**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549







**FORM
      10-QSB**




**x
      QUARTERLY REPORT UNDER
      SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**


For
      the
      quarterly period ended March 31, 2006





-OR-





**o
      TRANSITION REPORT UNDER
      SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**


For
      the
      transition period from ________ to ________




**Commission
      file number 000-51433**




**CENTERGISTIC
      SOLUTIONS, INC.**


(Name
      of
      small business issuer as specified in its charter)







**CALIFORNIA**
              
              **95-2873122**(State
                  or other jurisdiction of incorporation or organization)
              
              (IRS
                  Employer identification No.)





**2045
      West Orangewood Avenue, Orange, California 92868-1944**


(Address
      of principal executive offices)




**(714)
      935-9000**


(Issuer’s
      telephone number)









Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the preceding twelve months ( or for such
      shorter period that the issuer was required to file such reports), and (2)
      has
      been subject to such filing requirements for the past 90 days.





Yes o  No
x




**As
      of April** **** **30,
      2006, there were 10,724,312 shares of the issuer’s Common Stock
      outstanding.**




**Traditional
      Small Business Disclosure Format. Yes x** ****  **No
      o**

















CENTERGISTIC
      SOLUTIONS, INC.


QUARTERLY
      REPORT ON FORM 10-QSB


FOR
      THE
      PERIOD ENDED MARCH 31, 2006





TABLE
      OF CONTENTS


**Page**Part
                  I. FINANCIAL INFORMATIONItem
                  1. Financial Statements:Condensed
                  Consolidated Balance Sheet at March 31, 2006 (Unaudited)
              3Condensed
                  Consolidated Statements of Operations and Comprehensive Income
                  (Loss)For
                  the Nine and Three Months Ended March 31, 2006 and 2005
                  (Unaudited)
              5Condensed
                  Consolidated Statements of Cash FlowsFor
                  the Nine Months Ended March 31, 2006 and 2005 (Unaudited)
              6Notes
                  to Unaudited Condensed Consolidated Financial Statements
              8Item
                  2. Management’s Discussion and Analysis of FinancialCondition
                  and Results of Operations
              20Item
                  3. Controls and Procedures
              32Part
                  II. OTHER INFORMATIONItem
                  1. Legal Proceedings
              33Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              33Item
                  3. Defaults Upon Senior Securities
              33Item
                  4. Submission of Matters to a Vote of Security Holders
              33Item
                  5. Other Information
              33Item
                  6. Exhibits
              33SIGNATURES
              34EXHIBIT
                  INDEX
              35







**CENTERGISTIC
      SOLUTIONS, INC.**


**Condensed
      Consolidated Balance Sheet**




March
                  31,2006**ASSETS****Current**Cash
                  and cash equivalents
              
              $
              81,997Trade
                  receivables, less allowance for doubtfulaccounts
                  of $53,250
              
              
              661,796Inventories
              
              
              133,534Prepaid
                  expenses
              
              
              46,351Miscellaneous
                  receivables
              
              
              37,328Total
                  current assets
              
              
              961,006**Property,
                  equipment, and leasehold**improvements,
                  net of accumulated depreciation of $715,896
              
              
              85,734**Capitalized
                  software development costs,**net
                  of accumulated amortization of $1,802,426
              
              
              50,725**Other
                  assets**Deferred
                  offering costs
              
              
              529,854Other
              
              
              23,475Total
                  other assets
              
              
              553,329$
              1,650,794


See
        accompanying notes to consolidated financial statements.
  3




**CENTERGISTIC
        SOLUTIONS, INC.**


**Condensed
      Consolidated Balance Sheet (continued)**


March
                  31,2006**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY (DEFICIT)****Current
                  liabilities**Notes
                  payables - related parties
              
              $
              47,997Notes
                  payables - Line of credit-related party
              
              
              385,000Accounts
                  payable
              
              
              385,006Accrued
                  expenses
              
              
              168,593Deferred
                  income
              
              
              351,918Total
                  liabilities, all current
              
              
              1,338,514**Commitments
                  and contingencies**(Notes
                  4 through 7)**Stockholders’
                  equity (deficit)**Common
                  stock, 80,000,000 shares authorized;10,724,312
                  shares issued and outstanding
              
              
              3,058,510Additional
                  paid-in capital
              
              
              291,462Accumulated
                  deficit
              
              
              (3,003,869
              )Unearned
                  stock compensation
              
              
              (8,065
              )Common
                  stock to be redeemed
              
              
              (25,758
              )Total
                  stockholders’ equity (deficit)
              
              
              312,280Total
                  liabilities and stockholders’equity
                  (deficit)
              
              $
              1,650,794
  See
        accompanying notes to consolidated financial statements.


4




**CENTERGISTIC
        SOLUTIONS, INC.**


**Condensed
      Consolidated Statements of Operations and Comprehensive Income
      (Loss)**




**Nine
                  Months Ended**
              
              **Three
                  Months Ended****March
                  31,**
              
              **March
                  31,****2006**
              
              **2005**
              
              **2006**
              
              **2005****(Unaudited)**
              
              **(Unaudited)****Revenues:**Software
                  and service revenues
              
              $
              2,011,309
              
              $
              2,329,705
              
              
              748,080
              
              
              755,331Professional
                  services
              
              
              69,698
              
              
              16,560
              
              
              38,398
              
              
              -Hardware
                  sales
              
              
              326,016
              
              
              329,921
              
              
              86,605
              
              
              134,915Total
                  revenues
              
              
              2,407,023
              
              
              2,676,186
              
              
              873,083
              
              
              890,246**Cost
                  of revenues:**Software
                  and service costs
              
              
              430,044
              
              
              442,487
              
              
              73,348
              
              
              152,482Professional
                  services
              
              
              16,242
              
              
              4,780
              
              
              16,242
              
              
              -Hardware
                  costs
              
              
              257,045
              
              
              291,901
              
              
              84,258
              
              
              127,992Total
                  cost of revenues
              
              
              703,331
              
              
              739,168
              
              
              173,848
              
              
              280,474Gross
                  profit
              
              
              1,703,692
              
              
              1,937,018
              
              
              699,235
              
              
              609,772**Operating
                  expenses:**Selling
                  and marketing
              
              
              460,729
              
              
              552,256
              
              
              162,060
              
              
              188,337Research
                  and development
              
              
              227,359
              
              
              306,997
              
              
              70,677
              
              
              101,346General
                  and administrative
              
              
              1,224,527
              
              
              1,431,088
              
              
              449,531
              
              
              498,145Total
                  operating expenses
              
              
              1,912,615
              
              
              2,290,341
              
              
              682,268
              
              
              787,828**Operating
                  loss**
              
              
              (208,923
              )
              
              (353,323
              )
              
              16,967
              
              
              (178,056
              )**Other
                  expense**
              
              
              (5,191
              )
              
              (4,725
              )
              
              233
              
              
              (43
              )**Interest
                  expense**
              
              
              (32,390
              )
              
              (12,185
              )
              
              (15,350
              )
              
              (9,775
              )Income
                  (loss) before income taxes
              
              
              (246,504
              )
              
              (370,233
              )
              
              1,850
              
              
              (187,874
              )**Income
                  tax provision**
              
              
              (3,200
              )
              
              (3,200
              )
              
              -
              
              
              -**Net
                  Income (loss)**
              
              
              (249,704
              )
              
              (373,433
              )
              
              1,850
              
              
              (187,874
              )**Other
                  comprehensive income, net of tax**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**Comprehensive
                  Income (loss)**
              
              $
              (249,704
              )
              $
              (373,433
              )
              
              1,850
              
              
              (187,874
              )Basis
                  and diluted net loss per share
              
              $
              (0.02
              )
              $
              (0.04
              )
              
              -
              
              
              (0.02
              )Weighted-average
                  number ofcommon
                  shares outstanding
              
              
              10,705,334
              
              
              10,507,590
              
              
              10,717,645
              
              
              10,699,312
  See
      accompanying notes to consolidated financial statements.


5




**CENTERGISTIC
      SOLUTIONS, INC.**


**Condensed
      Consolidated Statements of Cash Flows**





**Nine
                Months Ended****March
                31,****2006**
            
            **2005****Cash
                flows from operating activities**Net
                loss
            
            $
            (249,704
            )
            $
            (373,433
            )Adjustments
                to reconcile net loss tonet
                cash used by operating activities:Depreciation
                and amortization
            
            
            106,325
            
            
            134,561Provision
                for doubtful accounts
            
            
            22,750
            
            
            (7,000
            )Stock
                compensation
            
            
            5,589
            
            
            5,589Non-cash
                interest expenseLoss
                on sale of securitiesavailable
                for saleIncrease
                (decrease) from changesin
                assets and liabilities:Trade
                receivables
            
            
            (125,631
            )
            
            (68,519
            )Inventories
            
            
            21,602
            
            
            (18,504
            )Prepaid
                expenses
            
            
            17,327
            
            
            (34,388
            )Miscellaneous
                receivables
            
            
            (4,578
            )
            
            (12,706
            )Deposits
            
            
            5,964
            
            
            -Deferred
                legal fees
            
            
            (5,000
            )
            
            -Accounts
                payable
            
            
            (88,671
            )
            
            54,440Accrued
                expenses
            
            
            43,891
            
            
            (25,378
            )Deferred
                income
            
            
            170,301
            
            
            47,244Net
                cash used by operating activities
            
            
            (79,835
            )
            
            (298,094
            )**Cash
                flows from investing activities**Proceeds
                from sale of securities
            
            
            -
            
            
            -Additions
                to capitalized software development costs
            
            
            -
            
            
            -Purchase
                of equipment
            
            
            (7,384
            )
            
            (18,867
            )Net
                cash used by investing activities
            
            
            (7,384
            )
            
            (18,867
            )




See
      accompanying notes to consolidated financial
      statements.




6


**CENTERGISTIC
        SOLUTIONS, INC.**


**Condensed
      Consolidated Statements of Cash Flows (continued)**




**Nine
                  Months Ended****March
                  31,****2006**
              
              **2005****(Unaudited)****Cash
                  flows from financing activities**Deferred
                  offering costs
              
              
              19,480
              
              
              (86,463
              )Issuance
                  of common stock
              
              
              5,000Borrowings
                  on short-term debt
              
              
              66,000
              
              
              285,000Repurchase
                  of common stock
              
              
              2,750
              
              
              (5,363
              )Loan
                  against distribution
              
              
              (4,500
              )
              
              (500
              )Payments
                  received on note receivable
              
              
              -
              
              
              2,202Net
                  cash (used) provided byfinancing
                  activities
              
              
              88,730
              
              
              194,876**Net
                  (decrease) increase in cash and cash equivalents**
              
              
              1,511
              
              
              (122,085
              )**Cash
                  and cash equivalents,beginning
                  of period**
              
              
              80,486
              
              
              149,846**Cash
                  and cash equivalents,end
                  of period**
              
              $
              81,997
              
              $
              27,761*Supplemental
                  Disclosures of Cash Flow**Information:*Cash
                  payments for:Interest
              
              $
              31,040
              
              $
              19,410Income
                  tax payments
              
              $
              3,200
              
              $
              3,200


See
        accompanying notes to consolidated financial
        statements.





