**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 December 31, 2005


-OR-





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


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**


For
      the
      transition period from ________ to ________




**Commission
      file number 000-51433**











**CENTERGISTIC
      SOLUTIONS, INC.**


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





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




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


(Address
      of principal executive offices)





**(714)
      935-9000**


(Issuer's
      telephone number)





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





Yes o   No
x





**As
      of January** **** **31,
      2006, 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 DECEMBER 31, 2005





TABLE
      OF
      CONTENTS




**Page**Part
                I. FINANCIAL INFORMATIONItem
                1. Financial Statements:Condensed
                Consolidated Balance Sheet at December 31, 2005
                (Unaudited)
            3Condensed
                Consolidated Statements of Operations and Comprehensive Income (Loss)
                For
                the Six and Three Months Ended December 31, 2005 and 2004
                (Unaudited)
            5Condensed
                Consolidated Statements of Cash Flows For the Six Months Ended December
                31, 2005 and 2004 (Unaudited)
            6Notes
                to Unaudited Condensed Consolidated Financial Statements
            8Item
                2. Management's Discussion and Analysis of FinancialCondition
                and Results of Operations
            20Item
                3. Controls and Procedures
            32Part
                II. OTHER INFORMATIONItem
                1. Legal Proceedings
            33Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            33Item
                3. Defaults Upon Senior Securities
            33Item
                4. Submission of Matters to a Vote of Security Holders
            33Item
                5. Other Information
            33Item
                6. Exhibits
            33SIGNATURES
            34EXHIBIT
                INDEX
            35




2


**CENTERGISTIC
        SOLUTIONS, INC.**


**Condensed
      Consolidated Balance Sheet**


December
                  31,2005(Unaudited)**ASSETS****Current**Cash
                  and cash equivalents
              
              $
              125,703Trade
                  receivables, less allowance for doubtfulaccounts
                  of $41,500
              
              
              624,340Inventories
              
              
              173,378Prepaid
                  expenses
              
              
              82,222Miscellaneous
                  receivables
              
              
              35,328Total
                  current assets
              
              
              1,040,971**Property,
                  equipment, and leasehold****improvements**,
                  net of accumulated depreciation of $642,783
              
              
              95,772**Capitalized
                  software development costs**,net
                  of accumulated amortization of $1,781,971
              
              
              71,180**Other
                  assets**Deferred
                  offering costs
              
              
              529,854Other
              
              
              13,271Total
                  other assets
              
              
              543,125$
              1,751,048




See
      accompanying notes to condensed consolidated
      financial statements.





3





**CENTERGISTIC
      SOLUTIONS, INC.**




**Condensed
      Consolidated Balance Sheet (continued)**


December
                  31,2005(Unaudited)**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY (DEFICIT)****Current
                  liabilities**Notes
                  payables - related parties
              
              $
              45,247Notes
                  payables - Line of Credit-related party
              
              
              400,000Accounts
                  payable
              
              
              566,483Accrued
                  expenses
              
              
              123,958Deferred
                  income
              
              
              306,793Total
                  liabilities, all current
              
              
              1,442,481**Commitments
                  and contingencies**(Notes
                  4 through 7)**Stockholders’
                  equity (deficit)**Common
                  stock, 80,000,000 shares authorized;10,699,312
                  shares issued and outstanding
              
              
              3,058,510Additional
                  paid-in capital
              
              
              291,462Accumulated
                  deficit
              
              
              (3,005,719
              )Unearned
                  stock compensation
              
              
              (9,928
              )Common
                  stock to be redeemed
              
              
              (25,758
              )Total
                  stockholders’ equity (deficit)
              
              
              308,567Total
                  liabilities and stockholders’equity
                  (deficit)
              
              $
              1,751,048


See
      accompanying notes to condensed consolidated
      financial statements.





4




CENTERGISTIC
      SOLUTIONS,
      INC.





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


**Six
                  Months Ended**
              
              **Three
                  Months Ended****December
                  31,**
              
              **December
                  31,****2005**
              
              **2004**
              
              **2005**
              
              **2004****(Unaudited)**
              
              **(Unaudited)****Revenues:**Software
                  and service revenues
              
              $
              1,263,229
              
              $
              1,574,374
              
              
              742,303
              
              
              849,366Professional
                  services
              
              
              31,300
              
              
              16,560
              
              
              22,300
              
              
              -Hardware
                  sales
              
              
              239,411
              
              
              195,006
              
              
              102,011
              
              
              117,223Total
                  revenues
              
              
              1,533,940
              
              
              1,785,940
              
              
              866,614
              
              
              966,589**Cost
                  of revenues:**Software
                  and service costs
              
