditors

         As there is no separately designated Audit Committee,  the entire Board
of Directors serves as the Audit Committee. A function of the Audit Committee is
to  pre-approve  all audit and non-audit  services  provided by the  independent
auditors. These services may include audit services, audit-related services, tax
services and other  services as allowed by law or  regulation.  Pre-approval  is
generally provided for up to one year and any pre-approval is detailed as to the
particular  service  or  category  of  services  and is  generally  subject to a
specifically  approved  amount.  The  independent  auditors and  management  are
required to periodically  report to the Audit Committee  regarding the extent of
services   provided  by  the  independent   auditors  in  accordance  with  this
pre-approval  and the  fees  incurred  to date.  The  Audit  Committee  may also
pre-approve particular services on a case-by-case basis.



                                       32
<PAGE>











                       CISTERA NETWORKS, INC. & SUBSIDIARY

                                       -:-

                INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS REPORT


                             MARCH 31, 2007 AND 2006



















<PAGE>






                                    CONTENTS


                                                                       Page

Report of Independent Registered Public Accountants.....................F - 1

Consolidated Balance Sheets
   March 31, 2007 and 2006..............................................F - 3

Consolidated Statements of Operations for the
   Years Ended March 31, 2007 and 2006..................................F - 5

Consolidated Statement of Stockholders' Equity for the
   Years Ended March 31, 2007 and 2006..................................F - 6

Consolidated Statements of Cash Flows for the
   Years Ended March 31, 2007 and 2006..................................F - 7

Notes to Consolidated Financial Statements............................. F - 9




















<PAGE>


                                                   RH
--------------------------------------------------------------------------------

ROBISON, HILL & CO.                                CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL CORPORATION
                                                   Brent M. Davies, CPA
                                                   David O. Seal, CPA
                                                   W. Dale Westenskow, CPA
                                                   Barry D. Loveless, CPA



               REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
Cistera Networks, Inc. & Subsidiary

         We have audited the accompanying consolidated balance sheets of Cistera
Networks,  Inc. &  Subsidiary  as of March 31,  2007 and 2006,  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended March 31, 2007 and 2006. These consolidated financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

         We conducted our audits in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  The  Company is not
required  to have,  nor were we engaged  to  perform,  an audit of its  internal
control over financial reporting.  Our audit included  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion on the  effectiveness  of the company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present  fairly,  in all material  respects,  the financial  position of Cistera
Networks,  Inc. as of March 31, 2007 and 2006, and the results of its operations
and its cash flows for the years  ended  March 31,  2007 and 2006 in  conformity
with accounting principles generally accepted in the United States of America.








MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF THE SEC PRACTICE SECTION and THE PRIVATE COMPANIES PRACTICE SECTION

1366 East Murray-Holladay Road, Salt Lake City, Utah  84117-5050
Telephone 801/272-8045, Facsimile 801/277-9942



                                     F - 1
<PAGE>



         The accompanying  consolidated  financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial  statements,  the Company has suffered  recurring losses from
operations and has a net capital  deficiency that raise  substantial doubt about
its ability to continue as a going  concern.  The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.




                                                    /s/ Robison, Hill & Co.
                                                    Certified Public Accountants
Salt Lake City, Utah
June 26, 2007


































                                     F - 2
<PAGE>



                       CISTERA NETWORKS, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS


                                                    March 31,
                                                2007       2006
                                             ----------  ----------
Current Assets:
   Cash                                      $  534,871  $   60,990
   Accounts Receivable                          314,178     198,319
   Other Receivable                              23,927      23,927
   Inventory                                     72,367      23,127
   Prepaid Expenses                              10,143      41,626
                                             ----------  ----------

      Total Current Assets                      955,486     347,989
                                             ----------  ----------

Fixed Assets:
   Computer Equipment                           123,035     117,725
   Trade Show Booth & Fixtures                   10,641       8,774
   Office Equipment                             129,064      72,622
   Property held under capital leases            10,205      10,205
   Less Accumulated Depreciation               (150,899)    (115,524
                                             ----------  ----------

      Net Fixed Assets                          122,046      93,802
                                             ----------  ----------

Intangible Assets:
   Intellectual property                      2,717,755   2,717,755
   Software development                         366,040     366,040
   Less Amortization                           (788,802)   (477,091)
                                             ----------  ----------

      Net Intangible Assets                   2,294,993   2,606,704
                                             ----------  ----------

Total Assets                                 $3,372,525  $3,048,495
                                             ==========  ==========







                                     F - 3
<PAGE>



                       CISTERA NETWORKS, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                                   (continued)


                                                    March 31,
                                                2007       2006
                                             ----------  ----------

Current Liabilities:
   Accounts payable                          $  544,796  $1,015,596
   Accrued liabilities                          598,023     623,361
   Related party payables                        24,038      84,938
   Short-term notes payable                           -      36,000
   Line of credit                                62,094           -
   Convertible promissory notes                 144,000     230,000
   Current portion of long-term debt              2,415       3,581
   Current portion of deferred income           351,698     110,008
                                             ----------  ----------

     Total Current Liabilities                1,727,064   2,103,484
                                             ----------  ----------

Long-Term Liabilities
   Lease obligation payable                           -       2,415
   Convertible promissory notes               1,900,606      45,000
   Deferred income                               84,968     119,151
                                             ----------  ----------
     Total Long-Term Liabilities              1,985,574     166,566
                                             ----------  ----------

     Total Liabilities                        3,712,638   2,270,050
                                             ----------  ----------

Stockholders' Equity:
   Common Stock, Par Value $.001
     Authorized 50,000,000 shares,
     Issued 8,292,022 shares at
     March 31, 2007 and
     Issued 8,077,226 shares
     at March 31, 2006                            8,292       8,077
   Paid-In Capital                            8,739,970   8,684,405
   Retained Deficit                          (9,088,375) (7,914,037)
                                             ----------  ----------

     Total Stockholders' Equity                (340,113)    778,445
                                             ----------  ----------

Total Liabilities and Stockholders' Equity   $3,372,525  $3,048,495
                                             ==========  ==========





The accompanying notes are an integral part of these financial statements.