7




**CENTERGISTIC
          SOLUTIONS, INC.**
 
 **Notes
          to Condensed Consolidated Financial Statements**
 *(Information
          with Respect to the Nine Months Ended*
 *March
          31, 2006 and 2005 is Unaudited)*


**1.**
            **Organization
                and Nature of Business**





Centergistic
      Solutions, Inc. (the “Company”) was incorporated in the State of California on
      March 10, 1972.





The
      Company provides integrated information distribution and reporting systems,
      serving both general business and contact center environments. The products
      provide critical information throughout the enterprise to help companies improve
      performance and increase personnel productivity.





Substantially
      all of the remaining operations are conducted by the Company’s Mexican
      subsidiary, Centergistic Solutions, S. DE R.L. DE D.V. (formerly known as AAC
      de
      Latin America). The Mexican operations distribute products of its parent, as
      well as other telecommunications products from third parties.








**2.**
            **Summary
                of Significant Accounting
                Policies**





*Basis
      of Presentation*





The
      accompanying unaudited consolidated financial statements as of March 31, 2006
      and for the three and nine month periods ended March 31, 2006 and 2005 have
      been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and in accordance
      with the instructions per Item 310(b) of Regulation SB. Accordingly, they do
      not
      include all of the information and footnotes required by accounting principles
      generally accepted in the United States of America for complete financial
      statements. In the opinion of management, all adjustments, consisting of normal
      recurring adjustments, considered necessary for a fair presentation have been
      included. Operating results for the three and nine month period ended March
      31,
      2006 are not necessarily indicative of the results that may be expected for
      the
      year ending June 30, 2006. These condensed consolidated financial statements
      and
      notes thereto should be read with the consolidated financial statements for
      the
      year ended June 30, 2005 included in the Company’s Form 10-KSB filed with the
      Securities and Exchange Commission.





*Principles
      of Consolidation*





The
      accompanying condensed consolidated financial statements as of March 31, 2006
      and for the three and nine months ended March 31, 2006 and 2005 include the
      accounts of the Company and its wholly owned subsidiaries, Affinitec Corporation
      (“Affinitec”), Centergistic Solutions, S. DE R.L. DE D.V. (“Centergistic
      Solutions - Mexico”). All significant intercompany accounts and transactions
      have been eliminated.




See
        accompanying notes to consolidated financial statements.
  8




**CENTERGISTIC
      SOLUTIONS, INC.**





**Notes
      to Condensed Consolidated Financial Statements **(Continued)****


*(Information
      with Respect to the Nine Months Ended*


*March
      31, 2006 and 2005 is Unaudited)*


**2.** **Summary
      of Significant Accounting Policies (continued)**





*Management’s
      Plans / Liquidity*





During
      the nine months ended March 31, 2006, the Company incurred a net loss of
      $249,704 and an operating loss of $208,923, which includes depreciation and
      amortization of $106,325, and, as of March 31, 2006, the Company had a working
      capital deficit of $(377,508). The Company demonstrated reduced operating costs
      during the nine months ended March 31, 2006, as the costs decreased by $377,726
      or from 86% of revenues to 79% in the current period. This was achieved on
      a 10%
      decrease in revenue, of $269,163. The Company has reduced costs through
      headcount reductions and less discretionary expenditures. The Company expects
      this reduced level of operating expenses to continue through the remainder
      of
      the fiscal year. The Company anticipates revenue growth through an improved
      economy, increased sales of new software products to our European distributor,
      targeted sales and marketing efforts, addition of strategically placed sales
      personnel, and expects an increased software sales trend to continue the
      remainder of this fiscal year and produce operating profits throughout the
      next
      fiscal year. The Company has created several different cost cutting scenarios
      and will reduce expenses as necessary if operating conditions necessitate such
      actions.





On
      November 30, 2004, and amended March 31, 2005, the Company entered into a line
      of credit agreement with Venture Communications Corporation, a shareholder
      and
      related party. The terms of the agreement call for a maximum advance of $400,000
      secured by a lien on all the assets of the Company. The Company believes that
      cash flow from operations will provide sufficient working capital to sustain
      operations through the remainder of the fiscal year.





*Segment
      Reporting*





The
      Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 131,
“Disclosures About Segment of an Enterprise and Related Information,” beginning
      July 2003.
      SFAS No. 131 establishes standards for the way to report information about
      operating segments and related disclosures about products and services,
      geographic areas, and major customers in financial statements. As of and for
      the
      three and nine months ended March 31, 2005, the Company views its operations
      and
      manages its business in two segments: Centergistic Solutions and Centergistic
      Solutions - Mexico.


See
        accompanying notes to consolidated financial statements.


9


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements **(Continued)****
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*


**2.**
            **Summary
                of Significant Accounting Policies
                (continued)**




The
      following represents the total assets by segment:


March
                  31, 2006Centergistic
                  Solutions
              
              $
              4,090,711Centergistic
                  Solutions - Mexico
              
              
              615,6754,706,386Eliminations
              
              
              (3,055,592
              )Total
                  consolidated assets
              
              $
              1,650,794





The
      following represents the revenues, gross profit and net income (loss) by
      segment:


Nine
                    Months Ended March 31,
                
                Three
                    Months Ended March 31,2006
                
                2005
                
                2006
                
                2005Centergistic
                    SolutionsRevenues
                
                $
                1,256,765
                
                $
                1,688,201
                
                $
                490,749
                
                $
                557,227Gross
                    profit
                
                $
                983,478
                
                $
                1,391,520
                
                $
                397,592
                
                $
                424,455Net
                    income (loss)
                
                $
                (269,497
                )
                $
                (445,502
                )
                $
                (14,150
                )
                $
                (189,048
                )Centergistic
                    Solutions - MexicoRevenues
                
                $
                1,150,258
                
                $
                987,985
                
                $
                382,334
                
                $
                333,019Gross
                    profit
                
                $
                720,214
                
                $
                545,498
                
                $
                301,643
                
                $
                185,317Net
                    income (loss)
                
                $
                19,802
                
                $
                72,071
                
                $
                16,009
                
                $
                1,176




*Net
      Loss Per Share*





In
      accordance with the provisions of SFAS No. 128, “Earnings Per Share,” the
      Company is required to disclose basic and diluted earnings (loss) per share.
      Basic earnings (loss) per share is computed by dividing net income (loss),
      by
      the weighted average number of common shares outstanding during each period.
      Diluted earnings (loss) per share is similar to basic earnings (loss) per share,
      except that the weighted average number of common shares outstanding is
      increased to reflect the dilutive effect of potential common shares, such as
      those issuable upon the exercise of stock or warrants, as if they had been
      issued.


See
        accompanying notes to consolidated financial statements.


10




**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements **(Continued)****
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*





**2.**
            **Summary
                of Significant Accounting Policies
                (continued)**





*Net
      Loss Per Share (continued)*





For
      all
      periods presented, there is no difference between basic and diluted loss per
      common share, as the effects of stock options or warrants are anti-dilutive,
      given the net loss applicable to common shares for each period.





*Concentrations*





Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist principally of temporary cash investments and trade accounts
      receivable.





The
      Company maintains its cash balances at financial institutions that management
      believes possess high-credit quality, and related cash balances are insured
      by
      the Federal Deposit Insurance Corporation up to $100,000 and the Securities
      Investor Protection Corporation up to $500,000. At March 31, 2006, the Company
      did not have any amounts held in the bank in excess of federally insured
      limits.





Management
      believes that concentrations of credit, with respect to trade receivables,
      are
      minimized by the Company’s customer base. As of March 31, 2006, the Company’s
      largest customer accounted for 5% of total trade receivables. For each of the
      nine months ended March 31, 2006 and 2005, the Company’s largest customer
      accounted for 13% and 21% of total Company net revenues, respectively. There
      were no other customers that exceeded 10% of such amounts as of each respective
      period-end.





As
      of
      March 31, 2006, customers of the Company’s Mexican subsidiary accounted for 62%
      of total trade receivables. For each of the nine months ended March 31, 2006
      and
      2005 sales to customers of the Company’s Mexican subsidiary account for 48% and
      37%, respectively, of total Company net revenues.




See
        accompanying notes to consolidated financial statements.


11


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements **(Continued)****
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*


**2.**
            **Summary
                of Significant Accounting Policies
                (continued)**





*Deferred
      Offering Costs*





The
      Company has engaged the services of investment bankers to assist with the
      potential funding of future operations through private investors. As of March
      31, 2006, the Company capitalized a net amount of $529,854 for these and related
      services and such are included in the accompanying condensed consolidated
      balance sheets as deferred offering costs. The capitalized deferred offering
      costs relate to a pending equity transaction or a sale of the public shell.
      There can be no assurance that the Company will receive funding from private
      investors or sell the shell. If the Company is able to receive private funding
      or sell the shell, the deferred offering costs will be offset against the
      proceeds received; otherwise, such will be expensed when the offering efforts
      are terminated or the ability to sell the shell has been
      extinguished.





*Accounting
      for Stock-based Compensation*





The
      Company has adopted SFAS No. 123, “Accounting for Stock-based Compensation,” as
      amended by SFAS No. 148, “Accounting for Stock-based Compensation-Transition and
      Disclosure,” which establishes financial accounting and reporting standards for
      stock-based compensation. SFAS No. 123 generally suggests, but does not require,
      stock-based employee compensation transactions be accounted for based on the
      fair value of the consideration received, or the fair value of the equity
      instruments issued, whichever is more reliably measurable. Companies that do
      not
      elect to change their accounting for stock-based employee compensation are
      required to disclose the effect on net income as if the provisions of SFAS
      No.
      123 were followed. The Company has decided to retain the provisions of APB
      Opinion No. 25, and related interpretations thereof, for recognizing stock-based
      employee compensation expense, which includes members of the board of directors.
      Non-employee stock compensation is recorded at fair value in accordance with
      SFAS No. 123.




See
        accompanying notes to consolidated financial statements.




