**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, 2007
 
 -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
x   No
o
 
 **As
        of April** **30, 2007, there were 10,724,312 shares of the issuer’s Common Stock
        outstanding.**
 
 **Traditional
        Small Business Disclosure Format. Yes**o**** ****  **No**x
 
  
 
  
 
 CENTERGISTIC
        SOLUTIONS, INC.
 QUARTERLY
        REPORT ON FORM 10-QSB
 FOR
        THE PERIOD ENDED MARCH 31, 2007
 
 TABLE
        OF CONTENTS
 **Page**Part
                    I. FINANCIAL INFORMATIONItem
                    1. Financial Statements:Condensed
                    Consolidated Balance Sheet at March 31, 2007 (Unaudited)
                3Condensed
                    Consolidated Statements of Operations and Comprehensive Income
                    (Loss)For
                    the Nine and Three Months Ended March 31, 2007 and 2006
                    (Unaudited)
                5Condensed
                    Consolidated Statements of Cash FlowsFor
                    the Nine Months Ended March 31, 2007 and 2006 (Unaudited)
                6Notes
                    to Unaudited Condensed Consolidated Financial Statements
                8Item
                    2. Management's Discussion and Analysis of FinancialCondition
                    and Results of Operations
                19Item
                    3. Controls and Procedures
                31Part
                    II. OTHER INFORMATIONItem
                    1. Legal Proceedings
                32Item
                    2. Unregistered Sales of Equity Securities and Use of
                    Proceeds
                32Item
                    3. Defaults Upon Senior Securities
                32Item
                    4. Submission of Matters to a Vote of Security Holders
                32Item
                    5. Other Information
                32Item
                    6. Exhibits
                32SIGNATURES
                33EXHIBIT
                    INDEX
                34
  -2-
 **CENTERGISTIC
          SOLUTIONS, INC.**
  **Condensed
          Consolidated Balance Sheet**
 March
                      31,2007**ASSETS****Current**Cash
                      and cash equivalents
                  
                  $
                  112,824Trade
                      receivables, less allowance for doubtfulaccounts
                      of $79,080
                  
                  
                  946,192Inventories
                  
                  
                  128,259Prepaid
                      expenses
                  
                  
                  69,772Miscellaneous
                      receivables
                  
                  
                  9,728Total
                      current assets
                  
                  
                  1,266,775**Property,
                      equipment, and leasehold****improvements**,
                      net of accumulated depreciation of $769,896
                  
                  
                  51,662**Capitalized
                      software development costs**,net
                      of accumulated amortization of $1,845,386
                  
                  
                  7,765**Other
                      assets**Deferred
                      offering costs
                  
                  
                  540,754Other
                  
                  
                  17,916Total
                      other assets
                  
                  
                  558,670$
                  1,884,872
 See
            accompanying notes to consolidated financial statements.
  -3-
 **CENTERGISTIC
            SOLUTIONS, INC.**
  **Condensed
          Consolidated Balance Sheet (continued)**
 March
                      31,2007**LIABILITIES
                      AND STOCKHOLDERS’ EQUITY (DEFICIT)****Current
                      liabilities**Notes
                      payables - related parties
                  
                  $
                  47,997Notes
                      payables - Line of credit-related party
                  
                  
                  330,000Accounts
                      payable
                  
                  
                  387,762Accrued
                      expenses
                  
                  
                  311,164Deferred
                      income
                  
                  
                  297,658Total
                      liabilities, all current
                  
                  
                  1,374,581**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
                  
                  
                  296,462Accumulated
                      deficit
                  
                  
                  (2,776,614
                  )Unearned
                      stock compensation
                  
                  
                  (613
                  )Common
                      stock to be redeemed
                  
                  
                  (67,454
                  )510,291Less
                      notes receivable
                  
                  
                  -Total
                      stockholders’ equity (deficit)
                  
                  
                  510,291Total
                      liabilities and stockholders’equity
                      (deficit)
                  