                                     F - 4
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS




                                      For the years ended
                                            March 31,
                                        2007        2006
                                   ------------  ------------

Revenues                           $  2,046,319  $  1,587,900
Cost of goods sold                      316,648       336,549
                                   ------------  ------------

     Gross Profit                     1,729,671     1,251,351
                                   ------------  ------------

Expenses:
   Sales and marketing                  335,817       538,290
   Research and development             510,025       587,302
   Software consulting                1,036,612       992,125
   Professional fees                    201,512       487,142
   General and administrative           736,005       971,044
                                   ------------  ------------

     Total Expenses                   2,819,971     3,575,903
                                   ------------  ------------

Other Income (Expense)
   Interest income                          714         1,466
   Interest expense                     (84,752)     (114,187)
   Write-off of goodwill                      -    (2,134,821)
                                   ------------  ------------

     Total Other Income (Expense)       (84,038)   (2,247,542)
                                   ------------  ------------

     Net Loss                      $ (1,174,338) $ (4,572,094)
                                   ============  ============

Basic & Diluted loss per share     $      (0.14) $     (0.72)
                                   ============  ============

Weighted Average Shares               8,190,123     6,393,718
                                   ============  ============









   The accompanying notes are an integral part of these financial statements.



                                     F - 5
<PAGE>


                       CISTERA NETWORKS, INC. & SUBSIDIARY
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE TWO YEARS ENDED MARCH 31, 2007 AND 2006


<TABLE>
<CAPTION>
                                                 Common Stock      Paid-In     Retained
                                               Shares   Par Value  Capital      Deficit
                                              --------- --------- ----------  ------------

<S>                                           <C>       <C>       <C>         <C>
Balance at March 31, 2005                     4,467,938 $   4,468 $1,245,325  $ (3,341,943)

Stock issued for accrued liabilities            173,511       174    482,190             -
Stock issued for acquisition of Xbridge       2,000,000     2,000  5,298,000             -
Stock issued from exercise of stock options     100,000       100    199,900             -
Stock issued for conversion of notes payable  1,325,777      1325  1,417,932             -
Stock issued for services                         2,000         2      1,998             -
Stock issued for legal settlement                 8,000         8          -             -
Contributed capital                                   -         -     39,060             -
Net loss                                              -         -          -    (4,572,094)
                                              --------- --------- ----------  ------------

Balance at March 31, 2006                     8,077,226    8,077   8,684,405    (7,914,037)

Stock issued in connection with exercise of
   warrants for conversion of notes payable      70,803       71      32,524             -
Stock issued for conversion of notes payable     21,965       22      21,943             -
Stock issued for cash in connection with
   exercise of warrants                         122,028      122       1,098             -
Net loss                                              -        -           -    (1,174,338)
                                              --------- --------- ----------  ------------

Balance at March 31, 2007                     8,292,022 $8,292    $8,739,970  $ (9,088,375)
                                              ========= ========= ==========  ============
</TABLE>















The accompanying notes are an integral part of these financial statements



                                     F - 6
<PAGE>


                      CISTERA NETWORKS, INC. & SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       For the years ended
                                                             March 31,
                                                         2007          2006
                                                     ------------  ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss                                             $ (1,174,338) $( 4,572,094)
Adjustments used to reconcile net loss to net cash
     provided by (used in) operating activities:
Write-off of goodwill                                           -     2,134,821
Depreciation and amortization                             347,086       318,120
Deferred income                                           207,507       125,384
Stock issued for accrued interest                          13,060        98,177
Stock issued for accrued liabilities                            -       543,004
Stock issued for services                                       -         2,000
Stock issued for legal settlement                               -             8
(Increase) Decrease in accounts receivable               (115,859)      147,467
(Increase) Decrease in inventory                          (49,240)       (5,433)
(Increase) Decrease in prepaid expenses                    31,483       (34,284)
(Increase) Decrease in Xbridge receivable                       -      (569,525)
Increase (Decrease) in accrued liabilities                (25,338)      431,342
Increase (Decrease) in accounts payable                  (470,800)      778,440
                                                     ------------  ------------
     Net Cash Used in operating activities             (1,236,439)     (602,573)
                                                     ------------  ------------

CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash acquired from Xbridge                                      -         2,834
Purchase of equipment                                     (63,619)      (23,475)
                                                     ------------  ------------
 Net cash provided by investing activities                (63,619)      (20,641)
                                                     ------------  ------------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on capital lease                                 (3,581)        (2,961)
Sale of common stock                                       1,220        583,500
Proceeds from line of credit                              62,094              -
Cash received from convertible debt                    1,805,606         45,000
Proceeds from loans                                       16,434         56,400
Payments on loans                                       (107,834)       (36,367)
                                                     ------------  ------------
 Net Cash Provided by Financing Activities             1,773,939        645,572
                                                     ------------  ------------

Net (Decrease) Increase in cash and cash equivalents     473,881         22,358
Cash and Cash Equivalents at beginning of period          60,990         38,632
                                                     ------------  ------------
Cash and Cash Equivalents at end of period           $   534,871   $     60,990
                                                     ============  ============


                                     F - 7
<PAGE>



                      CISTERA NETWORKS, INC. & SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (continued)

                                                        For the years ended
                                                              March 31,
                                                         2007         2006
                                                     ------------  ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest                                           $     35,574  $     57,312
  Franchise and income taxes                         $          -  $          -

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:

         On May 27, 2005, the Company issued 4,150,000 shares of common stock to
the shareholders of XBridge Software,  Inc. and cancelled  2,150,000 shares then
held by XBridge,  in connection with the Company's merger with XBridge Software,
Inc. In the merger,  the Company  acquired all of the assets and  liabilities of
XBridge Software,  valued at a net of $782,245, and intellectual property valued
at  $2,717,755.  Goodwill  of  $2,134,821  was also  acquired  and  subsequently
expensed.

         On December 31, 2005, the Company issued 946,392 shares of stock due to
the  conversion  of note  principal  and interest  from private  placement  fund
holders. The amount of principal  represented by these shares was $859,000.  The
amount of accrued interest represented by these shares was $87,392.

         On March 31, 2006, the Company issued 67,785 shares of stock due to the
conversion of note  principal and interest from private  placement fund holders.
The amount of principal  represented by these shares was $57,000.  The amount of
accrued interest represented by these shares was $10,785.

         On July  1,  2006,  the  Company  issued  70,893  shares  of  stock  in
connection  with the  exercise of  warrants  issued in the merger of the Company
with Xbridge  Software,  Inc. at $.46 per share. The warrants were exercised for
notes payable totaling $32,594.

         On August 31, 2006, the Company issued 4,034 shares of stock due to the
conversion of note  principal and interest from private  placement fund holders.
The amount of principal  represented  by these shares was $1,000.  The amount of
accrued interest represented by these shares was $3,034 due to the conversion of
a portion of the note at an earlier  date.  These notes  converted  at $1.00 per
share.

         On October 25, 2006,  the Company issued 122,028 shares of common stock
in connection  with the exercise of options  issued in the merger of the Company
with Xbridge at $.01 per share.