12


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*


**2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**





*Accounting
      for Stock-based Compensation (continued)*





In
      accordance with APB Opinion No. 25, the Company has incurred compensation
      cost aggregating $75,021 through March 31, 2006 for stock option grants, of
      which $5,589 was recognized during the nine-month periods ended March 31, 2006
      and 2005. Had compensation cost for the stock-based compensation plan been
      determined based on the fair value of awards (the method described in SFAS
      No.
      123), the reported net loss would have been as shown below:


Nine
                  MonthsEnded
                  March 31,2006
              
              2005Net
                  loss, as reported
              
              $
              (249,704
              )
              $
              (373,433
              )Add:
                  Stock compensation expense recorded in accordance with APB Opinion
                  No.
                  25
              
              
              5,589
              
              
              5,589Deduct:
                  Total stock-based employee compensation expense determined under
                  fair
                  value based method for all stock options, net of related tax
                  effects
              
              
              (13,355
              )
              
              (34,859
              )Pro
                  forma net loss
              
              $
              (257,470
              )
              $
              (402,703
              )Pro
                  forma net loss per share
              
              $
              (0.02
              )
              $
              (0.04
              )





The
      fair
      value of each grant is estimated at the grant date using the following
      assumptions: no stock price volatility; no dividends for all years; risk-free
      interest rates of 3.75% and 4.45% for the nine month periods ended March 31,
      2006 and 2005, respectively, and expected lives of ten years for all
      grants.




See
        accompanying notes to consolidated financial statements.


13


**CENTERGISTIC
          SOLUTIONS, INC.**
 
 **Notes
          to Condensed Consolidated Financial Statements (Continued)**
 *(Information
          with Respect to the Nine Months Ended*
 *March
          31, 2006 and 2005 is Unaudited)*
 **2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**


*Revenue
      Recognition*





The
      Company typically provides bundled software and services through a distributor
      network. Each component of a bundled solution is separately identified based
      upon vendor specific objective evidence. The components of revenue are
      recognized as follows:





·
            Software
                license fees for site licenses and master license agreements are
                recognized as revenue upon delivery of the software, and when remaining
                obligations are not significant. The Company’s software licensing
                agreement provides the customer with a 90-day warranty and return
                provision, including a limited time to test the software. If the
                customer
                can prove that the software is not functioning, the Company has the
                opportunity to remedy the problem and, if not resolved, the customer
                may
                return the software. The Company considers the need for a reserve
                for
                warranty and returns on a quarterly basis; however, such occurrences
                have
                historically not been significant.





·
            Advance
                contract payments for software services, consisting primarily of
                software
                maintenance and support, are recorded as deferred income until the
                services are provided. After the expiration of the software license
                warranty period, the Company commences recognition of the contract
                payments ratably over the term of the maintenance period. All subsequent
                software maintenance and support is billed separately and recognized
                ratably over the life of the maintenance period.





·
            Revenues
                from software sold to distributors are recognized upon delivery since
                title passes upon delivery. The distributor is subject to a restocking
                fee
                of 10%-25% if an order is returned; however, historically, such returns
                have been insignificant. Special orders are
                non-cancelable.





·
            Software
                and service revenues include services related to maintenance, time
                and
                materials contracts, installation and training. Such revenues are
                recognized as the services are
                rendered.





·
            Revenues
                from the sale of computer and display hardware are recognized upon
                shipment, which is generally concurrent with the passage of
                title.





·
            Professional
                services revenues are derived from the services provided by the Company’s
                consulting business. Such revenues are recognized as the services
                are
                rendered.




See
        accompanying notes to consolidated financial statements.


14




**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*


**3.**
            **Capitalized
                Software Development Costs**





Research
      and development, which includes design, development, and testing of new
      software, software maintenance, and enhancement costs, is expensed as incurred
      until technological feasibility has been established for the product.
      Technological feasibility is defined as a completion of detail program design.
      Thereafter, certain costs, such as coding and testing, are capitalized until
      the
      product is available for general release to customers.





Software
      costs are amortized on a product-by-product basis using the straight-line method
      over the remaining estimated economic life of the software product, which is
      typically six to five years. Actual future sales and remaining economic life
      of
      the product could differ significantly from these estimates. Amortization of
      software costs for the both the nine months ended March 31, 2006 and 2005 was
      $61,375, and is included general and administrative expenses in the accompanying
      condensed consolidated statements of operations and comprehensive income
      (loss).





The
      following describes the components of capitalized software development costs
      as
      of March 31, 2006 and the related estimated lives:


Date
                  TechnologicalFeasibility
              
              EstimatedEstablished
              
              LifeCenterStats
              
              
              December
                  2001
              
              
              5
                  yearsAgentView
              
              
              June
                  1999
              
              
              5
                  years





The
      following summarizes the costs capitalized by product as of March 31,
      2006:


CenterStats
              
              $
              398,998AgentView
                  (fully amortized)
              
              
              307,476Fully
                  amortized products
              
              
              1,146,6771,853,151Accumulated
                    amortization
              
              
              (1,802,426
              )$
              50,725




**4.**  **Notes
      Payable - Related Parties**





On
      November 30, 2004, as amended March 31, 2005, the Company entered into a line
      of
      credit agreement with Venture Communications Corporation, a shareholder and
      related party. The terms of the agreement call for a maximum advance of $400,000
      secured by a lien on all the assets of the Company. Interest on the advances
      are
      payable monthly at


See
        accompanying notes to consolidated financial statements.




15


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*


**4.**
            **Notes
                Payable - Related Parties
                (continued)**





10%
      per
      annum. Advances and unpaid interest on the line are due on July 1, 2007.
      Advances on the line are personally guaranteed in equal amounts by the
      President/CEO and Vice President/COO/CFO of the Company. The balance of the
      line
      at March 31, 2006 is $385,000.




On
      December 31, 2002, the Company entered into two notes payable to two of its
      officers for an aggregate $24,975. Such notes bear interest at 6% and the
      principal and interest are due and payable on demand. These notes are secured
      by
      all of the assets of the Company.




In
      April
      2004, the Company entered into a note payable with an employee of the Company
      for $5,000. The note bears interest at 6% and the principal and interest are
      due
      on demand. The note is secured by all of the assets of the Company.





In
      July
      2003, the Company agreed to purchase 148,328 shares of Company common stock
      from
      a former employee for $44,220 and issued a secured promissory note payable
      in
      such amount. The note bears interest at 5% per annum, and monthly payments
      in
      the amount of $2,750 are due and payable on the note commencing after December
      31, 2003. As each payment is made, the Company cancels and retires 8,728 shares.
      Payment of the note is secured by substantially all of the Company’s assets. The
      balance of the note at March 31, 2006 is $18,022.





**5.**
            **Commitments
                and Contingencies**





*Off-Balance
      Sheet Arrangement*





The
      Company provides indemnifications of varying scope and size to certain customers
      against claims of intellectual property infringement made by third parties
      arising from the use of the Company’s products. Management evaluates estimated
      losses for such indemnifications under SFAS No. 5, “Accounting for
      Contingencies,” as interpreted by FASB Interpretation No. 45, “Guarantor’s
      Accounting and Disclosure Requirements for Guarantees.” Management considers
      such factors as the degree of probability of an unfavorable outcome and the
      ability to make a reasonable estimate of the amount of the loss. As of March
      31,
      2006, the Company has not encountered material costs as a result of such
      obligations and has not accrued any liabilities related to such indemnifications
      in the accompanying condensed consolidated financial statements.




See
        accompanying notes to consolidated financial statements.


16


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*





**6.**
            **Stockholders’
                Equity**





*Stock
      Option Plans*





The
      stockholders of the Company have approved the Centergistic Solutions, Inc.
      Incentive Stock Option Plan (the “Plan”), which provides for the issuance of up
      to 2,800,000 shares of its common stock. Options granted under the Plan are
      not
      exercisable until two years after they are issued and expire ten years after
      the
      date of issue. The options vest at a rate of 25% per year over a four-year
      period. At March 31, 2006, 687,000 shares were available for grant under
      the terms of this Plan.





In
      January 1998, the stockholders of the Company approved a nonqualified stock
      option plan for the directors of the Company. The plan provides for issuance
      of
      up to 800,000 shares of its common stock to directors. Options are granted
      based
      on attendance at board meetings. At March 31, 2006, 476,800 shares were
      available for grant under the terms of this plan.





A
      summary
      of the status of the plans, and changes during the nine months ended March
      31,
      2006 is as follows:





Fixed
                Options
            
            Shares
            
            Weighted
                Average Exercise
              PriceOutstanding
                at beginningof
                period
            
            
            2,623,400
            
            $
            0.53Expired
            
            
            (270,400
            )
            
            (0.60
            )Granted
            
            
            83,200
            
            
            0.36Outstanding
                at end of period
            
            
            2,436,200
            
            $
            0.51Exercisable
                at end of period
            
            
            1,565,000
            
            $
            0.58Weighted
                average fair value of options granted during the period
            
            
            
            
            $
            0.36




See
        accompanying notes to consolidated financial statements.




17


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Nine Months Ended*
 *March
        31, 2006 and 2005 is Unaudited)*


**6.**
              **Stockholders’
                  Equity (continued)**




*Stock
      Option Plans (continued)*





A
      summary
      of stock options outstanding at March 31, 2006 is as follows:





Options
                Outstanding
            
            Options
                ExercisableFixed
                Options
            
            Number
              Outstanding
            
            Weighted
                Average Remaining Contractual
              Life
            
            Weighted
                Average
              Exercise
              Price
            
            Number
              Exercisable
            
            Weighted
                Average Exercise
              Price$
            0.30
                to $0.47
            
            
            1,487,400
            
            
            7.35
            
            $
            0.38
            
            
            616,200
            
            $
            0.38$
            0.52
                to $0.79
            
            
            948,800
            
            
            2.40
            
            
            0.71
            
            
            948,800
            
            
            0.712,436,200
            
            
            
            
            $
            0.51
            
            
            1,565,000
            
            $
            0.58





*Common
      Stock Purchase Warrants*





In
      conjunction with a subordinated debt financing with a related party in 1998,
      the
      Company issued warrants to purchase 480,000 shares of common stock at $0.676
      per
      share, which are exercisable at any time prior to September 2005. These warrants
      expired during the nine months ended March 31, 2006.





In
      connection with the agreement to sell the rights to the proceeds from an
      outstanding lawsuit in fiscal year 2001, the Company issued warrants (the
“Fiscal 2001 Warrants”) to purchase 4,528,000 shares of common stock at $0.4375
      per share, which are exercisable at any time prior to September 2005. Pursuant
      to the terms of the Fiscal 2001 Warrants, should the Company issue a warrant
      or
      stock option to any person or entity who is not an employee, director or
      consultant of the Company providing for an exercise price of less than $0.654
      per share, then the exercise price of the Fiscal 2001 Warrants shall be reduced
      to 110% of the lowest such exercise price (the “Anti-dilution Provision”). In
      accordance with the provisions of SFAS No. 123, the value of the lawsuit
      warrants was estimated to be $101,332. These warrants expired during the nine
      months ended March 31, 2006.





In
      connection with the line of credit agreement (Note 4), the Company issued
      warrants to its CEO and CFO to purchase 111,110 shares of common stock at $0.36
      per share, which are exercisable any time prior to January 2010. All of these
      warrants were outstanding as of March 31, 2006.


See
        accompanying notes to consolidated financial statements.


