U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


(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

                                       OR

[  ]     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)


<PAGE>

         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 is not 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. [ ]

         At March 31, 2007,  the aggregate  market value of all shares of voting
stock held by non-affiliates was approximately  $8,748,254.  In determining this
figure  Registrant  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  Registrant's
common stock,  as of March 31, 2007,  was as follows:  8,292,022  common shares,
$.001 par value per share.

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

At March  31,  2007 the  number  of  shares  of  common  stock  outstanding  was
8,292,022.

Transitional Small Business Disclosure Format (check one): Yes _; No X
                                                                     -


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














<PAGE>
                                TABLE OF CONTENTS


Item Number and Caption                                                     Page
                                     PART I

Item 1.     Description of Business                                           1

Item 2.     Description of Property                                           2

Item 3.     Legal Proceedings                                                 2

Item 4.     Submission of Matters to a Vote of Security Holders               3


                                     PART II

Item 5.     Market for Common Equity and Related Stockholder Matters          3

Item 6.     Management's Discussion and Analysis or Plan of Operations        4

Item 7.      Financial Statements                                             10

Item 8.      Changes in and Disagreements With Accountants on Accounting and
                 Financial Disclosure                                         10

Item 8A.    Controls and Procedures                                           10

                                    PART III

Item 9.     Directors, Executive Officers, Promoters and Control Persons;
                Compliance with Section 16(a) of the Exchange Act             10

Item 10.   Executive Compensation                                             13

Item 11.   Security Ownership of Certain Beneficial Owners and Management     14

Item 12.   Certain Relationships and Related Transactions                     15

Item 13.   Exhibits and Reports on Form 8-K                                   16

Item 14.   Principal Accountant Fees & Services                               17



<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  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.

         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. The acquisition was completed through a merger of XBridge
with a wholly owned  subsidiary  of CNH  Holdings  Company  (CNH).  Prior to the
merger,  XBridge held 2,150,000  shares of CNH stock which have been  cancelled.
Under the terms of the merger  agreement,  CNH then issued  4,150,000  shares of
stock in exchange for the outstanding shares of XBridge Software, resulting in a
net  issuance  of  2,000,000  shares of CNH  stock.  As a result of the  merger,
$1,860,000 in unpaid service fees related to software development work performed
by XBridge is inter-company debt and will be eliminated upon consolidation.  The
officers and certain of the directors of XBridge are also officers and directors
of CNH. In connection with the merger,  CNH issued an additional  169,847 shares
to these  individuals in exchange for the cancellation of $482,364.31 of XBridge
debt held by these individuals. The merger was completed on May 27, 2005.




                                       1
<PAGE>

                         ITEM 2: DESCRIPTION OF PROPERTY

         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.


                            ITEM 3: LEGAL PROCEEDINGS

         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 60,000
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 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,  however, no definitive settlement
agreement  has been  entered  into  among  the  parties.  The  likelihood  of an
unfavorable  outcome or the amount or range of any possible  loss to the Company
is not determinable.

         The Company denies these  allegations and is vigorously  defending this
litigation.

         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.  The parties have


                                       2
<PAGE>

come 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.

                                     PART II

                      ITEM 5: MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS

         The 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                                   $3.20               $2.42
September 30, 2005                              $2.65               $1.80
December 31, 2005                               $2.12               $1.25
March 31, 2006                                  $1.35               $1.15

June 30, 2006                                   $1.32               $1.13
September 30, 2006                              $2.15               $.65
December 31, 2006                               $.80                $.64
March 31, 2007                                  $1.55               $1.26


          The number of shareholders of record of the Company's  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  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.



                                       3
<PAGE>

         On August 1, 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 were $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 stock in
connection with the exercise of options issued in the merger of the Company with
Xbridge Software, Inc. 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  $2,391.  These  notes were
converted at $1.00 per share.