         On December 13, 2006,  the Company  issued  17,931 shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal  represented by these shares was $15,000.  The amount of
accrued  interest  represented  by these  shares was  $2,931.  These  notes were
converted at $1.00 per share.


   The accompanying notes are an integral part of these financial statements.



                                     F - 8
<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN

         The accompanying  consolidated  financial statements have been prepared
in  conformity  with  accounting  principles  generally  accepted  in the United
States,  which contemplate the Company as a going concern.  However, the Company
has  sustained  substantial  operating  losses  in  recent  years  and has  used
substantial amounts of working capital in its operations. Realization of a major
portion of the assets reflected on the  accompanying  balance sheet is dependent
upon continued  operations of the Company which,  in turn, is dependent upon the
Company's  ability to meet its financing  requirements and succeed in its future
operations. Management believes that actions presently being taken to revise the
Company's operating and financial requirements provide them with the opportunity
for the Company to continue as a going concern.

         These consolidated financial statements do not reflect adjustments that
would be necessary if the Company were unable to continue as a "going  concern".
While  management  believes  that the actions  already  taken or  planned,  will
mitigate the adverse  conditions and events which raise doubt about the validity
of the "going concern" assumption used in preparing these financial  statements,
there can be no assurance that these actions will be successful.

         If the  Company  were unable to  continue  as a "going  concern",  then
substantial adjustments would be necessary to the carrying values of assets, the
reported amounts of its liabilities, the reported revenues and expenses, and the
balance sheet classifications used.

Organization and Basis of Presentation

         CNH Holdings  Company,  Inc., a Nevada  corporation (the Company),  was
incorporated in Delaware on April 15, 1987, under the name of I.S.B.C. Corp. The
Company subsequently  changed its name first to Coral Companies,  Inc., and then
to CNH Holdings  Company.  Domicile  was changed to Nevada in 1997.  The Company
conducted an initial public and secondary offerings during the 1980's.

         On June 15, 1998,  the Company  acquired  Southport  Environmental  and
Development,  Inc. This  acquisition,  however,  was  subsequently  rescinded by
agreement  between the parties  and made a formal  order of the court  effective
April 19, 2000.  This order put the Company in the position which it occupied at
June 14, 1998,  as if none of the actions  which had occurred  from that time to
the date of rescission had transpired.
         On May 5, 2003,  Corvero  Networks,  Inc., a Florida  corporation,  was
formed by CNH Holdings  Company as a wholly-owned  subsidiary to acquire the use
of certain  technology known as the XBridge  Technology.  This technology has as
its principal  component the Corvero Convergence  Platform.  The acquisition was
accomplished by entering into a license agreement with XBridge Software, Inc., a
Delaware corporation. See Note 9, for detailed description of acquisition.




                                     F - 9
<PAGE>

                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (continued)

         On August 31, 2004,  CNH  Holdings  Company  absorbed its  wholly-owned
subsidiary Corvero Networks,  and began doing business as Cistera Networks.  All
Corvero products adopted the Cistera name.

         The Company was in the development stage from January 1, 1992 to May 5,
2003. Since May 5, 2003, the Company has commenced planned principal  operations
and is no longer in the development stage.

         On May 27, 2005, the Company acquired XBridge Software,  Inc. through a
merger between XBridge and a Company  subsidiary.  XBridge will continue to be a
wholly-owned subsidiary of the Company.

         On September 27, 2005,  the Company  changed its name from CNH Holdings
Company to Cistera Networks, Inc.

Nature of Operations

         Cistera Networks, Inc. provides IP-based advanced application platforms
and  engines  for  the  enterprise  VoIP  communications   market.  The  Cistera
Convergence  Server (TM) (CCS) uses the Cistera  Enterprise  Platform for IPT to
provide  Unified  Application  Administration  as well as Fault and  Performance
Management for  enterprise IPT  Application  deployments.  The Company  provides
next-generation  solutions for numerous  vertical markets  including  education,
finance,  healthcare and government. The Company maximizes IP phone capabilities
- taking the communications platform.

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES

         This  summary of  accounting  policies  for Cistera  Networks,  Inc. is
presented  to assist  in  understanding  the  Company's  consolidated  financial
statements.  The accounting  policies conform to generally  accepted  accounting
principles  and  have  been  consistently  applied  in  the  preparation  of the
consolidated financial statements.

Principles of Consolidation

         The  consolidated  financial  statements  for the years ended March 31,
2007  and  2006  include  the  accounts  of  Cistera  Networks,   Inc.  and  its
wholly-owned  subsidiary  XBridge  Software,  Inc.  XBridge  Software,  Inc. was
acquired by the Company on May 27, 2005.

         The  results  of  subsidiaries  acquired  or sold  during  the year are
consolidated  from their effective dates of acquisition  through their effective
dates of disposition.

         All  significant  intercompany  balances  and  transactions  have  been
eliminated.





                                     F - 10
<PAGE>

                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Use of Estimates

         The financial  statements  are prepared in conformity  with  accounting
principles  generally accepted in the United States of America. In preparing the
financial  statements,  management is required to make estimates and assumptions
that affect the reported  amounts of assets and  liabilities  and  disclosure of
contingent  assets  and  liabilities  as of the date of the  balance  sheet  and
statement of operations for the year then ended.  Actual results may differ from
these estimates. Estimates are used when accounting for allowance for bad debts,
collectibility  of  accounts  receivable,  amounts  due  to  service  providers,
depreciation and litigation contingencies, among others.

Cash and Cash Equivalents

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Concentration of Credit Risk

         The Company has no  significant  off-balance  sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign hedging arrangements.

Revenue Recognition

         The Company's  revenue is comprised of three main sources:  (1) product
sales, (2) professional services and (3) support and maintenance contracts.  The
Company recognizes revenue according to SOP 97-2 (Software Revenue  Recognition)
as  defined  by  paragraphs  07-14  in SOP  97-2  and  as  amended  by SOP  98-9
(Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions).  This SOP provides  guidance on when revenue should be recognized
and in what  amounts for  licensing,  selling,  leasing or  otherwise  marketing
computer software  (including  computer hardware and support services).  Product
sales revenues are recognized when a valid purchase order has been received from
a client and the product  has been  shipped and  installed  at the client  site.
Product revenue is fixed and determinable at the time of shipment as clients are
engaged with the Company in a two-tier  distribution model with no refund/return
rights.   Professional  services  revenue  and  costs  are  recognized  when  an
installation   project  has  been  completed  and  client   sign-off   received.
Professional  services  revenue  is fixed and  determinable  only at the time of
client  approval as typical  client install  projects  involve  several  vendors
working against shifting  deadlines to install multiple  solutions.  Support and
maintenance contracts are executed on an annual basis and the revenue from these
contracts is recognized on a monthly basis as the support fees are earned.