                  $
                  1,884,872
 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,****2007**
                
                **2006**
                
                **2007**
                
                **2006****(Unaudited)**
                
                **(Unaudited)****Revenues:**Software
                    and service revenues
                
                $
                2,310,902
                
                $
                2,011,309
                
                
                694,068
                
                
                748,080Professional
                    services
                
                
                119,163
                
                
                69,698
                
                
                37,463
                
                
                38,398Hardware
                    sales
                
                
                9,900
                
                
                326,016
                
                
                9,100
                
                
                86,605Total
                    revenues
                
                
                2,439,965
                
                
                2,407,023
                
                
                740,631
                
                
                873,083**Cost
                    of revenues:**Software
                    and service costs
                
                
                378,284
                
                
                430,044
                
                
                110,423
                
                
                73,348Professional
                    services
                
                
                1,537
                
                
                16,242
                
                
                -
                
                
                16,242Hardware
                    costs
                
                
                5,891
                
                
                257,045
                
                
                5,623
                
                
                84,258Total
                    cost of revenues
                
                
                385,712
                
                
                703,331
                
                
                116,046
                
                
                173,848Gross
                    profit
                
                
                2,054,253
                
                
                1,703,692
                
                
                624,585
                
                
                699,235**Operating
                    expenses:**Selling
                    and marketing
                
                
                295,954
                
                
                460,729
                
                
                73,093
                
                
                162,060Research
                    and development
                
                
                174,923
                
                
                227,359
                
                
                83,985
                
                
                70,677General
                    and administrative
                
                
                1,254,174
                
                
                1,224,527
                
                
                417,638
                
                
                449,531Total
                    operating expenses
                
                
                1,725,051
                
                
                1,912,615
                
                
                574,716
                
                
                682,268**Operating
                    income (loss)**
                
                
                329,202
                
                
                (208,923
                )
                
                49,869
                
                
                16,967**Other
                    income (expense)**
                
                
                1,736
                
                
                (5,191
                )
                
                751
                
                
                233**Interest
                    expense**
                
                
                (39,184
                )
                
                (32,390
                )
                
                (11,151
                )
                
                (15,350
                )Income
                    (Loss) before income taxes
                
                
                291,754
                
                
                (246,504
                )
                
                39,469
                
                
                1,850**Income
                    tax provision**
                
                
                -
                
                
                (3,200
                )
                
                -
                
                
                -**Net
                    income (loss)**
                
                
                291,754
                
                
                (249,704
                )
                
                39,469
                
                
                1,850**Other
                    comprehensive income, net of tax**
                
                
                -
                
                
                -
                
                
                -
                
                
                -**Comprehensive
                    income (loss)**
                
                $
                291,754
                
                $
                (249,704
                )
                
                39,469
                
                
                1,850Net
                    income (loss) per share - Basic
                
                $
                0.03
                
                $
                (0.02
                )
                
                -
                
                
                -Diluted
                
                $
                0.02
                
                
                -
                
                
                -
                
                
                -Weighted-average
                    number ofcommon
                    shares outstanding - Basic
                
                
                10,724,312
                
                
                10,705,334
                
                
                10,724,312
                
                
                10,717,645Diluted
                
                
                12,929,422
                
                
                -
                
                
                12,929,422
                
                
                -
 
 See
        accompanying notes to consolidated financial statements.


-5-


**CENTERGISTIC
        SOLUTIONS, INC.**


**Condensed
        Consolidated Statements of Cash Flows**
 **Nine
                    Months Ended****March
                    31,****2007**
                
                **2006****Cash
                    flows from operating activities**Net
                    income (loss)
                
                $
                291,754
                
                $
                (249,704
                )Adjustments
                    to reconcile net income (loss) tonet
                    cash provided (used) by operating activities:Depreciation
                    and amortization
                
                
                93,847
                
                
                106,325Provision
                    for doubtful accounts
                
                
                19,830
                
                
                22,750Stock
                    compensation
                
                
                5,589
                
                
                5,589Non-cash
                    interest expenseLoss
                    on sale of securitiesavailable
                    for saleIncrease
                    (decrease) from changesin
                    assets and liabilities:Trade
                    receivables
                