         The stock was not  issued  through  an  underwriter  and was not issued
through a public  offer.  These sales are exempt under  Regulation D Rule 506 of
the Securities Act of 1933.

                       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  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

         Our results for fiscal 2007, ending March 31, 2007, reflected increases
in gross  revenues and a reduction in  operating  losses from the  corresponding
periods of fiscal 2006, as we have  continued to see increased  growth in demand
for the Company's solutions.  Fiscal 2007 was a building year for the Company as
additional  investment was made to further  enrich our product  offerings and to
continue to ready our indirect  channel  partners  for our expected  increase in
market demand.

REVENUE

         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 revenues, however, have been insufficient to support operations and
we sustained  net losses  throughout  fiscal year 2007.  We augmented  revenues,


                                       4
<PAGE>

which were  insufficient  to support  operations,  with financing  obtained in a
second  private  placement,  initiated in the fourth fiscal  quarter 2007. As of
March 31, 2007, $1,900,606 had been received.

         We have incurred net losses since we began  operations in May 2003. Our
net loss was  approximately  $1,174,338 in our fiscal year ended March 31, 2007,
and  approximately  $4,572,094  for the fiscal year ended March 31, 2006.  As of
March 31, 2007, our accumulated deficit was $9,088,375.

Operating Margin

         For fiscal 2007, the Company delivered a gross margin percentage of 85%
compared to 79% for fiscal 2006. Operating expenses decreased during fiscal 2007
compared to fiscal 2006. However,  the Company was able to increased  investment
in headcount and capital assets.


Other Financial Highlights

         During  fiscal  2007,  the  Company  issued and sold  Senior  Unsecured
Convertible  Promissory Notes. As of March 31, 2007,  $1,900,606 was received by
the Company in this funding  round.  In  addition,  a factoring  agreement  with
Allied Capital  Partners,  L.P. was put into place which allowed for a revolving
line of credit tied to accounts receivable of up to $750,000.

Focus Areas

         We  have  continued  to  focus  particular  attention  on  growing  our
footprint  in the  Cisco  Unified  Communications  channel  and  customer  base;
strengthening  our  product  offerings  in the areas of  quality  assurance  and
compliance,  event alerting and  notification  and unified  communications;  and
increasing  our  visibility  in  specific  industry  vertical  markets  such  as
financial  services,  education,  government,  healthcare and retail; as well as
growing and expanding our support for other IP communications platform providers
like Nortel and Sylantro.

         In  addition  to these  areas,  we expect to  expand  focus to  include
solutions for service  providers  offering  hosted IP  communications  services,
opening up the potential for recurring revenue models for the company.

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;  (3)  support  and  maintenance,  which is
comprised of tiered technical  support levels.  Product  revenues  accounted for
more than 73.6  percent of total  revenues  during  fiscal  year 2007,  and 75.6
percent  of total  revenues  during  fiscal  year  2006.  Professional  services
revenues  accounted for 11.6 percent of total  revenues  during fiscal 2007, and
12.5 percent of total revenues during fiscal year 2006. Revenues for our support


                                       5
<PAGE>

and  maintenance  services made up 14.4 percent of total revenues  during fiscal
2007, and 11.9 percent of total revenues during fiscal year 2006.

         Product revenues are recognized once the software and hardware solution
has been shipped  according to the customer order. The order is typically placed
by a  value-added  reseller  (VAR) on behalf of the  end-customer.  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 12 months,  although terms range from 24 to 60
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 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 on a time and materials basis.
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
days of invoice.

COST OF REVENUES AND OPERATING EXPENSES

COST OF REVENUES

         Cost of 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.

         As our customer base has grown and continues to grow, we have continued
and will  continue  to invest  additional  resources  in  building  the  channel
infrastructure to enable our Value Added Resellers (VARs) and system integrators
(SIs) to provide the professional  services associated with our product standard
convergence solutions installation, configuration and training. 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.






                                       6
<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  custom  application  development  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 to support emerging markets and develop new technologies.