                                     F - 11
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Inventory

         Inventory  consists  of  equipment  that has been  shipped  but not yet
installed  and  equipment  that has been  returned  to the  Company  because the
customer  has quit the project or there were  problems  with the  hardware.  The
machines are  refurbished  and used in future sales.  The  inventory  assets are
recorded at cost.

Depreciation and Amortization

         Fixed assets are recorded at cost and depreciated  using  straight-line
and  accelerated  methods  over the  estimated  useful lives of the assets which
range from three to seven  years.  Fixed assets  consisted  of the  following at
March 31, 2007 and 2006:

                                                      March 31,
                                               2007                2006
                                        ------------------- -------------------
Computer Equipment                      $           123,035            $117,725
Trade Show Booth & Fixtures                          10,641               8,774
Office Equipment                                    129,064              72,622
Property held under capital leases                   10,205              10,205
Less accumulated depreciation                      (150,899)           (115,524)
                                        ------------------- -------------------

Total                                   $           122,046 $            93,802
                                        =================== ===================

         Maintenance  and  repairs are charged to  operations;  betterments  are
capitalized.  The  cost  of  property  sold  or  otherwise  disposed  of and the
accumulated  depreciation  thereon are eliminated  from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.

         Total depreciation  expense for the years ended March 31, 2007 and 2006
was $36,181 and $46,106, respectively.

Intangible Assets

         The Company has adopted the Financial  Accounting  Standards Board SFAS
No., 142, "Goodwill and Other Intangible Assets." SFAS 142 requires, among other
things,  that companies no longer amortize  goodwill,  but instead test goodwill
for  impairment  at least  annually.  In addition,  SFAS 142  requires  that the
Company identify reporting units for the purposes of assessing  potential future
impairments of goodwill,  reassess the useful lives of other existing recognized
intangible   assets,  and  cease  amortization  of  intangible  assets  with  an
indefinite  useful life.  An  intangible  asset with an  indefinite  useful life
should be tested for impairment in accordance with the guidance in SFAS 142.





                                     F - 12
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

         Intangible  Assets  consisted  of the  following  at March 31, 2007 and
2006:

                                    March 31,
       Intangible Asset          2007           2006     Amortization Period
----------------------------- ------------ ----------- -------------------------
Intellectual Property         $  2,717,755 $ 2,717,755          10 Years
Software Development               366,040     366,040              4 Years
Less accumulated amortization     (788,802)   (477,091)
                              ------------ -----------

Total                         $  2,294,993 $ 2,606,704
                              ============ ===========

         Software development costs include all development costs incurred after
the Company's software became "technologically  feasible". Prior to the software
reaching that stage, all development  costs were expensed as incurred.  Once the
software was  developed to the point of being ready for sale,  the Company began
amortizing  the costs over the term of the  license  agreement  it entered  into
which was four  years.  The  software  development  costs were  acquired  in the
acquisition of XBridge Software, Inc.

         On May 27, 2005, the Company issued 2,000,000 shares of common stock to
acquire the assets and  liabilities  of XBridge  Software,  Inc. The shares were
valued at the market price on the effective date of the  acquisition,  which was
$2.65 per  share.  The  Company  acquired  net  assets  valued at  $782,245  and
intellectual property valued at $2,717,755.  The Company has determined that the
intellectual  property has a useful life of 10 years, and is using straight-line
amortization.

         Total amortization  expense for the years ended March 31, 2007 and 2006
was $311,710 and $265,492, respectively.

         The estimated amortization for the next five years is as follows:

  2008                                         $  271,776
  2009                                            271,776
  2010                                            271,776
  2011                                            271,776
  2012                                            271,776
                                               ----------
  Total                                        $1,358,880
                                               ==========





                                     F - 13
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Earnings (Loss) per Share

         Basic  earnings  (loss) per share has been  computed  by  dividing  the
earnings for the period  applicable to the common  stockholders  by the weighted
average number of common shares outstanding during the years.

         Diluted  loss per common  share for the years  ended March 31, 2007 and
2006 is not presented as it would be anti-dilutive. At March 31, 2007, the total
number of potentially dilutive common stock equivalents was 6,428,197.  At March
31, 2006, the total number of potentially  dilutive common stock equivalents was
2,907,019.

Reclassification

         Certain   reclassifications  have  been  made  in  the  2006  financial
statements to conform with the 2007 presentation.

Deferred Income

         Deferred income represents contracts for certain revenue to be received
in the future and come from support and maintenance contracts as well as product
sales and  professional  services  which  have been  shipped  and billed but not
installed. Support and maintenance contracts are executed on an annual basis and
the revenue from these contracts is recognized on a monthly basis as the support
fees are earned.

Research and Development

         Research and  development  expenses  consist  primarily of salaries and
related expenses, and allocated overhead related to increasing the functionality
and enhancing the ease of use of the convergence platform and applications.

Stock Options

         Effective April 1, 2006, the company adopted the provisions of SFAS No.
123(R).  SFAS No.  123(R)  requires  employee  equity awards to be accounted for
under the fair value method.  Accordingly,  share-based compensation is measured
at grant date, based on the fair value of the award. Prior to April 1, 2006, the
company  accounted for awards  granted to employees  under its equity  incentive
plans under the intrinsic value method prescribed by Accounting Principles Board
(APB) Opinion No. 25,  "Accounting  for Stock Issued to Employees" (APB 25), and
related  interpretations,  and  provided  the  required  pro  forma  disclosures
prescribed by SFAS No. 123, "Accounting for Stock-Based  Compensation" (SFAS No.
123), as amended.  No stock  options were granted to employees  during the years
ended  March 31,  2007 or 2006 and  accordingly,  no  compensation  expense  was
recognized  under APB No.  25 for the years  ended  March 31,  2007 or 2006.  In
addition,  no compensation expense is required to be recognized under provisions
of SFAS No. 123(R) with respect to employees.




                                     F - 14
<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

         Under the modified  prospective method of adoption for SFAS No. 123(R),
the  compensation  cost  recognized  by the company  beginning  on April 1, 2006
includes (a) compensation cost for all equity incentive awards granted prior to,
but not yet  vested as of April 1,  2006,  based on the  grant-date  fair  value
estimated in  accordance  with the original  provisions of SFAS No. 123, and (b)
compensation cost for all equity incentive awards granted subsequent to April 1,
2006,  based on the  grant-date  fair value  estimated  in  accordance  with the
provisions of SFAS No. 123(R).  The company uses the  straight-line  attribution
method to recognize  share-based  compensation  costs over the service period of
the award.  Upon  exercise,  cancellation,  forfeiture,  or  expiration of stock
options,  or upon vesting or forfeiture of restricted stock units,  deferred tax
assets for options and  restricted  stock units with multiple  vesting dates are
eliminated  for each vesting  period on a first-in,  first-out  basis as if each
vesting  period was a  separate  award.  To  calculate  the excess tax  benefits
available  for  use in  offsetting  future  tax  shortfalls  as of the  date  of
implementation, the company followed the alternative transition method discussed
in FASB Staff Position No. 123(R)-3.