                
                (193,272
                )
                
                (125,631
                )Inventories
                
                
                (8,014
                )
                
                21,602Prepaid
                    expenses
                
                
                (36,069
                )
                
                17,327Miscellaneous
                    receivables
                
                
                5,100
                
                
                (4,578
                )Deposits
                
                
                (8,742
                )
                
                5,964Other
                
                
                1,516
                
                
                -Deferred
                    legal fees
                
                
                -
                
                
                (5,000
                )Accounts
                    payable
                
                
                (71,777
                )
                
                (88,671
                )Accrued
                    expenses
                
                
                65,141
                
                
                43,891Deferred
                    income
                
                
                (8,643
                )
                
                170,301Net
                    cash provided (used) by operating activities
                
                
                156,260
                
                
                (79,835
                )**Cash
                    flows from investing activities**Proceeds
                    from sale of securities
                
                
                -
                
                
                -Additions
                    to capitalized software development costs
                
                
                -
                
                
                -Purchase
                    of equipment
                
                
                (19,928
                )
                
                (7,384
                )Net
                    cash used by investing activities
                
                
                (19,928
                )
                
                (7,384
                )
 See
          accompanying notes to consolidated financial statements.
  -6-
 **CENTERGISTIC
          SOLUTIONS, INC.**
  **Condensed
        Consolidated Statements of Cash Flows (continued)**
 **Nine
                    Months Ended****March
                    31,****2007**
                
                **2006****(Unaudited)****Cash
                    flows from financing activities**Deferred
                    offering costs
                
                
                -
                
                
                19,480Issuance
                    of common stock
                
                
                -
                
                
                5,000Borrowings
                    on short-term debt
                
                
                -
                
                
                66,000Payments
                    on short-term debt
                
                
                (66,000
                )
                
                -Repurchase
                    of common stock
                
                
                (41,696
                )
                
                2,750Loan
                    against distribution
                
                
                -
                
                
                (4,500
                )Accrued
                    ESOT distribution
                
                
                25,196
                
                
                -Net
                    cash (used) provided byfinancing
                    activities
                
                
                (82,500
                )
                
                88,730**Net
                    (decrease) increase in cash and cash equivalents**
                
                
                53,832
                
                
                1,511**Cash
                    and cash equivalents,**beginning
                    of period
                
                
                58,992
                
                
                80,486**Cash
                    and cash equivalents,**end
                    of period
                
                $
                112,824
                
                $
                81,997*Supplemental
                    Disclosures of Cash Flow**Information:*Cash
                    payments for:Interest
                
                $
                37,834
                
                $
                31,040Income
                    tax payments
                
                $
                -
                
                $
                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, 2007and 2006 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,
        2007
        and for the three and nine month periods ended March 31, 2007 and 2006 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,
        2007 are not necessarily indicative of the results that may be expected for
        the
        year ending June 30, 2007. These condensed consolidated financial statements
        and
        notes thereto should be read with the consolidated financial statements for
        the
        year ended June 30, 2006 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,
        2007
        and for the three and nine months ended March 31, 2007 and 2006 include the
        accounts of the Company and its wholly owned subsidiary, 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, 2007 and 2006 is Unaudited)*
  **2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**
  *Management’s
        Plans / Liquidity*
 
 During
        the nine months ended March 31, 2006, the Company generated net income of
        $291,754, which includes depreciation and amortization of $93,847, and, as
        of
        March 31, 2007, the Company had a working capital deficit of ($107,806).
        The
        Company demonstrated reduced operating costs during the nine months ended
        March
        31, 2007, as the costs decreased by $187,564 or from 79% of revenues to 71%
        in
        the current period. The Company achieved gross profit margins of 84% during
        the
        nine months ended March 31, 2007 as compared to 71% last period ended. The
        Company expects this increased margin trend to continue as the Company is
        focused on selling software and service and reducing the reliance on less
        profitable hardware sales. 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.
 