MARKETING AND SALES

         Marketing and sales expenses are our largest cost,  accounting for 16.4
percent of total  revenues  for fiscal  2007,  and 33.7 percent for fiscal 2006.
Marketing and sales expenses consist  primarily of salaries and related expenses
for our sales and marketing staff,  payments to VARs, marketing programs,  which
include advertising,  events,  corporate  communications,  public relations, and
other brand building and product  marketing  expenses,  and allocated  overhead.
Marketing  costs,  particularly  events,  accounted  for 50.1  percent  of these
expenses for fiscal 2007 and 28.6 percent for fiscal 2006.

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

CRITICAL ACCOUNTING POLICIES

         Our financial  statements  are prepared in accordance  with  accounting
principles  generally  accepted in the United States.  The  preparation of these
financial  statements  requires us to make estimates and assumptions that affect
the reported amounts of assets,  liabilities,  revenues, costs and expenses, and


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<PAGE>

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 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 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.

         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 defnied 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).

         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.  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.



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<PAGE>

         For the  fiscal  year  2006 and  2007,  the  Company  did not pay sales
commissions  except in select agent  arrangements.  The Company intends to begin
paying sales commissions during the upcoming fiscal period.

RESULTS OF OPERATIONS

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

OVERVIEW  OF RESULTS OF  OPERATIONS  FOR FISCAL  2007 ENDED  MARCH 31,  2007 AND
FISCAL 2006 ENDED MARCH 31, 2006

         Revenues  during  the  fiscal  year  2007 and  fiscal  year  2006  were
$2,046,319 and $1,587,900 respectively.

         Our  gross  profit  during  the  fiscal  year 2007 was  $1,729,671,  or
84.5percent  of  revenues,  and our  operating  loss  for the  same  period  was
$1,174,338.   Our  operating  loss  less  noncash  items  of  depreciation   and
amortization  would have been  $826,446.  Gross  profit for fiscal year 2006 was
$1,251,351,  or 78.8 percent of revenues,  and the  operating  loss for the same
period was $4,572,094. Our operating loss less noncash items of depreciation and
amortization and write-off of goodwill would have been $2,125,675.

         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 manage the needs of the growing customer base 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 of $314,178,  as compared to $198,319 at March 31, 2006, and
deferred  revenue of $313,055  for  unearned  warranty  revenue,  as compared to
$229,159 at March 31, 2006. Deferred revenue for projects billed but uninstalled
at March 31, 2007 was $123,611.

         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 receiveable with a credit line of up to $750,000.

         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


                                       9
<PAGE>

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.

                          ITEM 7: FINANCIAL STATEMENTS

       The  financial  statements  of the  Company  and  supplementary  data are
included beginning  immediately preceding the signature page to this report. See
Item 13 for a list of the financial statements and financial statement schedules
included.

              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, including the Company's President, 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  President
concluded that, as of the end of the period, the Company's  disclosure  controls
and  procedures  were effective in timely  alerting him 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

       Based on his  evaluation as of March 31, 2007,  there were no significant
changes 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.

                                    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:



                                       10
<PAGE>

DIRECTOR'S   NAME (1)      AGE    POSITION WITH COMPANY*

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

Cynthia A. Garr             46    Interim Chief Financial Officer, Executive
                                  Vice-President of Corporate Development and
                                  Director

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

* No current director has any arrangement or  understanding  whereby they are or
will be selected as a director or nominee.

       The  executive  officers  hold office  until the next  annual  meeting of
shareholders  and until their  respective  successors have been duly elected and
qualified.  The  officers  are elected by the Board of  Directors  at its annual
meeting 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 of executive officers, all of whom serve on an at will basis.

         The Board of Directors of Cistera Network,  Inc.  currently consists of
three  individuals,  Derek P. Downs,  Cynthia A. Garr and Gregory T. Royal.  The
Company does not have any standing audit, nominating or compensation committees,
or any committees performing similar functions. The board will meet 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.