Fair Value of Financial Instruments

         The carrying value of the Company's  financial  instruments,  including
accounts payable and accrued liabilities at March 31, 2007 and 2006 approximates
their fair values due to the short-term nature of these financial instruments.

NOTE 3 - CONCENTRATION OF RISK

         As of March 31, 2007,  the Company  receives  approximately  31% of its
gross  revenues  from its top three  re-sellers.  This  represents a decrease in
concentration  of business  from the 48%  reported  for the year ended March 31,
2006. The loss of these  re-sellers  would not adversely  impact the business of
the Company.

NOTE 4 - INCOME TAXES

         As of March 31,  2007,  the  Company  had a net  operating  loss  carry
forward for income tax reporting  purposes of approximately  $9,089,000 that may
be offset against future taxable income through 2027. Current tax laws limit the
amount of loss  available  to be offset  against  future  taxable  income when a
substantial  change in  ownership  occurs.  Therefore,  the amount  available to
offset future taxable income may be limited. Due to the uncertainty with respect
to ultimate  realization,  the Company has established a valuation allowance for
all deferred income tax assets.

                                     March 31,
                                2007         2006
                            ------------  -----------
Net Operating Losses        $ 1,363,350   $ 1,187,100

Valuation Allowance
                             (1,363,350)   (1,187,100)
                            ------------  -----------
                            $          -  $         -
                            ============  ===========



                                     F - 15
<PAGE>

                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)

NOTE 4 - INCOME TAXES (continued)

         The provision for income taxes differs from the amount  computed  using
the federal US statutory income tax rate as follows:

                                                    March 31,
                                                 2007      2006
                                             ---------- ------------
Provision (Benefit) at US Statutory Rate     $  176,250 $    685,814

Increase (Decrease) in Valuation Allowance
                                               (176,250)    (685,814)
                                             ---------- ------------
                                             $        -  $         -
                                             ========== ============

         The Company  evaluates its valuation  allowance  requirements  based on
projected future operations.  When  circumstances  change and causes a change in
management's  judgment  about the  recoverability  of deferred  tax assets,  the
impact of the change on the valuation is reflected in current income.

NOTE 5 - LEASE COMMITMENT

         The Company currently leases  approximately 4,264 square feet of office
space at 17304 Preston Road, Suite 975, Dallas, Texas from Memshalah Realty. The
lease payments are approximately $7,626 per month and the lease expires November
30, 2009. This office space is used as the Corporate Headquarters.

         The minimum  future lease  payments  under this lease for the next five
years are:

 April 1, 2007 - March 31, 2008                   $    92,225
 April 1, 2008 - March 31, 2009                        94,357
 April 1, 2009 - March 31, 2010                        63,852
 April 1, 2010 - March 31, 2011                             -
 April 1, 2011 - March 31, 2012                             -
                                                  -----------
 Total minimum future lease payments              $   250,434
                                                  ===========

NOTE 6 - CAPITAL LEASE

         On October 20, 2004,  the Company  entered into an agreement  with Dell
Financial Services to lease five laptop computers and a laser printer. The lease
is for a period of thirty-six  months with a payment of  approximately  $369 per
month.  The Company has an end of lease  purchase  option of $1. The Company has
capitalized  a total of  $10,205  under  capital  leases for the  computers  and
printer in the  financial  statements.  The assets  are  depreciated  over their
related lease terms.  Depreciation of assets under capital leases is included in
depreciation expense for the years ended March 31, 2007 and 2006.



                                     F - 16
<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 6 - CAPITAL LEASE (continued)

         The minimum future lease payments under this capital lease for the next
five years are:

  April 1, 2007 - March 31, 2008                   $    2,952
  April 1, 2008 - March 31, 2009                            -
  April 1, 2009 - March 31, 2010                            -
  April 1, 2010 - March 31, 2011                            -
  April 1, 2011 - March 31, 2012                            -
                                                   ----------
  Total minimum lease payments                          2,952
  Less: Amount representing interest                     (537)
                                                   ----------
  Present value of net minimum
     lease payment                                 $    2,415
                                                   ==========

NOTE 7 - COMMON STOCK

         On April 29, 2005,  the Company  issued  173,511 shares of common stock
for accrued liabilities of $482,364.

         On May 27, 2005, the Company issued 4,150,000 shares of common stock to
the shareholders of XBridge Software,  Inc. and cancelled  2,150,000 shares then
held by XBridge,  in connection with the Company's merger with XBridge Software,
Inc. In the merger,  the Company  acquired all of the assets and  liabilities of
XBridge Software,  valued at a net of $782,245, and intellectual property valued
at  $2,717,755.  Goodwill  of  $2,134,821  was also  acquired  and  subsequently
expensed.

         On June 24, 2005,  the Company  issued  100,000  shares of common stock
from the exercise of outstanding stock options at $2 per share.

         Effective  September  21, 2005,  the Company's  authorized  shares were
increased from 10 million shares to 50 million shares.

         On December 31, 2005,  the Company  issued  311,600  shares of stock in
connection with the exercise of warrants issued in the 2004 private placement of
notes and warrants at $1.30 per share.

         On December 31, 2005,  the Company  issued 946,392 shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal represented by these shares was $859,000.  The amount of
accrued interest represented by these shares was $87,392.  These notes converted
at $1.00 per share.

         On March 31,  2006,  the  Company  issued  67,785  shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal  represented by these shares was $57,000.  The amount of
accrued interest represented by these shares was $10,785.  These notes converted
at $1.00 per share.



                                     F - 17
<PAGE>




                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 7 - COMMON STOCK (continued)

         One March 31, 2006 the Company issued 2,000 shares of stock to a former
contractor for providing project  management  services valued at $2,000. As part
of the initial  agreement with this  contractor,  these shares were to be issued
upon the delivery of services defined by the agreement.

         On March 31, 2006, the Company issued 68,000 shares of stock as part of
a  legal  settlement.  60,000  of the  shares  had  been  previously  issued  as
restricted  and in  settlement  of the legal  issue,  the shares were  returned,
cancelled and reissued as free trading. 8,000 shares were newly issued.