 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, 2007, 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, 2007 and 2006 is Unaudited)*
  **2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**
 
 The
        following represents the total assets by segment:
 March
                    31, 2007Centergistic
                    Solutions
                
                $
                4,429,989Centergistic
                    Solutions - Mexico
                
                
                641,7515,071,740Eliminations
                
                
                (3,186,868
                )Total
                    consolidated assets
                
                $
                1,884,872
 
 The
        following represents the revenues, gross profit and net income (loss) by
        segment:
  Nine
                    Months Ended
                
                Three
                    Months EndedMarch
                    31,
                
                March
                    31,2007
                
                2006
                
                2007
                
                2006Centergistic
                    SolutionsRevenues
                
                $
                1,479,264
                
                $
                1,256,765
                
                $
                450,511
                
                $
                490,749Gross
                    profit
                
                $
                1,440,264
                
                $
                983,478
                
                $
                435,105
                
                $
                397,592Net
                    income (loss)
                
                $
                399,215
                
                $
                (269,497
                )
                $
                94,034
                
                $
                (14,159
                )Centergistic
                    Solutions - MexicoRevenues
                
                $
                960,701
                
                $
                1,150,258
                
                $
                290,120
                
                $
                382,334Gross
                    profit
                
                $
                613,989
                
                $
                720,214
                
                $
                189,480
                
                $
                301,643Net
                    income (loss)
                
                $
                (107,461
                )
                $
                19,802
                
                $
                (54,565
                )
                $
                16,009
 
 *Net
        Income (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, 2007 and 2006 is Unaudited)*
 
 **2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**
 
 *Net
        Income (Loss) Per Share (continued)*
 
 For
        all
        periods presented, basic and diluted income (loss) per common share have
        been
        calculated. The dilutive income per share calculation includes shares on
        a "as
        if" basis as if options and warrants had been exercised.
 
 *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, 2007, 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, 2007, the Company’s
        largest customer accounted for 24% of total trade receivables. For each of
        the
        nine months ended March 31, 2007 and 2006, the Company’s largest customer
        accounted for 21% and 13% 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, 2007, customers of the Company’s Mexican subsidiary accounted for 51%
        of total trade receivables. For each of the nine months ended March 31, 2007
        and
        2006 sales to customers of the Company’s Mexican subsidiary account for 39% and
        48%, 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, 2007 and 2006 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, 2007, the Company capitalized a net amount of $540,754 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, 2007 and 2006 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 $82,473 through March 31, 2007 for stock option grants,
        of
        which $5,589 was recognized during the nine-month periods ended March 31,
        2007
        and 2006. 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 income (loss) would have been as shown
        below:
 Nine
                    MonthsEnded
                    March 31,2007
                
                2006Net
                    income (loss), as reported
                
                $
                291,754
                
                $
                (249,704
                )Add:
                    Stock compensationexpense
                    recorded inaccordance
                    with APBOpinion
                    No. 25
                
                
                5,589
                
                
                5,589Deduct:
                    Total stock-basedemployee
                    compensationexpense
                    determined underfair
                    value based methodfor
                    all stock options, net ofrelated
                    tax effects
                
                
                (13,841
                )
                
                (13,355
                )Pro
                    forma net income (loss)
                
                $
                283,502
                
                $
                (257,470
                )Pro
                    forma net income (loss) per share
                
                $
                0.03
                
                $
                (0.02
                )
 
 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 4.39% and 3.75% for the nine month periods ended March
        31,
        2007 and 2006, 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, 2007 and 2006 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, 2007 and 2006 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 three
        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 nine months ended March 31, 2007 and 2006 was $22,500 and $61,375,
        respectively, 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, 2007 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,
        2007:
 CenterStats
                
                $
                398,998AgentView
                    (fully amortized)
                