The executive team for Cistera Networks, Inc.:

DEREK  DOWNS - PRESIDENT  - has served as  President  since May 31, 2004 and was
Interim CEO for the Company  since April 2006.  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
University  of Eastern New Mexico in 1990 with a BBA degree in  Marketing  and a
BBA degree in Business Administration.

GREGORY T. ROYAL,  EXECUTIVE VICE  PRESIDENT,  CHIEF  TECHNOLOGY  OFFICER -- Mr.
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.  Greg is one of the
original  founders of Cistera  Networks(TM) and the inventor of the X-Switch(TM)
Technology.  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).  Greg has system  certification with Compaq,  IBM,


                                       11
<PAGE>

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.

CYNTHIA  A.  GARR,  INTERIM  CFO  AND  EXECUTIVE  VICE  PRESIDENT  OF  CORPORATE
DEVELOPMENT  -Ms 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  Brookhaven  College in 1985 with a
degree in Business Management.

A.KATRINA  ROCHE,  CHIEF  EXECUTIVE  OFFICER  - Ms.  Roche  served  as our Chief
Executive  Officer and a member of the Board of  Directors  from June of 2005 to
April of 2006.  Ms.  Roche  continues  to  serve  as a  member  of the  Board of
Directors.

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.

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
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."








                                       12
<PAGE>

                         ITEM 10: EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

         The following  table set forth,  for the last three fiscal  years,  the
annual  and  long  term  compensation  earned  by,  awarded  to,  or paid to the
individuals who were chief executive officer and chief operations officer at any
time during the last fiscal year.

<TABLE>
<CAPTION>
           (a)               (b)         (c)              (d)       (e)           (f)          (g)             (h)           (i)
                                                                   Other                   Securities
                            Year                                   Annual      Restricted  Underlying                     All Other
                            Ended                                 Compen-        Stock      Options/           LTIP        Compen-
        Name and            March      Salary            Bonus     sation       Award(s)      SAR's          Payouts       sation
   Principal Position        31        ($)(1)             ($)       ($)           ($)         (no.)            ($)           ($)

<S>                         <C>          <C>           <C>        <C>          <C>         <C>               <C>          <C>
KATRINA A. ROCHE            2006         $100,000              -         -              -            -               -             -
   Former CEO
DEREK P. DOWNS              2007         $127,500              -         -              -            -               -             -
   President/Director       2006         $125,000              -         -              -            -               -             -
   Interim CEO
                            2005          $31,251              -         -              -            -               -             -
CYNTHIA A. GARR             2007          $10,417   -          -         -              -            -               -             -
   Interim CFO/             2006         $125,000              -         -              -            -               -             -
   Director
                            2005          $31,251              -         -              -            -               -             -
GREG T. ROYAL               2007         $130,500              -         -              -            -               -             -
   Executive V.P.          2006          $130,000              -         -              -            -               -             -
                           2005           $31,251              -         -              -            -               -             -
</TABLE>

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

         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.

         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.

         Pursuant to an  employment  agreement  dated June 6, 2005,  the Company
agreed to pay $150,000 per year to A. Katrina Roche,  an officer and director of
the Company. Upon her resignation in April 2006, that agreement was terminated.





                                       13
<PAGE>

                ITEM 11: SECURITY OWNERSHIP OF BENEFICIAL OWNERS
                                 AND MANAGEMENT

PRINCIPAL SHAREHOLDERS

         The table  below sets forth  information  as to each  person  owning of
record (or who was known by the Company to own beneficially) more than 5% of the
outstanding common stock at March 31, 2007. This table also includes information
as to the  ownership of the common shares by each of the directors and executive
officers of the Company, as well as by the directors and executive officers as a
group.  Except as otherwise  indicated,  all shares are owned directly,  and the
persons named in the table have sole voting and investment power with respect to
shares shown as beneficially owned by them.