18




**CENTERGISTIC
      SOLUTIONS, INC.**





**Notes
      to Condensed Consolidated Financial Statements (Continued)**


*(Information
      with Respect to the Nine Months Ended*


*March
      31, 2006 and 2005 is Unaudited)*


**Private
      Placement of Debt**





Subsequent
      to June 30, 2003 and through March 31, 2004, the Company entered into a total
      of
      16 Note and Warrant Purchase Agreements (the “Agreements”). Under the
      Agreements, the lenders agreed to loan the Company an aggregate $490,000
      ($30,000 of which was issued upon conversion of accounts payable) in exchange
      for convertible subordinated promissory notes (the “Notes”). The Notes,
      excluding all accrued interest, were convertible into shares of common stock
      of
      the Company. The principal amount of the Notes were converted at a price of
      $0.3975 per share effective June 15, 2004. Interest accrued at a rate of 6%
      per
      annum and was paid in full in September 2004. The notes contained a beneficial
      conversion feature, the value of which was determined to be $8,618. Such was
      recorded as a component of the debt discount and was accreted as non-cash
      interest expense over the term of the Notes.





In
      consideration for entering into the Notes, the Company also issued warrants
      (the
“Notes Warrants”) entitling the note holder to purchase shares up to an
      aggregate of 74,016 shares of the Company’s common stock that will be received
      by the note holder upon conversion of the Notes discussed above. The Notes
      Warrants are exercisable in whole, but not in part, at any time from the date
      of
      issuance of the Notes Warrants and ending on August 31, 2005 at a price of
      $0.3975 per share of common stock. The Company estimated the value of these
      warrants at $8,618, which was accreted as non-cash interest expense over the
      term of the Notes. These Notes Warrants expired during the nine months ended
      March 31, 2006.





Of
      the
      aggregate loan amount of $490,000, an aggregate $70,000 was loaned by two
      officers and a relative of an officer with an aggregate of 10,576 warrants
      being
      issued to such individuals.





In
      connection with the above-described transactions, the Company paid, as a
      financial consulting fee, $20,750 in cash and issued warrants, exercisable
      at a
      price of $0.466 per share to purchase 44,512 shares of common stock. The Company
      estimated the value of the warrants at $3,915 which was recorded as a debt
      discount. The financial consulting fee and warrants were accreted as non-cash
      interest expense over the term of the Notes. These warrants expired during
      the
      nine months ended March 31, 2006. **


See
        accompanying notes to consolidated financial statements.


19




**ITEM  2.**
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS**





**A
      NOTE ABOUT FORWARD-LOOKING STATEMENTS**





The
      statements, other than statements of historical fact, included in this report
      are forward-looking statements.  Forward-looking statements generally can
      be identified by the use of forward-looking terminology such as “may,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “plan,” “seek,” or
“believe.”  We believe that the expectations reflected in such
      forward-looking statements are accurate.  However, we cannot assure you
      that such expectations will occur.  Our actual future performance could
      differ materially from such statements. These forward-looking statements are
      subject to risks and uncertainties that could cause actual results and events
      to
      differ materially. For a detailed discussion of these risks and uncertainties
      please see the “Factors That May Affect Future Results” section of this report.
      You should not unduly rely on these forward-looking statements, which speak
      only
      as of the date of this report.  Except as required by law, we are not
      obligated to release publicly any revisions to these forward-looking statements
      to reflect events or circumstances occurring after the date of this report
      or to
      reflect the occurrence of unanticipated events.




**General**




We
      are a provider of business performance and intelligence management software
      that
      enables companies to translate data into critical and meaningful metrics
      allowing for improved financial and operational performance. Our software
      provides managers with customizable reporting and analysis tools. These tools
      allow for real-time monitoring of and reporting against crucial benchmarks
      in an
      organization. This enables constant monitoring of a company’s progress against
      financial and operational goals, and helps achieve optimal operational
      performance.




Business
      performance and intelligence management software uses historical and real-time
      data and metrics to provide managers with visibility on the business operations
      in real-time. We provide call/contact center managers with powerful reporting
      and analytic tools allowing the constant monitoring of the operational
      effectiveness and efficiency. While our current market focus is on the
      call/contact center, we offer software to all operational areas of the
      enterprise to gauge performance and profitable improvement. We also offer
      consulting, training, technical support and programming services for our
      customers and partners.




Our
      company operates through its domestic headquarters and our wholly-owned Mexican
      subsidiary located in Mexico City, Mexico. Our domestic operation sells
      AgentView, CenterStats, and the related hardware necessary to run these
      applications or display statistics derived from these applications, training
      and
      educational services, installation, custom programming and support services.
      Our
      Lynch Young & Company Professional Services Group wound up operations in
      June 2004 and was subsequently merged into the operations of
      Centergistic...




Centergistic
      Solutions, Inc., Inc. was incorporated in Los Angeles, California on
      March 13, 1972. Lynch Young Inc. (dba Lynch Young & Company) was
      incorporated in California on October 16, 1980. Centergistic Solutions,
      Inc. Latina America S. de R.L. de C.V., a limited liability partnership, was
      formed in Mexico City, Mexico on May 19, 2000. This partnership was a
      successor to Centergistic Solutions, Inc. Latina America S.A. de C.V., a Mexican
      corporation originally formed July 1, 1993.




We
      face several significant challenges common in our industry: continued revenue
      growth; market segment risk; technological changes; and liquidity and capital
      resources.




We
      face challenges in growing our revenues because our CenterStats product has
      not
      been installed in a large number of clients to date, and has not achieved wide
      customer acceptance due to limited marketing and sales activities. We are
      dependent upon the sale of CenterStats to substantially grow our revenues.
      We
      have developed a sales and marketing plan to achieve this revenue growth, but
      need capital necessary to implement the plan.




We
      currently sell our products and services into the call/contact center market.
      We
      generally sell in two different types of environments. In one instance, our
      products are part of a bundled sale at the time of a new call/contact center
      purchase and installation. We are dependent on our distributors for a majority
      of these types of sales. In the other instance, we sell to established
      call/contact centers that perceive a lack of data, statistics, and metrics
      to
      effectively manage and monitor the performance of their centers. We generate
      revenue in this arena through both direct end-user sales and distribution
      channel sales. We face challenges that our distributors could find new sources
      of this type product or even internally develop their own product. We also
      face
      challenges that the call/contact center market undergoes significant changes,
      restructuring, contraction, or evolution into different technologies.




We
      are subject to a rapidly changing technological environment. Our ability to
      keep
      current with the demands of technology is critical to our success. Each time
      the
      data flow of a particular application in the call/contact center changes or
      new
      applications are created, we must be able to retrieve that data. Our products
      must be changed also so that we may retrieve that data. If we cannot continue
      to
      stay atop the technology curve, we will not be able to compete effectively
      in
      this market space. To combat this challenge, we have developed technology
      partnerships with many of the industry application providers such as Avaya,
      Cisco, Concerto, Genesys, Microsoft, and Nortel to name a few. These
      partnerships allow us the environment to test our products and certify that
      our
      products work with a specific vendor application and to get updates as their
      technology changes.




20




**Current
      Conditions**




We
      derive a substantial portion of our revenues from sales to customers in Mexico,
      Latin America and South America. For the nine month periods ended March 31,
      2006 and 2005, these customers represented approximately 48% and 37%,
      respectively, of our total net revenues.




Our
      revenues in these countries are derived from our subsidiary, Centergistic
      Solutions, Inc. Latin America S. R. L. de C.V., a limited liability partnership.
      Its office is located in Mexico City and houses 20 employees. This company
      acts
      primarily as a distributor, selling our AgentView and CenterStats products
      along
      with others sourced from third party vendors such as PC call accounting,
      voicemail products, data collection devices, and LED display boards. This
      company sells its products primarily to companies such as Avaya, Siemens and
      Alcatel.




On
      November 30, 2004, and amended on March 31, 2005, we entered into a line of
      credit agreement with Venture Communications Corporation, a shareholder and
      related party. The terms of the agreement call for a maximum advance of $400,000
      secured by a lien on all the assets of the Company. Advances on the line are
      personally guaranteed in equal amounts by the President/CEO and Vice
      President/COO/CFO of the Company. We believe that this line of credit, and
      cash
      generated from operations will provide sufficient working capital to sustain
      operations through the remainder of the fiscal year.




**Critical
      Accounting Policies**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets, liabilities and
      equity and disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenue and expenses during
      the
      reported period. Actual results may differ from these estimates under different
      assumptions or conditions.




***Revenue
      Recognition***




Our
      revenue recognition policy is significant because revenue is a key component
      of
      our results of operations. We derive our revenue primarily from sales of our
      various products. As described below, significant management judgments and
      estimates must be made and used in connection with revenue recognized in any
      accounting period. If our management makes different judgments or uses different
      estimates, material differences may result in the amount and timing of our
      revenue for any period. We recognize revenue from the sale of our products
      when:




·
            
            we
                have persuasive evidence that an arrangement exists. For all sales,
                we use
                a binding purchase order and sales order confirmation as evidence
                of an
                arrangement. Sales through certain of our distributors are evidenced
                by a
                master agreement governing the relationship, together with binding
                purchase orders on a transaction by transaction basis;




·
            
            the
                product is delivered to the customer under the terms of the arrangement
                and title passes. Passage of title generally occurs when the product
                is
                delivered to a common carrier, but in some cases occurs when the
                customer
                receives the product;




·
            
            the
                revenue is fixed and determinable. At the time of the transaction,
                we
                assess whether the fee associated with our revenue transactions is
                fixed
                and determinable based on the payment terms associated with the
                transaction. If a significant portion of a fee is due after our normal
                payment terms, which are 30 to 75 days from invoice date, then we
                account for the fee as not being fixed and determinable. In these
                cases,
                we recognize revenue as the fees become due; and




·
            
            collection
                of the resulting receivable is reasonably assured. We assess collection
                based on a number of factors, including past transaction history
                with the
                customer and the credit-worthiness of the customer. We do not request
                collateral from our customers. If we determine that collection of
                a fee is
                not reasonably assured, then we defer the fee and recognize revenue
                at the
                time collection becomes reasonably assured, which generally is upon
                receipt of cash.




We
      derive revenues from licensing our software products, selling computer and
      display hardware, and providing customer support, training, installation, and
      consulting services. Software license fees for site licenses and master license
      agreements are recognized as revenue upon delivery of the software, and when
      remaining obligations are not significant. Sales to distributors are recognized
      upon delivery as our distributors generally have customer orders in hand before
      ordering from us. Should orders be cancelled, our distributors are subject
      to
      restocking charges of 10%-25% except for custom orders which are non-cancelable.




Our
      software licensing agreement provides the customer with certain warranty
      provisions, including a limited time to test the software. If the customer
      can
      prove the software is not functioning, we have the opportunity to remedy the
      problem, and if not resolved, the customer can return the software.
      Historically, returns and warranty costs have not been significant.