                
                307,476Fully
                    amortized products
                
                
                1,146,6771,853,151Accumulatedamortization
                
                
                (1,845,386
                )$
                7,765
 **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 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 CEO and Vice President/COO/CFO of the Company. The balance
        of the
        line at March 31, 2007 is $330,000.
 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, 2007 and 2006 is Unaudited)*
  **4.**
              **Notes
                  Payable - Related Parties
                  (continued)**
  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
        last payment on this note was made in August 2004. The balance of the note
        at
        March 31, 2007 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,
        2007, 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, 2007 and 2006 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, 2007, 1,042,000 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, 2007, 464,000 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,
        2007 is as follows:
 
 Fixed Options
              
              Shares
              
              Weighted
                  Average Exercise
                PriceOutstanding
                  at beginningof
                  period
              
              
              2,436,200
              
              $
              0.51Expired
              
              
              (355,000
              )
              
              (0.57
              )Granted
              
              
              12,800
              
              
              0.36Outstanding
                  at end of period
              
              
              2,094,000
              
              $
              0.50Exercisable
                  at end of period
              
              
              1,652,100
              
              $
              0.54Weighted
                  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, 2007 and 2006 is Unaudited)*
  **6.**
              **Stockholders’
                  Equity (continued)**
 
 *Stock
        Option Plans (continued)*
 
 A
        summary
        of stock options outstanding at March 31, 2007 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
              
              
              1,361,200
              
              
              6.36
              
              $
              0.39
              
              
              919,300
              
              $
              0.39$0.52
                  to $0.79
              
              
              732,800
              
              
              1.69
              
              
              0.72
              
              
              732,800
              
              
              0.722,094,000
              
              
              
              
              $
              0.50
              
              
              1,652,100
              
              $
              0.54
 
 *Common
        Stock Purchase Warrants*
 
 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, 2007.
 See
          accompanying notes to consolidated financial statements.
 -18-
  **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.
  Centergistic
        Solutions, Inc., Inc. was incorporated in Los Angeles, California on
        March 13, 1972. 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, Aspect, 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.
  -19-
  **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,
        2007 and 2006, these customers represented approximately 39% and 48%,
        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 18 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.
  -20-
  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, 2007 and June 30, 2006, our accounts
        receivable balances were $946,000 and $773,000, respectively, net of our
        estimated allowances for doubtful accounts of $79,000 and $59,000, respectively.
  The
        accounts receivable balance increased during the nine month period ended
        March 31, 2007. The Company achieved higher revenue volumes during this
        period and this resulted in increased accounts receivables balances. 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, 2007 has increased to 140 days.
        We attribute this increase to higher sales volume and several older invoices.
        We
        do expect the turnover to improve as we increase collections of several older
        accounts, especially Mexican distributors.
  ***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 $22,500
        and
        $61,000 for each of the nine month periods ended March 31, 2007 and 2006,
        respectively.
  ***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, 2007, 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.
  -21-
  **Results
        of Operations for the Nine Months Ended March 31, 2007 as Compared to the
        Nine
        Months Ended March 31, 2006**
   We
        believe there is some relatively minor improvement in the economy in
        general, and an improvement in corporate infrastructure technology
        spending in specific. We saw increases in revenue in almost all lines of
        business this past quarter, and expect to see improvement in our revenue
        when
        corporate infrastructure technology spending increases. Our biggest risks
        continue to be revenue and growth, and the capital raise necessary to implement
        our sales and marketing strategy.
  ***Revenues***
  **Nine
                    Month Period Ended March 31,****(In
                    thousands)****2007**
                