NAME AND ADDRESS        NATURE OF                         SHARES
OF BENEFICIAL OWNERS    OWNERSHIP                         OWNED          PERCENT

Common                  A. Katrina Roche(1)                    0

Common                  Derek P. Downs(1)                125,199(2)       1.50%

Common                  Cynthia A. Garr(1)           1,330,191((2))       16.0%

Common                  Gregory T.  Royal(1)         1,396,159((2))       16.8%
Common                  Kingdon Hughes               1,498,722((3))       18.1%

Common                  Artis Capital Management         560,250(4)        6.8%

Common                  Charles Stidham                  300,000(5)       14.4%
                        100 Allentown Parkway #110
                        Allen, Texas 75002

Common                  Mark S. Pierce                   556,895(6)        9.2%
                        5645 Rico Drive
                        Boca Raton, FL 33487

Common                  E-Biz Trans, Inc.                220,000(6)        2.7%
                        5645 Rico Drive
                        Boca Raton, FL 33487

Common                  S and B Resources                220,000(5)        2.7%
                        789 NE 39th St.
                        Boca Raton, FL 33431

Common                  South Beach Live, Inc.           356,000(5)        4.4%
                        100 Allentown Parkway #110
                        Allen, Texas 75002

Common                  Atlantic Asset Management        326,000(5)        4.0%
                        789 NE 39th St.
                        Boca Raton, FL 33431

All Officers and Directors as a Group                   2,851,549         34.4%



                                       14
<PAGE>

(1)      The business  address for each of Ms. Roche and Garr and Messrs.  Downs
         and Royal is 17304 Preston Road, Suite 975, Dallas, Texas 75252.

(2)      Includes  options  resulting from the  conversion of XBridge  Software,
         Inc. options as set forth in Executive  Compensation - Option Grants in
         last  fiscal  year.  The table does not  include  options  which may be
         granted  under the Cistera  Networks,  Inc. Long Term  Incentive  Stock
         Option Plan, as this plan has not yet been approved by shareholders.

(3)      The business  address for Mr.  Hughes is 16475  Dallas Pkwy,  Suite 440
         Addison, TX 75001. Includes 222,951 shares subject to warrants that are
         presently exercisable.

(4)      The business address for Artis Capital  Management is One Market Plaza,
         Spear Street Tower, Suite 1700, San Francisco, CA 94105.

(5)      Consists  of  300,000  shares  subject to  options  that are  presently
         exercisable. Mr. Stidham holds power of attorney to vote shares held by
         S and B Resources, South Beach Live, Inc. and Atlantic Asset Management
         and as such may be deemed to be the beneficial  owner of shares held by
         such entities.

(6)      Consists  of  400,000  shares  subject to  options  that are  presently
         exercisable.  Mr.  Pierce is an affiliate  of E-Biz Trans,  Inc. and as
         such,  may be deemed to have shared voting and  dispositive  power with
         respect to the 220,000 shares of our common stock held by E-Biz Trans.

             ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On May 5, 2003, Corvero Networks,  Inc. was formed by CNH Holdings as a
wholly-owned  subsidiary to acquire the use of certain  technology  known as the
XBridge Technology.  The acquisition was accomplished by entering into a license
agreement  with XBridge  Software,  Inc.  Various  officers and directors of CNH
Holdings own a controlling interest in XBridge Software, Inc.

         The license  agreement  resulted in XBridge licensing to Corvero all of
XBridge's right,  title, and interest in and to a software program.  The Company
issued  2,000,000  "restricted"  common  shares  of its  stock to  XBridge  as a
licensing  fee and  Corvero  was  obligated  to pay  royalties  based upon gross
revenue.