         On July  1,  2006,  the  Company  issued  70,803  shares  of  stock  in
connection  with the  exercise  of  warrants  issued  in the  merger of CNH with
XBridge at .46 per share.  These  warrants  were  exercised  to satisfy  certain
outstanding notes payable.

         On August 31,  2006,  the  Company  issued  4,034  shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal  represented  by these shares was $1,000.  The amount of
accrued interest represented by these shares was $3,034 due to the conversion of
a portion of the note earlier. These notes converted at $1.00 per share.

         On October 25, 2006,  the Company issued 122,028 shares of common stock
in connection  with the exercise of options  issued in the merger of the Company
with Xbridge at $.01 per share.

         On December 13, 2006,  the Company  issued  17,931 shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal  represented by these shares was $15,000.  The amount of
accrued  interest  represented  by these  shares was  $2,931.  These  notes were
converted at $1.00 per share.

NOTE 8 - NOTES PAYABLE

         In June 2005, the Company  received loans totaling  $50,000.  The notes
are due May 30, 2006 and carry an interest rate of 8% per annum. Due to the loan
being unpaid at maturity, the interest rate increased to 12%. At March 31, 2007,
the total amount of principal and interest due on this note was $0.

NOTE 9 - LINE OF CREDIT

         On September 21, 2006, the Company  entered into a factoring  agreement
with Allied Capital Partners,  L.P., whereby Allied Capital provides a revolving
line of credit to the  Company up to $750,000  that is secured by the  Company's
accounts  receivable.  At March 31,  2007,  the total  amount due on the line of
credit was $62,094.

         On May 18,  2007,  the Company  secured a line of credit with  JPMorgan
Chase Bank in the amount of $50,000. The line of credit carries an interest rate
of prime  plus one half  point.  The line of  credit is  secured  with a deposit
guarantee of $50,000.




                                     F - 18
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 10 - RELATED PARTY TRANSACTIONS

         On March 5, 2003,  we (1) obtained an exclusive  license to certain XML
technology  from XBridge in exchange  for the issuance of 500,000  shares of our
common  stock,  and (2)  entered  into an asset  purchase  agreement  to acquire
certain of XBridge's assets. On June 20, 2003, we issued an additional 1,500,000
shares of our common  stock to XBridge in  settlement  of certain CNH  Holdings'
obligations under the license agreement and asset purchase agreement. Subsequent
to the settlement transaction,  the officers and directors of XBridge became our
officers and directors.

         Subsequent  to  March  2003,  the  Company  had  entered  into a master
services  agreement with XBridge  pursuant to which XBridge provided the Company
with certain  development  and  maintenance  services.  In connection  with this
master  services  agreement,  the  Company had  previously  issued to XBridge an
additional  150,000  shares of its common stock and had  incurred  approximately
$1,860,000 in past due service fee debt.

         Effective  May  27,  2005,  we  acquired   XBridge   through  a  merger
transaction  and obtained  ownership of the XBridge  intellectual  property upon
which our products are based. Prior to entering into the agreement governing the
merger,  (a) Ms. Cynthia Garr, the Company's  Executive Vice President,  interim
Chief Financial Officer and a director, was also the President and a director of
XBridge,  (b), Mr. Gregory Royal, the Company's Chief  Technology  Officer and a
director,  was also a Vice  President  and a director of XBridge,  (c) Mr. Derek
Downs the Company's  acting Chief Executive  Officer and a director,  was also a
consultant to Xbridge.

         On May 31,  2004,  the  Company  received  a loan  from an  officer  of
$55,755.  The note carries an interest rate of 8% and was due December 31, 2005.
At March 31, 2007,  the total amount of principal  and interest due on this note
was $39,609.

         On March 31,  2006,  the  Company  received  a loan from an  officer of
$6,400.  The note carries an interest  rate of 8% and is due March 31, 2007.  At
March 31, 2007,  the total amount of principal and interest due on this note was
$0.

         On June 30,  2006,  the  Company  received  a loan from an  officer  of
$16,434.  Currently,  this  note  is  considered  short  term  and  has no  loan
provisions. At March 31, 2007, the balance of the loan was $0.

         In July 2003,  XBridge  Software,  Inc. received loans totaling $33,000
from shareholders.  The loans were due on demand and carried an interest rate of
8% per annum.  The Company  acquired  these loans as part of the  acquisition of
XBridge  Software in May 2005. At March 31, 2007,  total  principal and interest
due on these loans was $0.

         Pursuant to an employment  agreement dated January 1, 2005, the Company
agreed to pay $125,000  per year to Derek Downs,  an officer and director of the
Company.





                                     F - 19
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 10 - RELATED PARTY TRANSACTIONS (continued)

         Pursuant to an employment  agreement dated October 1, 2004, the Company
agreed to pay $130,000 per year to Gregory Royal, an officer and director of the
Company.

NOTE 11 - ACQUISITIONS

         On May 5,  2003,  a License  Agreement  was  entered  into  principally
between Corvero Networks and XBridge Software, although CNH Holdings Company was
party to certain provisions. The License Agreement resulted in XBridge licensing
to Corvero all of  XBridge's  right,  title and  interest  in, and to a software
program (and concomitant hardware platforms) which had been developed by XBridge
and which were,  collectively known as the "XBridge Technology." This technology
principally allows for the development,  implementation and commercialization of
XML  integration  solutions  in the EBI and IP Telephony  markets.  CNH Holdings
Company subsequently issued 2,000,000 "restricted" common shares of its stock to
XBridge as a licensing fee.

         On August 31, 2004,  CNH  Holdings  Company  absorbed its  wholly-owned
subsidiary Corvero Networks,  Inc., and began operating as Cistera Networks.  As
of that date,  all Corvero  products  adopted the Cistera name. All of Corvero's
rights under the License Agreement dated May 5, 2003 passed to Cistera Networks,
Inc.

         On May 27,  2005,  the Company  issued  2,000,000  new shares of common
stock to acquire the assets and liabilities of XBridge Software, Inc. The shares
were valued at the market price on the effective date of the acquisition,  which
was $2.65 per share.  The Company  acquired  net assets  valued at $782,245  and
intellectual  property  valued at  $2,717,755.  Goodwill of $2,134,821  was also
acquired and subsequently expensed.