                **%**
                
                **2006**
                
                **%**Centergistic
                    (U.S.)
                
                $
                1,479
                
                
                60.6
                
                $
                1,257
                
                
                52.2Mexico
                    and Latin America
                
                $
                961
                
                
                39.4
                
                $
                1,150
                
                
                47.8Total
                
                $
                2,440
                
                
                100.0
                
                $
                2,407
                
                
                100.0
  Total
        net revenues increased by $33,000 or 1% for the nine month period ended
        March 31, 2007 (“PE 2007”) as compared to the nine month period ended
        March 31, 2006 (“PE 2006”). Revenues from U.S. based operations increased
        by $222,000 or 18% from the PE 2006. Revenues from Mexico decreased by $189,000
        or 16% as compared to PE 2006.
  In
        the U.S. based operations, direct sales of AgentView software increased $180,000
        or 95% compared to PE 2006. This increase is primarily due to introduction
        of a
        new version of software and consistent with the improvement in corporate
        technology spending. 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 continues to increase, we expect
        our revenue to increase.
  Distribution
        revenue in the U.S. increased by $55,000 or 9% from PE 2006. Revenue from
        our
        largest distributor increased by $208,000 or 66% from PE 2006. We expect
        business from our distributor to increase during the next nine months as
        we hope
        to see increased volume as an upgrade program was introduced to their
        installed base, and a roll out of our CenterStats product to that base as
        well.
        Distribution revenue to U.S. distributors fell by $153,000 or 57% primarily
        due
        to the discontinuance of hardware sales. We made a strategic decision to
        stop
        selling low margin hardware to distributors and concentrate on hig margin
        software and service sales. The margin improvement certainly reflects this
        strategy. 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 $9,000 or 15% due to the sales of lower
        priced upgrades as opposed to full systems included in last years revenues.
        We
        expect these revenues to increase as more Agent View and CenterStats products
        are sold.
  Consulting and professional services increased by $39,000 or 56% from PE
        2006.
        We have begun actively seeking consulting contracts during PE 2007. We expect
        this increasing revenue trend to continue throughout the remainder of the
        fiscal
        year.
  Mexico
        and Latin America revenues decreased by $189,000 or 16% as compared to PE
        2006.
        We made a concentrated effort to eliminate low margin products from our product
        offerings to distributors. The resulting decline in revenue is attributable
        to
        the elimination of low margin products. 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 $386,000 or 16% of revenues as compared to $703,000
        or
        29% of revenues in PE 2006. Costs associated with hardware and third party
        products sales decreased by nearly $220,000. The margin improvement is due
        to
        the increased software and service revenue and the elimination of sales of
        lower
        margin hardware and 3 rd party
        products. 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 increased to 84% of revenues in PE 2007, or $2,054,000, as compared
        to
        71%, or $1,704,000, in PE 2006. The improvement in gross profit percentage
        is
        attributable to higher software and service revenue achieved in PE 2007.
        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.
  -22-
  **Operating
          Expenses**
  *Sales
          and Marketing*
  Sales
          and marketing expenses decreased $164,000 or 36% as compared to PE 2006.
          Salaries and wages were lower by $34,000 due to restructuring sales management
          positions in Mexico. Consulting ($32,000), commissions ($52,000), and trade
          show
          expenses ($28,000) all declined. Commission expense was lower due to the
          decreased sales in Mexico, who salespeople are highly leveraged. We eliminated