         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. The acquisition was completed through a merger of XBridge
with a wholly owned  subsidiary  of CNH  Holdings  Company  (CNH).  Prior to the
merger,  XBridge held  2,150,000  shares of CNH stock that have been  cancelled.
Under the terms of the merger  agreement,  CNH then issued  4,150,000  shares of


                                       15
<PAGE>

stock in exchange for the outstanding shares of XBridge Software, resulting in a
net  issuance  of  2,000,000  shares of CNH  stock.  As a result of the  merger,
$1,860,000 in unpaid service fees related to software development work performed
by XBridge is inter-company debt and will be eliminated upon consolidation.  The
officers and certain of the directors of XBridge are also officers and directors
of CNH. In connection with the merger,  CNH issued an additional  169,847 shares
to these  individuals in exchange for the cancellation of $482,364.31 of XBridge
debt held by these individuals.

         On May 31,  2004,  the  Company  received  a loan  from an  officer  of
$55,755.  The note carries an interest  rate of 8% and is due December 31, 2005.
At March 31, 2007,  the total amount of principal  and interest due on this note
was $39,608.

         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 are due on demand and carry on 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.

                   ITEM 13: EXHIBITS, AND REPORTS ON FORM 8-K

      (a) The following documents are filed as part of this report.

1. FINANCIAL STATEMENTS 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

2.     EXHIBITS

         The  following  exh ibits 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.


                                       16
<PAGE>

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.


     (b)          REPORTS FILED ON FORM 8-K

         On  February 8, 2007,  the  Company  filed on Form 8-K under Item 7.01,
Regulation FD Disclosure.

         On April 12, 2007, the Company filed on Form 8-K under Item 3.02, Sales
of Unregistered Securities.

                  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:

            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

         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.

         The Audit Committee pre-approved 100% of the Company's 2003 audit fees,
audit-related  fees,  tax fees,  and all other fees to the  extent the  services
occurred  after May 6, 2003,  the effective  date of the Securities and Exchange
Commission's final pre-approval rules.





                                       17


<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>









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.

                                            Respectfully submitted,


                                            /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)

<TABLE>
<CAPTION>
                                                                       March 31,
                                                               2007                2006
                                                         -----------------  ------------------
Current Liabilities:
<S>                                                      <C>                <C>
   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
                                                         =================  ==================
</TABLE>






   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


<TABLE>
<CAPTION>
                                                               For the years ended
                                                                    March 31,
                                                             2007                2006
                                                      ------------------  ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S>                                                   <C>                 <C>
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
                                                      ==================  ==================
</TABLE>





                                      F - 7

<PAGE>



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


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

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 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)
hardware/software   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).  Hardware/software sales revenues are recognized when a valid
purchase  order has been  received from a client and the  hardware/software  has
been  shipped and  installed at the client  site.  Hardware/software  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:

<TABLE>
<CAPTION>
                                                       March 31,
           Intangible Asset                     2007               2006            Amortization Period
---------------------------------------  ------------------  -----------------   ------------------------
<S>                                      <C>                 <C>                         <C>
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
                                         ==================  =================
</TABLE>


         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
hardware/software  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. No tax benefit has been reported in
the financial statements, because the Company believes there is a 50% or greater
chance the  carry-forwards  will expire unused.  Accordingly,  the potential tax
benefits of the loss  carry-forwards are offset by a valuation  allowance of the
same amount.


                                         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:

<TABLE>
<CAPTION>
                                                             March 31,
                                                      2007                2006
<S>                                            <C>                 <C>
Provision (Benefit) at US Statutory Rate       $         176,250   $         685,814
Increase (Decrease) in Valuation Allowance              (176,250)           (685,814)
                                               $               -   $               -
                                               ==================  ==================
</TABLE>

         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 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 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 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,  however, no definitive settlement
agreement  has been  entered  into  among  the  parties.  The  likelihood  of an
unfavorable  outcome or the amount or range of any possible  loss to the Company
is not determinable.

         The Company denies these  allegations and is vigorously  defending this
litigation.

         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: June 28, 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 28th day of June 2007.

Signatures                              Title

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


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


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


                                      Director
A. Katrina Roche