21





Advance
      contract payments for services, consisting primarily of software customer
      support, are recorded as deferred income until after the expiration of the
      software warranty period, at which time the revenue is recognized ratably over
      the term of the maintenance period. All subsequent software support is billed
      separately and recognized ratably over the life of the support period.




Revenue
      from computer and display hardware is recognized upon shipment, and consulting
      service revenue is recognized as services are rendered.




***Allowance
      for Doubtful Accounts***




Our
      management estimates the uncollectability of our accounts receivable for losses
      that may result from the inability of our customers to make required payments.
      Management specifically analyzes accounts receivable and historical bad debts,
      customer concentrations, customer credit-worthiness, current economic trends
      and
      changes in customer payment terms when evaluating the adequacy of the allowance
      for doubtful accounts. If our customers’ financial condition deteriorates such
      that it impairs their ability to make payments to us, additional allowances
      may
      be required. As of March 31, 2006 and June 30, 2005, our accounts
      receivable balances were $662,000 and $559,000, respectively, net of our
      estimated allowances for doubtful accounts of $53,000 and $31,000, respectively.




The
      accounts receivable balance increased during the nine month period ended
      March 31, 2006. The Company achieved lower revenue volumes during this
      period and received collections on several older accounts. We do expect the
      accounts receivable balance to grow as we increase our sales of CenterStats.
      The
      payment cycle on these types of sales will stretch to 75-90 days from our
      typical experience of 45-60 days.




We
      have taken steps to address this trend by requiring staged payments on these
      contracts when milestones are completed. We now typically require 25% of the
      contract amount due upon signing, 50 to 65% upon delivery, and the remaining
      balance due 30 days thereafter. We do not expect this trend to
      significantly impact us as we believe revenues will continue to grow
      sufficiently to enable us to generate enough cash flow to sustain operations.




The
      accounts receivable turnover at March 31, 2006 has declined to 74 days. We
      attribute this decline to lower sales volume and several older invoices. We
      do
      expect the turnover to slow down as we increase sales of CenterStats with larger
      invoice amounts and longer payment cycle.




***Capitalized
      Software Development Costs***




We
      account for software development costs in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 86, “Accounting for the Costs of Computer
      Software to be Sold, Leased, or Otherwise Marketed.” SFAS No. 86 specifies
      that software development costs incurred internally should be expensed as
      incurred until technological feasibility has been established. Once
      technological feasibility has been established, all software development costs
      should be capitalized until the product is available for general release to
      customers. Technological feasibility is defined as a completion of detail
      program design. Amortization of capitalized software costs totaled $61,000
      for
      each of the nine month periods ended March 31, 2006 and 2005.




***Long-Lived
      Assets***




During
      fiscal year 2003, we adopted SFAS No. 144, “Accounting for the Impairment
      of Disposal of Long-Lived Assets,” which addresses significant issues relating
      to the implementation of SFAS No. 121 and develops a single accounting
      model, based on the framework established in SFAS No. 121 for long-lived
      assets to be disposed of by sale, whether such assets are or are not deemed
      to
      be a business. SFAS No. 144 also modifies the accounting and disclosure
      rules for discontinued operations. Implementation of such standard has not
      had a
      material effect on the accompanying consolidated financial statements. As of
      March 31, 2006, no such indicators of impairment were identified by
      management.




***Stock-Based
      Compensation***




From
      time to time, we provide compensation in the form of shares of our common stock
      as well as options or warrants to acquire shares of our common stock.




We
      derive the value of rights to acquire our common stock granted to non-employees,
      such as options or warrants, from pricing models that consider current market
      and contractual prices for our stock, as well as time value and yield curve
      or
      volatility factors. Pricing models and their underlying assumptions impact
      the
      amount and timing of unrealized gains and losses we recognize, and use of
      different pricing models or assumptions could produce different financial
      results.




Options
      granted to employees are valued using the intrinsic value method which bases
      compensation on the difference between the market value of the underlying shares
      of common stock and the exercise price at the date of grant.




**Results
      of Operations for the Nine Months Ended March 31, 2006 as Compared to the Nine
      Months Ended March 31, 2005**




22




We
      believe there is some relatively minor improvement in the economy in general,
      but a weakness in corporate infrastructure technology spending in specific.
      We
      saw decreases in revenue in almost all lines of business this past quarter,
      but
      expect to see improvement in our revenue when corporate infrastructure
      technology spending increases. Our biggest risks continue to be revenue growth,
      and the capital raise necessary to implement our sales and marketing strategy.




***Revenues***


**Nine
                    Month Period Ended March 31, (In thousands)**2006
                
                %
                
                2005
                
                %Centergistic
                    (U.S.)
                
                $
                1,257
                
                
                52.2
                
                $
                1,688
                
                
                63.1Mexico
                    and Latin America
                
                $
                1,150
                
                
                47.8
                
                $
                988
                
                
                36.9Total
                
                $
                2,407
                
                
                100.0
                
                $
                2,676
                
                
                100.0




Total
      net revenues decreased by $269,000 or 10% for the nine month period ended
      March 31, 2006 (“PE 2006”) as compared to the nine month period ended
      March 31, 2005 (“PE 2005”). Revenues from U.S. based operations decreased
      by $431,000 or 26% from the PE 2005. Revenues from Mexico increased by $162,000
      or 16% during PE 2005.




In
      the U.S. based operations, direct sales of AgentView software decreased $113,000
      or 40% compared to PE 2005. This decease is consistent with the weakness in
      corporate technology spending and to reductions in sales expenditures by us.
      We
      are starting to see increased interest from customers requiring multiple data
      sources and a high number of agents. This will help our revenue in the future
      as
      one of our AgentView products is priced on a “per agent” basis. We also charge
      additional amounts for multiple data sources. As corporate infrastructure
      technology spending begins to increase, we expect our revenue to increase.




Distribution
      revenue in the U.S. decreased by $296,000 or 34% from PE 2005. Revenue from
      our
      largest distributor, Dacon, fell by $253,000 or 45% from PE 2005 accounting
      for
      most of the decline. We expect business from Dacon to increase during the next
      nine months as we hope to see increased volume as an upgrade program will soon
      be introduced to the British Telecom (“BT”) installed base, and an expected roll
      out of our CenterStats product to that base as well. In addition, Dacon was
      undergoing a management buy out and sales during this period were stagnant.
      We
      expect sales to increase during the remainder of our fiscal year and continue
      increasing through the beginning periods of next fiscal year.




Installation
      and training revenues decreased by $27,000 or 31% due to the decline in software
      revenues. We expect these revenues to increase as more Agent View and
      CenterStats products are sold.




Consulting
      and professional services increased by $44,000 or 259% from PE 2005. We have
      begun actively seeking consulting contracts during PE 2006. We expect this
      increasing revenue trend to continue throughout the remainder of the fiscal
      year.




Mexico
      and Latin America revenues increased by $162,000 or 16% as compared to PE 2004.
      The Mexican economy has stabilized and we except this trend to continue through
      the remainder of the fiscal year. We expect to see our revenues begin to
      steadily improve through the remainder of our fiscal year, with an improving
      trend as the economy improves.




**Cost
      of Revenues**




Cost
      of revenues decreased to $703,000 or 29% of revenues as compared to $739,000
      or
      28% of revenues in PE 2004. Costs associated with hardware and third party
      products sales decreased by nearly $47,000. We are at risk of hardware and
      third
      party vendors passing on price increases that will affect our profitability.
      We
      expect this trend of declining hardware revenues and costs to continue
      throughout this fiscal year resulting in improved cost of revenue
      percentages.




**Gross
      Profit**




Gross
      profit declined to 71% of revenues in PE 2006, or $1,704,000, as compared to
      72%, or $1,937,000, in PE 2005. The decline in gross profit percentage is
      attributable to lower revenue achieved in PE 2006. We expect gross profit
      percentages to increase as we sell more software and services and less hardware.
      We have made a concentrated effort to stop selling hardware and concentrate
      exclusively on selling software and services.




**Operating
      Expenses**




23




*Sales
      and Marketing*




Sales
      and marketing expenses decreased $91,000 or 16% as compared to PE 2005. Salaries
      and wages were lower by $191,000 due to reduction in headcount. This decrease
      was offset by increases in consulting of $60,000 and commissions of $39,000.
      Commission expense was higher due to the increased sales in Mexico and
      compensation plans designed to reward software sales. We face the risk of not
      having the necessary capital to fully implement our sales and marketing strategy
      next fiscal year. If we do not receive any capital, we will scale back our
      implementation of the sales and marketing strategy, and this will adversely
      affect our revenue and profitability in our future fiscal periods.




Our
      strategy is to continue to slowly fund our sales and marketing programs by
      investing any cash generated by operations. Absent any outside funding, we
      will
      continue this process for the foreseeable future. If we are not successful
      in
      raising any additional capital, we will only hire to the level that can be
      sustained from our existing operational cash flow.




*General
      and Administrative*




General
      and administrative expenses decreased by $206,000 or 14% as compared to PE
      2005.
      Salaries and wages were reduced by $182,000 due to reductions, consolidation
      of
      functions and use of consultants. Our insurance expense dropped by $55,000
      due
      to a change to a higher deductible plan for our employees. Depreciation declined
      by $33,000, and payroll taxes were reduced by $22,000 due to the drop in
      salaries. These decreases were offset by increases in consulting expense of
      $54,000 and bonuses paid to Mexico personnel of $26,000.




We
      anticipate general and administrative expenses to increase as we add staff.
      As a
      result of obtaining public reporting company status, our professional fees
      in
      upcoming fiscal years are expected to greatly increase. We anticipate general
      and administrative costs to increase by $100,000 to $150,000 per year due to
      increased professional fees, director and officer liability insurance, and
      increased employee benefit costs.




*Research
      and Development*




Research
      and development expenses decreased by $80,000 or 26% over the same period as
      last year primarily due to closure of our India development office with a staff
      of 4. Salaries and wages declined by $68,000, and rent, travel, and professional
      fees all decreased by $4,000 due to the closure of the India office. We expect
      the declining trend to continue throughout the remainder of the fiscal year.




We
      plan to increase the staffing level upon achieving operating cash flow.
      Primarily, these developers will develop interfaces to enable our products
      to
      work with “best of breed” call/contact center applications.




**Interest
      Expense**




The
      interest expense during PE 2006 increased by $20,000 or 167% over PE 2005.
      The
      interest expense was related to interest on the line of credit.




**Net
      Income (Loss)**




Net
      loss improved to $250,000 as compared to $373,000 in PE 2005, a $123,000 or
      33%
      improvement. The improvement was primarily due to decreases in operating
      expenses offset by lower revenue levels achieved in the quarter.




We
      anticipated generating an operating loss given that we planned to invest any
      excess cash flow back into operations through increased sales and marketing
      and
      development expenditures.