          a
          sales consultant during the current period and decided to cut back on trade
          show
          expenditures. 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 increased by $30,000 or 2% as compared to PE
          2006.
          The creation of a bonus plan for executive management caused bonus expense
          to
          rise by $96,000. Payroll tax expense rose by $8,000 due to higher payrolls
          and
          bonuses. These increases were offset by reductions in insurance expense
          ($53,000), professional fees ($16,000), and depreciation and amortization
          ($12,000).
  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 $52,000 or 23% 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 $31,000, and rent, travel, and professional
          fees decreased a total of $24,000 due to the closure of the India office.
          This
          reduced expenditure level will be offset by increased hires of staff here
          in the
          U.S. We expect research and development expenditures to increase as we
          add
          additional staff.
  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 2007 increased by $7,000 or 21% over PE 2006.
          The
          interest expense was related to interest on the line of credit.
  **Net
          Income (Loss)**
  Net
          income improved to $292,000 as compared to a $250,000 loss in PE 2006,
          a
          $542,000 or 217% improvement. The improvement was primarily due to increased
          sales and gross margins and decreases in operating expenses achieved in
          the
          quarter.
  **Liquidity
          and Capital Resources**
  Net
          cash provided by operating activities was $156,000 in PE 2007 and net cash
          used
          by operations was $80,000 in PE 2006. The net cash provided by operations
          in PE
          2007 was comprised primarily of income from operations of $292,000 and
          by
          depreciation and amortization of $94,000 offset by a net decrease from
          changes
          in assets and liabilities of $256,000. The net cash used for operations
          in PE
          2006 was comprised primarily of the loss from operations of $250,000 offset
          by
          depreciation and amortization of $135,000 and a net increase from changes
          in
          assets and liabilities of $34,000.
  Net
          cash from investing activities used $20,000 in PE 2007 as compared to a
          use of
          $7,000 in PE 2006. The cash used in both period ends were primarily due
          to
          purchase of fixed assets.
  Net
          cash used by financing activities was $83,000 in PE 2007 as compared to
          cash
          provided of $89,000 in PE 2006. The amount used in PE 2007 was primarily
          due to
          payments on borrowings of $66,000 added to stock repurchases (ESOT) of
          $42,000
          offset by an increase in the accrued ESOT distribution of $25,000. The
          cash
          provided by financing activities in PE 2006 came from borrowings on debt
          of
          $66,000 and a reversal of deferred offering costs of $19,000.
  -23-
  We
          had a deficit working capital of ($108,000) at March 31, 2007.
  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, 2007,
          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
          $2,750 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. We have not made payments on this note
          since
          August 2004. The balance of this note at March 31, 2007 was $18,022.
  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,
          2007 was
          $330,000.
  As
          of March 31, 2007, including the results of operations for the nine months
          then ended, our working capital increased to a deficit of ($108,000).
          Approximately $48,000 of that deficit is related party notes payable which
          we do
          not anticipate repaying. Another $298,000 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
          2007.
  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 re-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, 2007 as Compared to
          the Three
          Months Ended March 31, 2006**
  We
          believe there is some improvement in the economy in general, and some strength
          in corporate infrastructure technology spending in specific. We saw decreases
          in
          revenue in most lines of business this past quarter, but 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)****2007**
                