NOTE 12 - CONVERTIBLE DEBT

         Effective  December 13, 2004,  the Company issued and sold an aggregate
of $1,146,000 in principal  amount of Senior  Unsecured  Convertible  Promissory
Notes (the "notes"),  and issued  warrants to purchase  1,146,000  shares of our
common stock, par value $0.001 per share (the "warrants").  Of the $1,146,000 in
notes,  $1,004,000  in  principal  amount of notes  were  issued  for cash,  and
$142,000  in  principal  amount  of notes  were  issued in  connection  with the
cancellation  of an equal amount of the Company's  outstanding  obligations.  At
December  31,  2005,  a number of note  holders  opted to convert  their debt as
provided in their note agreements. The total number of shares issued due to this
conversion was 946,392. The amount of principal  represented by these shares was
$859,000.  The  amount of  accrued  interest  represented  by these  shares  was
$87,392.  At March 31, 2006,  three note holders  opted to convert their debt as
provided in their note agreements. The total number of shares issued due to this
conversion was 67,785.  The amount of principal  represented by these shares was
$57,000. The amount of accrued interest represented by these



                                     F - 20
<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 12 - CONVERTIBLE DEBT (continued)

shares was $10,785.  These notes converted at $1.00 per share.  The total amount
of principal and interest due at December 13, 2006 was  $196,088.  At August 31,
2006, one note holder who had previously  converted most of his outstanding debt
opted to convert the outstanding  balance. The total number of shares issued due
to this conversion was 4,034. The remaining  amount of principal  represented by
these  shares was $1,000.  The amount of interest  earned on his  original  note
represented  by these shares was $3,034.  At December 13, 2006,  one note holder
opted to convert their outstanding  balance.  There were 17,931 shares issued at
$1.00 per shares to convert principal of $15,000 and accrued interest of $2,931.
At December  13,  2006,  two note  holders  opted to convert  their  outstanding
balance to the second private placement. The total amount converted was $56,071.
At March 31, 2007,  there was $144,000 of principal  and $22,138 of interest due
on these notes.

         The  notes  bear  interest  at the  rate  of 8% per  annum,  compounded
quarterly on each March 31, June 30, September 30 and December 31 that the notes
are outstanding (each, an interest compounding date). The outstanding  principal
on the notes and all accrued  interest  become due and payable on the earlier of
(a)  December  9,  2006,  or (b) the date on which a change  in  control  of the
Company occurs.

         The  outstanding  principal  and  accrued  interest  on the  notes  are
convertible into shares of common stock at a conversion rate equal to the lesser
of (a) $1.30 per share,  or (b) a 25% discount to the average  closing bid price
of the  Company's  common  stock for the five  days  including  and  immediately
preceding  the interest  compounding  date,  provided that in no event shall the
conversion  price  per  share be less than  $1.00  per  share.  The notes may be
converted, in whole or in part, at the option of the note holder on any interest
compounding date occurring after the effective date of a registration  statement
covering  the resale of shares of common stock to be issued upon  conversion  of
the notes.

         In  addition,  if the  Company  subsequently  issues  or sells  any new
securities  convertible,  exercisable or exchangeable  into shares of our common
stock  ("convertible  securities")  in a private  transaction and receives gross
proceeds of at least $500,000,  the notes may be converted,  in whole or in part
at the option of the noteholders, into the convertible securities, upon the same
terms and conditions governing the issuance of the convertible securities in the
private  transaction.  The right of the note  holders to  convert  the note into
convertible  securities does not apply to any convertible  securities  issued by
the Company (a) in connection with a merger, acquisition or consolidation of the
Company,   (b)  in  connection  with  strategic  license  agreements  and  other
partnering  arrangements  so long as such  issuances  are not for the purpose of
raising  capital,  (c) in  connection  with bona fide firm  underwritten  public
offerings of its securities,  (d) pursuant to the Company's  incentive and stock
option  plans,  (e) as a result  of the  exercise  of  options  or  warrants  or
conversion of convertible  notes or preferred stock which were granted or issued
as of December 13, 2004.

         The Company may prepay the notes in whole or in part,  upon thirty days
prior written notice to note holders;  provided that partial  prepayments may be
made only in increments of $10,000 and, provided further,  that the note holders
may  convert  the amount of the  proposed  prepayment  into shares of our common
stock,  regardless  of the  period  of  time  that  the  notes  have  then  been
outstanding.



                                     F - 21
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 12 - CONVERTIBLE DEBT (continued)

         The  warrants  have a term of five  years  and  are  exercisable  at an
exercise  price  of  $1.30  per  share.  Subject  to an  effective  registration
statement  covering  the  resale of the  shares of common  stock  issuable  upon
exercise of the  Warrants,  the  Company  may,  upon  thirty days prior  written
notice,  redeem the  warrants for $0.10 per share,  in whole or in part,  if our
common  stock  closes with a bid price of at least $3.50 for any ten (10) out of
fifteen  (15)  consecutive  trading  days.  Because  at that  price  it would be
profitable for the warrant  holders to exercise  their  warrants  rather than to
allow the  redemption  to  proceed,  we assume  they would  choose to  exercise.
However,  there is no assurance  that our stock price will rise to the $3.50 per
share redemption trigger price, or that all of the warrants will be exercised.

         The Company is currently seeking to issue and sell a second offering of
Senior Unsecured Convertible  Promissory Notes. This second offering will mirror
the terms of the previous Private Placement Funding as stated above,  except for
the  conversion of stock and interest is set at a fixed rate of $1.00 per share.
The notes and  accrued  interest  are due and payable two years from the date of
the note. As of March 31, 2007, $1,900,606 had been received by the Company from
this offering.

         In April 2007, the Company received an additional  $1,225,000 from this
offering.

NOTE 13 - STOCK OPTIONS

         During the year ended  March 31,  2005,  the Company  issued  1,815,000
stock  options to  employees,  contractors  and other  service  providers to the
Company.  At March 31, 2006,  no  compensation  expense had been recorded as the
exercise price of the options was equal or greater than the fair market value of
the stock. As of December 31, 2006, 1,015,000 of the total stock options are not
exercisable, as they are not yet approved or registered.

         The following table sets forth the options  outstanding as of March 31,
2006:

<TABLE>
<CAPTION>
                                                                        Weighted
                                                     Option /            Average            Weighted
                                                     Warrants           Exercise             Average
                                                      Shares              Price            Fair Value
                                                 -----------------   ----------------    ----------------
<S>                                              <C>                 <C>                 <C>
Options outstanding, March 31, 2005                      1,815,000        $      1.29               $1.43
Options outstanding from Xbridge merger                    529,945               0.23                0.34
Warrants outstanding from Xbridge merger                   312,439               0.46                0.46
Warrants outstanding from Private Placement              1,146,000               1.30                1.30
Outstanding warrants from early exercise of
     Private Placement Warrants                            155,800               1.30                1.30
Granted, Exercise price more than fair value                     -                  -                   -
Granted, Exercise price less than fair value                     -                  -                   -
Expired                                                          -                  -
Exercised                                                 (411,600)              1.47                   -
                                                 -----------------
Options and warrants outstanding, March 31, 2006         3,547,584         $     1.04
                                                 =================   ================
</TABLE>