              
              356,696
              
              
              290,005
              
              
              244,007
              
              
              185,197Professional
                  services
              
              
              -
              
              
              4,780
              
              
              -
              
              
              -Hardware
                  costs
              
              
              172,787
              
              
              163,909
              
              
              71,226
              
              
              91,237Total
                  cost of revenues
              
              
              529,483
              
              
              458,694
              
              
              315,233
              
              
              276,434Gross
                  profit
              
              
              1,004,457
              
              
              1,327,246
              
              
              551,381
              
              
              690,155**Operating
                  expenses:**Selling
                  and marketing
              
              
              298,669
              
              
              363,919
              
              
              157,755
              
              
              181,593Research
                  and development
              
              
              156,682
              
              
              205,651
              
              
              73,810
              
              
              101,008General
                  and administrative
              
              
              774,996
              
              
              932,943
              
              
              403,833
              
              
              467,251Total
                  operating expenses
              
              
              1,230,347
              
              
              1,502,513
              
              
              635,398
              
              
              749,852**Operating
                  loss**
              
              
              (225,890
              )
              
              (175,267
              )
              
              (84,017
              )
              
              (59,697
              )**Other
                  expense**
              
              
              (5,424
              )
              
              (4,682
              )
              
              (4,567
              )
              
              (2,524
              )**Interest
                  expense**
              
              
              (17,040
              )
              
              (2,410
              )
              
              (7,111
              )
              
              (1,673
              )Loss
                  before income taxes
              
              
              (248,354
              )
              
              (182,359
              )
              
              (95,695
              )
              
              (63,894
              )**Income
                  tax provision**
              
              
              (3,200
              )
              
              (3,200
              )
              
              (3,200
              )
              
              (3,200
              )**Net
                  loss**
              
              
              (251,554
              )
              
              (185,559
              )
              
              (98,895
              )
              
              (67,094
              )**Other
                  comprehensive income, net of tax**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**Comprehensive
                  loss**
              
              $
              (251,554
              )
              $
              (185,559
              )
              
              (98,895
              )
              
              (67,094
              )Basis
                  and diluted net loss per share
              
              $
              (0.02
              )
              $
              (0.02
              )
              
              (0.01
              )
              
              (0.01
              )Weighted-average
                  number ofcommon
                  shares outstanding
              
              
              10,699,312
              
              
              10,413,813
              
              
              10,699,312
              
              
              10,691,312




See
      accompanying notes to condensed consolidated
      financial statements.





5




**CENTERGISTIC
      SOLUTIONS, INC.**


**Notes
        to Condensed Consolidated Financial Statements**
 *(Information
        with Respect to the Six Months Ended*
 *December
        31, 2005 and 2004 is Unaudited*
  Condensed
        Consolidated Statements of Cash
        Flows


**Six
                  Months Ended****December
                  31,****2005**
              
              **2004****(Unaudited)****Cash
                  flows from operating activities**Net
                  loss
              
              $
              (251,554
              )
              $
              (185,559
              )Adjustments
                  to reconcile net loss tonet
                  cash used by operating activities:Depreciation
                  and amortization
              
              
              73,621
              
              
              95,892Provision
                  for doubtful accounts
              
              
              6,000
              
              
              (4,310
              )Stock
                  compensation
              
              
              3,726
              
              
              3,726Non-cash
                  interest expense
              
              
              
              
              
              -Loss
                  on sale of securitiesavailable
                  for sale
              
              
              
              
              
              -Increase
                  (decrease) from changesin
                  assets and liabilities:Trade
                  receivables
              
              
              (71,425
              )
              
              (154,765
              )Inventories
              
              
              (18,242
              )
              
              (21,798
              )Prepaid
                  expenses
              
              
              (18,544
              )
              
              (12,380
              )Miscellaneous
                  receivables
              
              
              (2,578
              )
              
              (4,959
              )Deposits
              
              
              8,270
              
              
              -Other
              
              
              4,647
              
              
              -Accounts
                  payable
              
              
              92,806
              
              
              47,445Accrued
                  expenses
              
              
              (5,244
              )
              
              17,292Deferred
                  income
              
              
              125,176
              
              
              83,321Net
                  cash used by operating activities
              
              
              (53,341
              )
              
              (136,095
              )**Cash
                  flows from investing activities**Proceeds
                  from sale of securities
              
              
              -
              
              
              -Additions
                  to capitalized software development costs
              
              
              
              
              
              -Purchase
                  of equipment
              
              
              (6,922
              )
              
              (10,136
              )Net
                  cash used by investing activities
              
              
              (6,922
              )
              
              (10,136
              )




See
      accompanying notes to condensed consolidated
      financial statements.