**Liquidity
      and Capital Resources**




Net
      cash used in operating activities was $80,000 in PE 2006 and $298.000 in PE
      2005. The net cash used for operations in PE 2006 was comprised primarily of
      loss from operations of $250,000 offset by depreciation and amortization of
      $106,000, and a net increase from changes in assets and liabilities of $34,000.
      The net cash used for operations in PE 2005 was comprised primarily of the
      loss
      from operations of $373,000 offset by depreciation and amortization of $135,000
      and a net decrease from changes in assets and liabilities of $59,000.




Net
      cash from investing activities used $7,000 in PE 2006 as compared to a use
      of
      $19,000 in PE 2005. The cash used in both period ends were primarily due to
      purchase of fixed assets.




Net
      cash provided from financing activities was $89,000 in PE 2006 as compared
      to
      $195,000 in PE 2005. The amount provided in PE 2006 was primarily due to
      borrowings of $66,000 added to a decline in deferred offering costs of $20,000.
      The PE 2005 amount came from a net $285,000 in borrowings offset by deferred
      offering costs of $86,000.




24




We
      had a deficit working capital of ($378,000) at March 31, 2006.




In
      March 2002, we received two loans from our officers and directors, Ricardo
      Brutocao and David Cunningham. The total of these two loans is $24,975. The
      loans are payable on demand and bear interest at 6%. As of March 31, 2005,
      the balance of these loans is $24,975.




In
      July 2003, we agreed to purchase 148,328 shares of our common stock from Al
      Wild, a former employee, for $44,220 and issued our secured promissory note
      payable to Mr. Wild in such amount. Our note bears interest at the rate of
      5% per annum, and monthly payments of principal and interest in the amount
      of
      $2,700 are due and payable on the note commencing September 30, 2003. As
      each monthly payment is made on our note, we may cancel and retire 8,728 of
      the
      shares. Mr. Wild may cancel our note at any time and elect to receive the
      remainder of the shares we purchased from him that have not been cancelled
      and
      retired by us in accordance with our agreement. Payment of our note to Mr.
      Wild
      is secured by all of our assets.




In
      November 2004, and amended March 31, 2005, we entered into a line of credit
      agreement with Venture Communications Corporation, a shareholder and related
      party. The agreement calls for a maximum advance of $400,000 secured by a lien
      on all the assets of the Company. The balance of this line at March 31, 2006
      was
      $385,000.




As
      of March 31, 2006, including the results of operations for the nine months
      then ended, our working capital decreased to a deficit of ($378,000).
      Approximately $48,000 of that deficit is related party notes payable which
      we do
      not anticipate repaying. Another $352,000 of the deficit is deferred income
      of
      which a majority will be converted into revenue during the next fiscal year.
      We
      believe that we will be able to convert the remainder of the working capital,
      along with the advances available under our line of credit, into the cash
      necessary to continue operations for the balance of fiscal year 2006.




We face the risk that we will not be able to raise
      the necessary capital to fully fund our sales and marketing plan. If we are
      not
      successful in raising capital, we will have to scale back our plans for the
      future. This will impact our future revenue growth and profitability.




If
      we can not find outside funding, we will reduce our planned hires to the level
      that can be sustained from our existing operational cash flow. We will also
      scale back our future product launch and marketing of CenterStats to the level
      that they will be funded by operational cash flow. We will also implement,
      necessitated on business conditions, several cost cutting strategies identified
      by management.




We
      currently have not entered into any agreements nor are we currently in
      discussions with any potential merger or acquisition candidate. However, we
      intend to pursue an acquisition strategy upon successful completion of a capital
      raise and the listing of our stock on the OTC Bulletin Board. As we believe
      our
      current market space has a number of relatively small companies, our strategy
      will be to increase market share, customer base, and technology by acquiring
      these companies. We also believe that acquiring certain key distributors,
      thereby securing our sales channels, makes sound business sense. We may possibly
      seek to acquire one or more distributors in the future.




**Results
      of Operations for the Three Months Ended March 31, 2006 as Compared to the
      Three
      Months Ended March 31, 2005**




We
      believe there is some improvement in the economy in general, and some strength
      in corporate infrastructure technology spending in specific. We saw increases
      in
      revenue in most lines of business this past quarter, and expect to see
      improvement in our revenue as long as corporate infrastructure technology
      spending increases. Our biggest risks continue to be revenue growth, and the
      capital raise necessary to implement our sales and marketing strategy.




***Revenues***


**Three
                  Month Period Ended March 31, (In thousands)**2005
              
              %
              
              2004
              
              %Centergistic
                  (U.S.)
              
              $
              491
              
              
              56.2
              
              $
              557
              
              
              62.6Mexico
                  and Latin America
              
              $
              382
              
              
              43.8
              
              $
              333
              
              
              37.4Total
              
              $
              873
              
              
              100.0
              
              $
              890
              
              
              100.0




25




Total
      net revenues decreased by $17,000 or 2% for the three month period ended
      March 31, 2006 (“PE 2006”) as compared to the three month period ended
      March 31, 2005 (“PE 2005”). Revenues from U.S. based operations decreased
      by $66,000 or 12% from the PE 2005. Revenues from Mexico increased by $49,000
      or
      15% during PE 2006.




In
      the U.S. based operations, direct sales of AgentView increased $46,000 or 68%
      compared to PE 2005. The increase is due to improvement in corporate technology
      spending and due to a new release of software. We are starting to see increased
      interest from customers requiring multiple data sources and a high number of
      agents. This will help our revenue in the future as one of our AgentView
      products is priced on a “per agent” basis. We also charge additional amounts for
      multiple data sources. As corporate infrastructure technology spending is
      increasing, we expect our revenue to increase.




Distribution
      revenue in the U.S. decreased by $169,000 or 46% from PE 2005. Revenue from
      our
      largest distributor, Dacon, decreased by $111,000 or 59% from PE 2005. Most
      of
      the decrease was due to the management buy out of Dacon which was completed
      in
      December 2005. We expect business from Dacon to increase as an expected roll
      out
      of our CenterStats product to the BT installed base will begin. We also saw
      a
      decline in sales as compared to PE 2005 from another U.K distributor who exited
      the contact center market space. We expect to replace this distributor with
      another during our next fiscal year. We expect to reserve his trend of
      decreasing revenues from distribution as we are focusing on selling through
      our
      existing channels.




Installation
      and training revenues increased by $10,000 or 50% from PE 2005 due to the
      increased sales of AgentView. We expect these revenues to increase as more
      Agent
      View and CenterStats products are sold.




Mexico
      and Latin America revenues increased by $49,000 or 15% as compared to PE 2004.
      The Mexican economy has stabilized and we except this increasing revenue trend
      to continue through the remainder of the fiscal year. We expect to see our
      revenues continue to steadily improve through the remainder of this fiscal
      year,
      and continue through the next fiscal year.




**Cost
      of Revenues**




Cost
      of revenues decreased to $174,000 or 20% of revenues as compared to $281,000
      or
      32% of revenues in PE 2005. Costs associated with hardware and third party
      products sales decreased by $123,000 and consulting expenses increased $16,000.
      As a greater portion of our revenue over this past three months ended
      March 31, 2006 was derived from software and service, our costs related to
      hardware and third party products decreased accordingly. We are at risk of
      hardware and third party vendors passing on price increases that will affect
      our
      profitability. We expect this trend of declining hardware revenues and costs
      to
      continue throughout this fiscal year resulting in improved cost of revenue
      percentages.




**Gross
      Profit**




Gross
      profit improved to 80% of revenues in PE 2006, or $699,000, as compared to
      68%,
      or $610,000, in PE 2005. The improvement is gross profit percentage is
      attributable to the mix of revenue away from hardware and third-party sourced
      products to software products. We expect this trend to continue as we sell
      more
      AgentView and CenterStats to direct end-users and concentrate on software and
      service sales as opposed to hardware sales.




**Operating
      Expenses**




*Sales
      and Marketing*




Sales
      and marketing expenses decreased $26,000 or 14% as compared to PE 2005. We
      spent
      more on commissions due to the increased sales volume, especially in Mexico.
      Commission expense was higher by $22,000 due to the higher sales volume and
      more
      direct sales. Salaries and wages were reduced by $31,000. Trade show expenses
      were reduced by $7,000 and travel expenses were lower by $10,000. We face the
      risk of not having the necessary capital to fully implement our sales and
      marketing strategy next fiscal year. If we do not receive any additional
      capital, we will scale back our implementation of the sales and marketing
      strategy, and this will adversely affect our revenue and profitability in our
      future fiscal periods.




Our
      strategy will continue to slowly fund our sales and marketing programs by
      investing any cash generated by operations. Absent any outside funding, we
      will
      continue this process for the foreseeable future. If we are not successful
      in
      raising capital, we will reduce our planned hires to the level that can be
      sustained from our existing operational cash flow.




*General
      and Administrative*




General
      and administrative expenses decreased by $48,000 or 10% as compared to PE 2005.
      We increased commission by $20,000 due to bonus plan for Mexico administrative
      staff performance. Salaries decreased by $40,000 due to headcount reductions
      and
      voluntary salary reduction by the CEO which was offset by an increase in
      consulting fees of $18,000. Our professional fees declined by $18,000 due to
      not
      reporting our December 31, 2005 quarterly reports timely. Insurance premiums
      were reduced by $13,000 due to switching to a higher deductible medical
      insurance plan. Depreciation fell by $8,000 during the period.




26




We
      anticipate general and administrative expenses to increase as we add staff.
      As a
      result of obtaining public reporting company status, our professional fees
      in
      upcoming fiscal years are expected to greatly increase. We anticipate general
      and administrative costs to increase by $100,000 to $150,000 per year due to
      increased professional fees, director and officer liability insurance, and
      increased employee benefit costs.




*Research
      and Development*




Research
      and development expenses decreased by $31,000 or 31% over the same period as
      last year. The costs decreased because of the closing of our India development
      office with 4 developers. Salaries and wages decreased by $27,000, professional
      fees by $6,000 and rent expense declined by $3,000. These reductions are all
      due
      to the closure of the India office. We expect this trend to continue the
      remainder of our fiscal year.




We
      plan to increase the staffing level upon achieving operational profits.
      Primarily, these developers will develop interfaces to enable our products
      to
      work with “best of breed” call/contact center applications.




**Interest
      Expense**




The
      interest expense during PE 2006 was related to increased borrowing on the line
      of credit. We expect this interest to remain throughout the remainder of our
      fiscal year.




**Net
      Income (Loss)**




We
      achieved net income of $2,000 in PE 2006 as compared to a net loss of $188,000
      in PE 2005. The improvement was primarily due to higher gross profit margins
      and
      reduced operating costs achieved in the quarter.