                                     F - 22
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)

NOTE 13 - STOCK OPTIONS (continued)

         The following table sets forth the options  outstanding as of March 31,
2007:

<TABLE>
<CAPTION>
                                                                         Weighted
                                                      Option /            Average            Weighted
                                                      Warrants           Exercise             Average
                                                       Shares              Price            Fair Value
                                                  -----------------   ----------------    ----------------
<S>                                               <C>                 <C>                 <C>
Options and warrants outstanding, March 31, 2006          3,547,584           $1.29               $1.43
Warrants outstanding from Private Placement               1,842,690            1.00                1.00
Granted, Exercise price more than fair value                      -               -                   -
Granted, Exercise price less than fair value                      -               -                   -
Expired                                                     (51,814)              -
Exercised                                                  (192,831)           0.18                   -
                                                  -----------------
Options and warrants outstanding, March 31, 2007          5,145,629           $1.04
                                                  =================   ================
</TABLE>

         Exercise  prices for optioned  shares  outstanding as of March 31, 2007
ranged  from  $0.23 to $2.00.  A summary of these  options by range of  exercise
prices is shown as follows:

<TABLE>
<CAPTION>
                                                                                  Weighted-           Weighted-
                                           Weighted-         Shares/               Average             Average
                          Shares /          Average          Warrants          Exercise Price        Contractual
     Exercise             Warrants         Exercise         Currently             Currently           Remaining
      Price             Outstanding          Price         Exercisable           Exercisable             Life
-------------------   -----------------  --------------  -----------------   --------------------  -----------------
<S>                   <C>                <C>             <C>                 <C>                   <C>
$             1.10             635,000   $        1.10                  -    $              1.10       7 years
              1.30             380,000            1.30                  -                   1.30       4 years
              2.00             700,000            2.00            700,000                   2.00       10 years
               .23              81,352             .23             81,352                    .23       3 years
               .46             326,565             .46            326,565                    .46       3 years
               .46             189,822             .46            189,822                    .46       3 years
              1.30             990,200            1.30            990,200                   1.30       5 years
              1.00           1,842,690            1.00          1,842,690                   1.00       5 years
</TABLE>

         In September 2005, although the stock price had not achieved the levels
necessary  to allow the Company to redeem the  warrants,  warrant  holders  were
offered an  incentive  of one-half  warrant  for each  warrant  exercised.  This
incentive  expired on  December  31,  2005.  The  Company  raised an  additional
$405,080  from the  exercise of 311,600  warrants and issued  155,800  incentive
warrants.




                                     F - 23
<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 14 - CONTINGENCIES

         In 2005,  the Company was made a  third-party  defendant to  litigation
that was originally  filed on June 5, 2001 in Longview,  Texas,  styled J. David
Bolton, Joanna Bolton, Whitney Gaidry,  Virginia Ille and Kenneth Ille vs. Larry
V. Tate,  Gerald Pybas,  E. Robert Barbee,  H. Paul Estey,  and Robert A. Baker;
Case No. 2001-1196-A; 188th District Court, Gregg County, Texas. Plaintiffs sued
Defendants  and the  Company  for breach of  contract  and sought  approximately
$975,000 in damages.  The Defendants had sued the Company for indemnification of
Plaintiffs' claims.

         On February 7, 2006,  the parties  reached an  agreement to settle this
case at  mediation  and signed a binding  agreement  which  settles the disputes
between them. As part of that  settlement,  the Company agreed to deliver 68,000
unrestricted  stock  certificates  of the  Company's  stock to  Plaintiffs.  The
Plaintiffs held 60,000 shares of restricted stock prior to the settlement. Those
60,000 shares were cancelled and reissued as unrestricted shares. The Plaintiffs
received  8,000 newly issued shares.  The  settlement  should not be taken as an
admission of liability and the Company expressly denies any such liability.

         The  Company,  and  certain  of its  current  and former  officers  and
directors are defendants in litigation pending in Dallas,  Texas, styled KINGDON
R. HUGHES VS. GREGORY T. ROYAL,  CYNTHIA A. GARR, JAMES T. MILLER,  JR., CHARLES
STIDHAM, CNH HOLDINGS COMPANY D/B/A CISTERA NETWORKS AND XBRIDGE SOFTWARE, INC.;
Cause No.  DV05-0600-G;  G-134th  District  Court,  Dallas  County,  Texas.  The
plaintiff has alleged a number of complaints  against the defendants,  including
breach of fiduciary duty,  misappropriation of corporate  opportunities,  fraud,
fraudulent inducement,  breach of contract, tortuous interference with contract,
fraudulent transfer,  and shareholder  oppression arising in connection with the
license  agreement  between  the  Company  and  XBridge  in  May  2003  and  the
acquisition  of XBridge by the Company in May 2005. The parties held a mediation
conference in April 2006 and have come to an  understanding  with respect to the
principle elements of a potential settlement. We are currently in the process of
negotiating definitive settlement agreements.

         The  Company is a defendant  in  litigation  pending in Dallas,  Texas,
styled  Collaborative  Search  Partners,  Inc. vs. Xbridge  Software,  Inc., and
Cistera Networks, Inc., Cause No. 07-03189;J191st District Court, Dallas County,
Texas. The plaintiff has alleged a number of complaints  against the defendants,
including breach of contract,  promissory estoppel,  and quantum meruitt arising
in connection with two separate  employment search agreements.  In May 2007, the
parties came to an  understanding  with respect to the  principle  elements of a
potential  settlement,  and a Rule 11 letter  agreement  has been filed with the
Court,  however,  a definitive  settlement  agreement is still being  negotiated
among the  parties.  The Rule 11 letter  agreement  provides  for payment by the
defendants of $44,000 to the plaintiff  over a period of six months,  and in the
event the  defendants  fail to make such  payments,  a default  judgment  may be
rendered against the defendants.




                                     F - 24
<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                   CISTERA NETWORKS, INC.

Dated: August 2, 2007              By  /S/     Derek P. Downs
                                    -----------------------------------
                                                Derek P. Downs
                                                President
                                                (Principal Executive Officer)

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 2nd day of August 2007.

Signatures                            Title

/S/     Derek P. Downs                President
------------------------------
Derek P. Downs                        (Principal Executive Officer)


/S/     Cynthia A. Garr               Interim C.F.O., Executive Vice- President
------------------------------
Cynthia A. Garr                       of Corporate Development, and Director
                                      (Principal Financial Officer)


/S/     Gregory T. Royal              Executive Vice-President/Chief Technology
------------------------------
Gregory T. Royal                      Officer and Director



                                       33