                **%**
                
                **2006**
                
                **%**Centergistic
                    (U.S.)
                
                $
                451
                
                
                60.9
                
                $
                491
                
                
                56.2Mexico
                    and Latin America
                
                $
                290
                
                
                39.1
                
                $
                382
                
                
                43.8Total
                
                $
                741
                
                
                100.0
                
                $
                873
                
                
                100.0
  -24-
  Total
          net revenues decreased by $132,000 or 15% for the three month period ended
          March 31, 2007 (“PE 2007”) as compared to the three month period ended
          March 31, 2006 (“PE 2006”). Revenues from U.S. based operations decreased
          by $40,000 or 8% from the PE 2006. Revenues from Mexico decreased by $92,000
          or
          24% from the PE 2006.
  In
          the U.S. based operations, direct sales of AgentView decreased $25,000
          or 22%
          compared to PE 2006. The majority of the decrease ($15,000) is due to reduced
          hardware sales to direct customers. We have made a concentrated effort
          to stop
          selling low margin hardware and focus on higher margin software and services.
          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. increased by $34,000 or 18% from PE 2006. Revenue from
          our
          largest distributor increased by $111,000 or 59% from PE 2006. Most of
          the
          increase was due to the roll out of upgrades and CenterStats to their installed
          base. We expect business from our distributor to increase as we continue
          the
          upgrade and CenterStats roll out to the installed base. We also saw a decline
          in
          hardware sales to distributors as compared to PE 2006 due to our discontinuance
          of selling hardware. We expect to continue this declining trend of hardware
          sales from distribution throughout the remainder of our fiscal year.
  Installation
          and training revenues decreased by $26,000 or 87% from PE 2006 due to the
          decreased direct sales of AgentView. We expect these revenues to increase
          as
          more Agent View and CenterStats products are sold.
  Maintenance
          revenue declined by $26,000 or 22% from PE 2006 as we continued to sell
          upgrades
          to the installed base which caused the maintenance revenues to decline
          on those
          customers.
  Mexico
          and Latin America revenues decreased by $92,000 or 24% as compared to PE
          2006.
          We made a concentrated effort to eliminate the sale of low margin products
          this
          fiscal year. We have seen a corresponding drop in revenue due to this plan.
          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 $116,000 or 16% of revenues as compared to $174,000
          or
          20% of revenues in PE 2006. Costs associated with hardware revenues decreased
          by
          $78,000 and consulting expenses decreased $16,000. As a greater portion
          of our
          revenue over this past three months ended March 31, 2007 was derived from
          software and service, our costs related to hardware products decreased
          accordingly. 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 84% of revenues in PE 2007, or $625,000, as compared
          to 80%,
          or $699,000, in PE 2006. The improvement is gross profit percentage is
          attributable to the mix of revenue away from hardware and third-party sourced
          products to software and service related revenues. 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 $89,000 or 55% as compared to PE 2006.
          Commission expenses decreased by $58,000 due to the lower sales volume in
          Mexico, which has highly leveraged salespeople. We eliminated a sales consultant
          position this year and that decreased expenses by $20,000. 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 $32,000 or 7% as compared to PE
          2006.
          Insurance premiums were reduced by $31,000 due to switching to a higher
          deductible medical insurance plan. Depreciation fell by $6,000 during the
          period. We increased expenses in payroll taxes, automotive, and travel
          all by
          $2,000 during the PE 2007.
  -25-
  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 increased by $13,000 or 19% over the same period
          as
          last year. The costs increased because we added development staff in the
          U.S.
          during the PE 2007. We will continue to add staff to meet the development
          demands of our customers. 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 2007 was related to 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 $39,000 in PE 2007 as compared to $2,000 in PE 2006,
          a
          $38,000 or 2,033% improvement. 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
          generated net income of $292,000 during the nine months ended March 31,
          2007,
          but as of such date our accumulated deficit was $2,777,000. 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,
          2007 and 2006 were $2,440,000 and $2,407,000, 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.
 
 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.
  -26-
  **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 our major distributor as a customer would materially adversely
          affect our business, operating results and financial condition.**
  We
          sell a substantial portion of our products to a major international distributor
          which has been a distributor of our products for the past 13 years. For the
          nine month periods ended March 31, 2007 and 2006, this customer accounted
          for 21% and 13%, respectively, of net revenues, and 24% of total trade
          receivables as of March 31, 2007. The loss of this customer 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,
          2007 and 2006, these customers represented approximately 39% and 48%,
          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.
  **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.
  -27-
  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.
  **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.**
  -28-
  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,•
                
                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.
  -29-
  **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, 2007 our officers and directors beneficially owned a total of
          8,059,486 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, 2007), or
          approximately 68% 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, 2007.
          All of these shares are “restricted securities” under Rule 144 of the
          Securities Act of 1933. An additional 2,205,110 shares underlying options
          and warrants outstanding on March 31, 2007 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
          our common stock has begun trading in the over-the-counter market on the
          OTC
          Electronic Bulletin Board, we are now on the pink sheets. If an active
          trading
          market does not develop or is not sustained, it may be difficult for you
          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.
  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.
  -30-
 
 **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,
          2008. 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.
  -31-
  **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.
 
 -32-
 **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:
                  May 11, 2007
                By:
                /s/ Ricardo
                  G. BrutocaoRicardo
                  G. Brutocao,Chief
                  Executive Officer Date:
                    May 11, 2007
                  By:
                  /s/ David
                    M.
                    CunninghamDavid
                      M. Cunningham, President,
                    Chief
                      Operating Officer and Chief Financial
                    Officer
                      (Principal Accounting Officer)
 -33-
  **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
  -34-