**Factors
      That May Affect Future Results**




**We
      have experienced losses in the past, anticipate losses for the foreseeable
      future and may never achieve profitability.**




We
      incurred a net loss of $250,000 during the nine months ended March 31, 2006,
      and
      as of such date our accumulated deficit was $3,004,000. We expect that our
      operating expenses will increase significantly as we continue to expand our
      business. As a result, we will need to generate significantly more revenues
      from
      sales of our CenterStats product to achieve profitability. We have a limited
      operating history with our CenterStats product and we are not able to estimate
      when, if ever, our revenues will increase sufficiently to cover these expenses.
      We cannot assure you that our revenue will grow in the future or that additional
      capital will be made available to us. If revenues grow slower than we
      anticipate, or if operating expenses exceed our expectations or cannot be
      reduced accordingly, or if we cannot obtain additional capital, our business,
      operating results and financial condition will be materially and adversely
      affected, which could cause our investors to lose all or part of their
      investment in our common stock.




**We
      have not generated any significant revenues from the sale of our CenterStats
      product and if we are unable to increase sales, our business, operating results
      and financial condition will be materially adversely affected.**




We
      began
      marketing our CenterStats product in March 2002. Our marketing efforts to date
      have been very limited because we lack sufficient capital to implement our
      sales
      and marketing strategy. Revenues for the nine month periods ended March 31,
      2006 and 2005 were $2,407,000 and $2,676,000, respectively.




Our
      future revenues will depend significantly on our ability to penetrate the
      call/contact center or business intelligence software market space. We have
      developed a sales and marketing strategy to achieve revenue growth, but we
      need
      additional capital to implement it. If we are not successful in selling our
      products in our targeted market due to insufficient additional capital or other
      factors including competitive pressures or technological advances by others,
      our
      business, operating results and financial condition will be materially and
      adversely affected.




**We
      need additional capital to implement our current business strategy, which may
      not be available to us, and if we raise additional capital, it may dilute our
      investors’, ownership in us.**




We
      believe that the proceeds of a private placement offering, together with cash
      generated from operations, will be sufficient to meet our anticipated needs
      for
      business expansion, capital expenditures, working capital and general corporate
      purposes for the foreseeable future, but no less than a period of 12 months
      after the date of this report. Thereafter, we may need to raise additional
      funds.




27





If
      additional funds are raised through the issuance of equity or convertible debt
      securities, the percentage ownership of our shareholders will be reduced,
      shareholders may experience additional dilution and such securities may have
      rights, preferences and privileges senior to those of the Common Stock and
      may
      have covenants which impose restrictions on our operations. There can be no
      assurance that any necessary additional financing will be available on terms
      favorable to us or at all. If adequate funds are not available or are not
      available on acceptable terms, we may not be able to fund our marketing needs
      or
      expansion, to take advantage of unanticipated acquisition opportunities, to
      develop or enhance services or products or to respond to competitive pressures.
      This inability could have a material adverse effect on our value, prospects,
      business, results of operations and financial condition.




**Our
      quarterly operating results, revenues and expenses may fluctuate significantly
      which could have an adverse effect on the market price of our common stock.**




Our
      operating results, revenues and expenses may fluctuate significantly from
      quarter to quarter due to a variety of factors including:


·
            
            market
                acceptance of our CenterStats product,·
            
            the
                timing, size and execution of orders and shipments,·
            
            lengthy
                and unpredictable sales cycles,·
            
            the
                timing of introduction and market acceptance of new products or product
                enhancements by us or our competitors,·
            
            Product
                and price competition,·
            
            the
                relative proportions of revenues derived from license fees and services,·
            
            Changes
                in our operating expenses,·
            
            our
                success in increasing our direct sales force,·
            
            our
                success in maintaining relationships with our third-party distributors
                and
                adding new ones, and·
            
            fluctuations
                in general economic conditions.




We
      believe that period-to period comparisons of our results of operations are
      not a
      good indication of future performance. There can be no assurance that future
      revenues and results of operations will not vary substantially. It is also
      possible that in future quarters; our operating results will be below the
      expectations of public market analysts and investors. In that event, the trading
      price of our common stock may fall.




**The
      loss of Dacon PLC as a customer would materially adversely affect our business,
      operating results and financial condition.**




We
      sell a substantial portion of our products to Dacon PLC, which is based in
      the
      United Kingdom and has been a distributor of our products for the past
      12 years. For the nine month periods ended March 31, 2006 and 2005,
      Dacon accounted for 13% and 21%, respectively, of net revenues, and 5% of total
      trade receivables as of March 31, 2006. The loss of Dacon PLC as a customer
      would have a material adverse effect on our business, operating results and
      financial condition.




**We
      face risks associated with operations in Mexico, Latin America and South America
      which could adversely affect our business, operating results and financial
      condition.**




We
      derive a substantial portion of our revenues from sales to customers in Mexico,
      Latin America and South America. For the nine month periods ended March 31,
      2006 and 2005, these customers represented approximately 48% and 37%,
      respectively, of our total net revenues.




We
      face certain risks inherent in conducting business internationally, and such
      specific risks in Mexico, Latin America and South America as languages and
      cultural differences, legal and governmental regulatory requirements and
      potential political and economic unrest. Any of these factors could seriously
      harm our ability to generate future revenues from these customers, and,
      consequently, our business, operating results and financial condition.




28




**We
      operate in a competitive business environment and if we cannot compete
      effectively, we may face price reductions and decreased demand for our products.**




The
      market for our products and services is intensely competitive and subject to
      technological change. Competitors vary in size and in the scope and breadth
      of
      the products and services they offer. We encounter competition from a number
      of
      sources, all of which offer performance management reporting systems to the
      call/contact center market. We expect additional competition from other
      established and emerging companies as the market for performance management
      reporting solutions and complementary products continues to develop and expand.
      We encounter competition in the United States from a number of sources,
      including Symon and Innova, all of which offer performance management reporting
      systems to the call/contact center market. Some of our current and many of
      our
      potential competitors have longer operating histories, greater name recognition,
      larger client bases and significantly greater financial, engineering, technical,
      marketing and other resources than we do. As a result, these companies may
      be
      able to respond more quickly to new or emerging technologies and changes in
      customer demands or to devote greater resources to the development, promotion
      and sale of their products than we can.




In
      addition, current potential competitors have established or may establish
      cooperative relationships among themselves or with third parties to increase
      the
      ability of their products to address the needs of our prospective customers.
      Accordingly, it is possible that new competitors or alliances among competitors
      may emerge and acquire significant market share. We expect that the call/contact
      center market will continue to attract new competitors and new technologies,
      possibly involving alternative technologies that are more sophisticated and
      cost-effective than our technology. New product introductions by our competitors
      could cause a decline in sales, a reduction in the sales price, or a loss of
      market acceptance of our existing products. There can be no assurance that
      we
      will be able to compete successfully against current or future competitors
      or
      that competitive pressures faced by us will not materially adversely affect
      our
      business, financial condition and results of operations.




**We
      rely in part, on third-party distributors to market and distribute our products,
      and their failure to do so successfully could significantly harm our ability
      to
      maintain and expand our customer base, which would adversely affect our
      operating results and financial condition.**




Our
      sales and marketing strategy includes channels of third party distributors.
      We
      have developed a number of these relationships and intend to develop new ones.
      Our inability to attract new distributors or their inability to penetrate their
      respective market segments or the loss of any of our third-party distributors
      as
      a result of competitive products offered by other companies, or products similar
      to ours that are developed internally by them or otherwise, could harm our
      ability to maintain and expand our customer base. Our ability to achieve revenue
      growth in the future will depend in part on our success in developing and
      maintaining successful relationships with these third-party distributors. If
      we
      are unable to develop or maintain our relationships with these third-party
      distributors, our operating results and financial condition will suffer.




**We
      must increase our direct sales force to sell our products, and if we are unable
      to hire and train new sales personnel, our future growth will be impaired.**




Our
      direct sales force currently consists of three persons. Our sales and marketing
      strategy includes increasing the level of direct sales. Our ability to achieve
      revenue growth in the future will depend on our ability to recruit, train,
      and
      retain qualified direct sales personnel. If we are not able to obtain additional
      capital, we will not be able to increase the size of our direct sales force.
      Even if we are successful in obtaining additional capital, there is no assurance
      that we will be successful in recruiting and retaining qualified sales
      personnel. Our inability to increase the size and productivity of our direct
      sales force could impair our growth and adversely affect our operating results
      and financial condition.




**If
      we fail to keep pace with rapid technological changes in our industry, we could
      lose existing customers and be unable to attract new business.**




Our
      market is characterized by rapidly changing technologies, frequent new product
      and service introductions and evolving industry standards. The introduction
      of
      products embodying new technologies and the emergence of new industry standards
      can render our existing products obsolete and unmarketable in short periods
      of
      time. We expect new products and services, and enhancements to existing products
      and services to continue to be developed and introduced by others, which will
      compete with, and reduce the demand for, our products and services. Our future
      success will depend, in part, on our ability to enhance the performance features
      and reliability of our current products and introduce new products that keep
      pace with technological developments and emerging industry standards and to
      address the increasingly sophisticated needs of our customers. We may have
      to
      raise additional capital to successfully improve the features and reliability
      of
      our products and services. We may not be able to obtain the capital or obtain
      it
      on terms acceptable to us. There can be no assurance that we will be successful
      in developing, marketing and selling new products or product enhancements that
      meet these changing demands, that we will not experience difficulties that
      could
      delay or prevent the successful development, introduction and marketing of
      these
      products or that our new products and product enhancements will adequately
      meet
      the demands of the marketplace and achieve market acceptance.




29




**We
      may lose sales, or sales may be delayed, due to the long sales cycle for our
      products, which would reduce our revenues.**




Our
      customers generally involve many people in the decision to purchase our products
      and consulting and other services. As a result, we may wait many months before
      a
      sale can actually be completed. During this long sales cycle, events may occur
      that affect the size or timing of the order or even cause it to be canceled.
      For
      example, our competitors may introduce new products, or the customer’s own
      budget and purchasing priorities may change. If these events were to occur,
      sales of our products may be cancelled or delayed, which would reduce our
      revenues.




**If
      we do not retain our senior management and other key employees, we may not
      be
      able to successfully implement our business strategy.**




Our
      future success depends to a significant extent on the continued services of
      our
      senior management, particularly, Ricardo Brutocao, Chief Executive Officer,
      and
      David Cunningham, Chief Operating and Financial Officer, and other key
      personnel, particularly, Rama Iyer, Vice President, Technology and Product
      Management. The loss of the services of any of these persons could have a
      material adverse effect on our business, results of operations and financial
      condition. We have no employment agreement with Mr. Iyer. We do not
      maintain “key person” life insurance for any of our personnel at this time but
      may decide to in the future. Competition for qualified personnel in our industry
      is intense and we compete for these personnel with other companies that have
      greater financial and other resources than we do. Our future success will depend
      in large part upon on our ability to attract, retain and motivate highly
      qualified personnel, and there can be no assurance that we will be able to
      do
      so. If we have any difficulty in hiring needed qualified personnel, our
      business, financial condition and results of operations could be materially
      adversely affected.




**Our
      success depends on growth in the telecommunications industry.**




While
      the Company as a whole is not dependent upon the telecommunications industry,
      our AgentView legacy products are substantially positioned in the sector. Our
      business would be adversely affected to the extent that the telecommunications
      industry continues to contract through consolidation and advances in technology,
      or does not achieve sustainable growth particularly usage by companies who
      use
      multiple software applications. A number of factors may inhibit the
      telecommunications industry’s growth, including:




·
            
            financial
                difficulties and recent bankruptcies of major providers such as Global
                Crossing and Worldcom;·
            
            competitive
                concerns centered around large-scale price cutting;·
            
            reluctance
                of industry companies to place purchase orders for capital expenditures;
                and·
            
            lack
                of increasing customer demand for premium and high-speed services.




If
      these conditions continue to occur in the future, the telecommunications
      industry, as well as the purchase of our products by it, could grow more slowly
      or decline.




**Our
      limited ability to protect our proprietary technology and other rights may
      adversely affect our ability to compete.**




We
      rely on a combination of trademarks, copyrights, trade secret laws and
      contractual provisions to protect our intellectual rights. We also have a patent
      pending for an information management system. We cannot assure our investors
      that our patent application will result in any patent being issued to us or,
      if
      issued, that any patent claims will be of sufficient scope or strength to
      provide any meaningful protection or any competitive advantage to us. There
      can
      be no assurance that these protections will be adequate to prevent our
      competitors from misappropriating our technology or that our competitors will
      not independently develop technologies that are substantially equivalent or
      superior to our technology. To protect our trade secrets and other proprietary
      information, we require employees, consultants and others to enter into
      confidentiality agreements. We cannot assure our investors that these agreements
      will provide meaningful protection for our trade secrets, know-how or other
      proprietary information in the event of any unauthorized use, misappropriation
      or disclosure of such trade secrets, know-how or other proprietary information.




**If
      we are found to infringe the proprietary rights of others, we could be required
      to redesign our products, pay royalties or enter into license agreements with
      third parties.**




Although
      we have never been the subject of a material intellectual property dispute,
      there can be no assurance that a third party will not assert that our technology
      violates its intellectual property rights in the future. As the number of
      software products in our target market increases and the functionality of these
      products further overlap, we believe that software developers may become
      increasingly subject to infringement claims. Any claims, whether with or without
      merit, could:




·
            
            be
                expensive and time consuming to defend,




30




·
            
            cause
                us to cease making, licensing or using products that incorporate
                the
                challenged intellectual property,·
            
            require
                us to redesign our products, if feasible,·
            
            divert
                management’s attention and resources, and·
            
            require
                us to enter into royalty or licensing agreements in order to obtain
                the
                right to use necessary technologies.




There
      can be no assurance that third parties will not assert infringement claims
      against us in the future with respect to our current or future products or
      that
      any such assertion will not require us to enter into royalty arrangements (if
      available) or litigation that could be costly to us.




**A
      large percentage of our stock is owned by relatively few people, including
      officers and directors, and their interest may be different from and conflict
      with yours.**




As
      of March 31, 2006 our officers and directors beneficially owned a total of
      6,919,494 shares (including shares issuable upon exercise of options,
      warrants or convertible securities beneficially owned by them that are
      exercisable or convertible within 60 days after March 31, 2006), or
      approximately 58% of our outstanding common stock. You may be subject to certain
      risks due to the concentrated ownership of our common stock. For example, these
      stockholders, if acting together, would be able to influence or control matters
      requiring approval by our stockholders, including the election of directors
      and
      the approval of mergers, acquisitions or other extraordinary transactions.
      They
      may also have interests that differ from yours and may vote in a way with which
      you disagree and which may be adverse to your interests. The concentration
      of
      ownership may have the effect of delaying, preventing or deterring a change
      of
      control of our company, could deprive our stockholders of an opportunity to
      receive a premium for their common stock as part of a sale of our company and
      might ultimately affect the market price of our common stock.




**Future
      sales of shares of our common stock which are eligible for sale by our
      stockholders may decrease the price of our common stock.**




We
      had 10,724,312 shares of common stock outstanding on March 31, 2006.
      All of these shares are “restricted securities” under Rule 144 of the
      Securities Act of 1933. An additional 2,547,310 shares underlying options
      and warrants outstanding on March 31, 2006 will be restricted securities if
      and when they are issued. Restricted securities may be sold only if they are
      registered under the Securities Act or if an exemption from the registration
      requirements of the Securities Act is available. Generally, stockholders may
      sell restricted securities without registration after holding them for one
      year
      and subject to certain volume limitations. Actual sales or the prospect of
      sales
      by our present stockholders or by future holders of restricted securities,
      pursuant to a registration statement, under Rule 144, or otherwise, may, in
      the future, have a depressive effect on the market price of our common stock.
      A
      decline in the price of shares of our common stock might impede our ability
      to
      raise capital through the issuance of additional shares of our common stock
      or
      other equity securities.




**There
      is no market for our common stock and we cannot assure you that a market will
      develop or what the market price of our common stock will be.**




Although
      there has been limited trading in our stock on the over-the-counter market
      on
      the OTC Electronic Bulletin Board, we can give no assurance, that if an
      active trading market can be develop or sustained, you may be able to
      sell your shares of common stock at an attractive price or at all. We cannot
      predict the prices at which our common stock will trade. It is possible that
      in
      future quarters our operating results may be below the expectations of public
      market analysts and investors and, as a result of these and other factors,
      the
      price of our common stock may decline.




**Our
      common stock will be deemed to be penny stock which may make it difficult for
      investors to sell their shares.**




If
      a market ever develops for our common stock, our common stock will be deemed
      to
      be penny stock as that term is defined in Rule 3a51-1 of the Securities
      Exchange Act of 1934 (the “Exchange Act”). Penny Stocks are stocks:
      (i) with a price of less than five dollars per share; (ii) that are
      not traded on a recognized national exchange; (iii) whose prices are not
      quoted on the NASDAQ automated quotation system (NASDAQ listed stocks must
      still
      meet requirement (i) above); or (iv) in issuers with net tangible
      assets less than $2,000,000 (if the issuer has been in continuous operation
      for
      at least three years) or $5,000,000 (if in continuous operation for less than
      three years) or, with average revenues of less than $6,000,000 for the last
      three years.




Section 15(g)
      of the Exchange Act and Rule 15g-2 of the Exchange Act require
      broker-dealers dealing in penny stocks to provide potential investors with
      a
      document disclosing the risks of penny stocks and to obtain a manually signed
      and dated written receipt of the document before effecting any transaction
      in a
      penny stock for the investor’s account. Potential investors in our common stock
      are urged to obtain and read such disclosures carefully before purchasing any
      shares that are deemed to be penny stock.




31




Moreover,
      Rule 15g-9 of the Exchange Act requires broker-dealers in penny stocks to
      approve the account of any investor for transactions in such stocks before
      selling any penny stock to that investor. This procedure requires the
      broker-dealer to: (i) obtain from the investor information concerning his
      or her financial situation, investment experience and investment objectives;
      (ii) reasonably determine, based on that information, that transaction in penny
      stocks are suitable for the investor and that the investor has significant
      knowledge and experience to be reasonably capable of evaluating the risks of
      penny stock transactions; (iii) provide the investor with a written
      statement setting forth the basis on which the broker-dealer made the
      determination in (ii) above; and (iv) receive a signed and dated copy
      of such statement from such investor, confirming that it accurately reflects
      the
      investor’s financial situation, investment experience and investment objects.
      Compliance with these requirements may make it more difficult for investors
      in
      our common stock to resell the shares to third parties or to otherwise dispose
      of them.




**No
      dividends anticipated to be paid** .




We
      have never paid any cash dividends on our common stock and we do not anticipate
      paying cash dividends on our common stock in the future. The future payment
      of
      dividends is directly dependent upon our future earnings, capital requirements,
      financial requirements and other factors to be determined by our Board of
      Directors. It is anticipated that future earnings, if any, which may be
      generated from our operations will be used to finance our growth, and that
      cash
      dividends will not be paid to our stockholders.




**ITEM
      3. CONTROLS AND PROCEDURES**





As
      of the
      last day 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 Chief Operating Officer who is also the Company’s Chief
      Financial Officer, of the effectiveness of the design, and operation of the
      Company’s disclosure controls and procedures pursuant to Rule 13a-14 of the
      Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that
      evaluation, the Chief Operating Officer concluded that the Company’s disclosure
      controls and procedures are effective in timely alerting him to material
      information relating to the Company (including its consolidated subsidiary)
      required to be included in the Company’s Exchange Act filings.





There
      has
      not been any change in the Company’s internal controls over financial reporting
      during the quarter covered by this report that has materially affected, or
      is
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.





Under
      current SEC guidelines, the requirements of Section 404 of the Sarbanes-Oxley
      Act of 2002 (the “Act”) will be effective for the Company’s year ending June 30,
      2007. In order to comply with the Act, the Company must undertake a
      comprehensive effort, which includes documentation and testing of the design
      and
      operation of its internal control using the guidelines establishes by *Internal
      Control-Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission. During
      the course of these activities, the Company may identify certain internal
      control matters that management believes should be improved. These improvements,
      if necessary, will likely include further formalization of existing policies
      and
      procedures, improved segregation of duties, additional information technology
      system controls and additional monitoring controls. Although management does
      not
      believe that any of these matters will result in material weaknesses being
      identified in the Company’s internal control as defined by the Public Company
      Oversight Board (United States), no assurances can be given regarding the
      outcome of these efforts at the present time.




32


**PART
      II. OTHER INFORMATION**




**(UPDATE
      AS APPROPRIATE)**




**ITEM
      1. LEGAL PROCEEDINGS**





None.





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





None.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





The
      Company has a note payable to a former employee in connection with a stock
      repurchase agreement that requires monthly payments of $2,750 pursuant to
      contractual terms. The current balance of the note payable is $18,022 and the
      Company’s most recent payment under the note agreement was in August 2004. The
      note is secured by substantially all of the Company’s assets.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**ITEM
      5. OTHER INFORMATION**





None.





**ITEM
      6. EXHIBITS**





None.


33





**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**CENTERGISTIC SOLUTIONS, INC.**Date:
                January 18, 2007
            
            /s/
              Ricardo G. BrutocaoRicardo
                G. Brutocao,Chief
                Executive Officer





Date:
                  Janaury 18, 2007
            
            /s/
              David M. CunninghamDavid
                  M. Cunningham,Chief
                  Operating Officer and Chief FinancialOfficer
                (Principal Accounting Officer)




34




**EXHIBIT
        INDEX**


No.
              
              Description31.1
              
              Certification
                  of CEO - Rule 13a - 14(a) or 15d - 14(a)*31.2
              
              Certification
                  of CFO - Rule 13a - 14(a) or 15d - 14(a)*32
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of
                  2002+




*  Filed
        herewith
  +  Furnished
        herewith
  35