6




**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements**
 *(Information
        with Respect to the Six Months Ended*
 *December
        31, 2005 and 2004 is Unaudited)*
  **Condensed
        Consolidated Statements of Cash Flows (continued)**





**Nine
                Months Ended****December
                31,****2005**
            
            **2004****(Unaudited)****Cash
                flows from financing activities**Deferred
                offering costs
            
            
            24,480
            
            
            (81,463
            )Principal
                payments on term loan andnotes
                payable
            
            
            -
            
            
            -Borrowings
                on short-term debt
            
            
            81,000
            
            
            150,000Repurchase
                of common stock
            
            
            -
            
            
            (5,363
            )Payments
                received on note receivable
            
            
            -
            
            
            1,460Net
                cash (used) provided byfinancing
                activities
            
            
            105,480
            
            
            64,634**Net
                (decrease) increase in cash and cash equivalents**
            
            
            45,217
            
            
            (81,597
            )**Cash
                and cash equivalents,**beginning
                of period
            
            
            80,486
            
            
            149,846**Cash
                and cash equivalents,**end
                of period
            
            $
            125,703
            
            $
            68,249*Supplemental
                Disclosures of Cash Flow**Information:*Cash
                payments for:Interest
            
            $
            16,140
            
            $
            10,085Income
                tax payments
            
            $
            3,200
            
            $
            3,200




See
      accompanying notes to condensed consolidated
      financial statements.





7




**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Six Months Ended*
 *December
        31, 2005 and 2004 is Unaudited)*
  **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.





LYA,
      Inc., a wholly owned subsidiary, is a consulting business for call centers
      and
      the telecommunications industry. The operations of this entity were merged
      into
      that of the parent company during fiscal year 2005, and management stopped
      viewing it as an operating segment.





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





*Basis
      of Presentation*





The
      accompanying unaudited condensed consolidated financial statements as of
      December 31, 2005 and for the six month periods ended December 31, 2005 and
      2004
      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 six month period ended December
      31, 2005 are not necessarily indicative of the results that may be expected
      for
      the year ending June 30, 2006. These condensed consolidated financial statements
      and notes thereto should be read with the consolidated financial statements
      for
      the year ended June 30, 2005 included in the Company’s Form 10-KSB filed with
      the Securities and Exchange Commission.




See
      accompanying notes to condensed consolidated
      financial statements.




8


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Six Months Ended*
 *December
        31, 2005 and 2004 is Unaudited)*


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





*Principles
      of Consolidation*





The
      accompanying condensed consolidated financial statements as of December 31,
      2005
      and for the six months ended December 31, 2005 and 2004 include the accounts
      of
      the Company and its wholly owned subsidiaries, Centergistic Solutions, S. DE
      R.L. DE D.V. (“Centergistic Solutions - Mexico”) and LYA, Inc. (“LYA”). All
      significant intercompany accounts and transactions have been
      eliminated.





*Management’s
      Plans / Liquidity*





During
      the six months ended December 31, 2005, the Company incurred a net loss of
      $251,554 and an operating loss of $225,890, which includes depreciation and
      amortization of $73,621, and, as of December 31, 2005, the Company had working
      capital deficit of $(401,510). The Company demonstrated improved margins during
      the six months ended December 31, 2005, as the margin percentage increased
      to
      66% from 65% in the prior period. This was achieved on a 14% decrease in
      revenue. The Company has also undertaken steps to reduce operating costs.
      Headcount and program reduction were undertaken in all operating areas of the
      Company. Operating expenses were reduced by $272, 166 or 18%. 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 the
      reduced cost effect to continue this fiscal year and produce operating profits
      throughout the next 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
      six months ended December 31, 2005, the Company views its operations and manages
      its business in two segments: Centergistic Solutions and Centergistic Solutions
      - Mexico.




See
      accompanying notes to condensed consolidated
      financial statements.




9


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Six Months Ended*
 *December
        31, 2005 and 2004 is Unaudited)*


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





*Segment
      Reporting (continued)*





The
      following represents the total assets by segment:


December
                  31, 2005Centergistic
                  Solutions
              
              $
              4,112,075Centergistic
                  Solutions - Mexico
              
              
              709,3334,821,408Eliminations
              
              
              (3,070,360
              )Total
                  consolidated assets
              
              $
              1,751,048




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


Three
                  Months Ended
              
              Six
                  Months EndedDecember
                  31,
              
              December
                  31,2005
              
              2004
              
              2005
              
              2004Centergistic
                  SolutionsRevenues
              
              $
              353,705
              
              $
              564,914
              
              $
              766,016
              
              $
              1,130,974Gross
                  profit
              
              $
              275,136
              
              $
              478,456
              
              $
              585,886
              
              $
              967,065Net
                  income (loss)
              
              $
              (141,945
              )
              $
              (121,567
              )
              $
              (255,347
              )
              $
              (256,454
              )Centergistic
                  Solutions - MexicoRevenues
              
              $
              512,909
              
              $
              401,675
              
              $
              767,924
              
              $
              654,966Gross
                  profit
              
              $
              276,245
              
              $
              211,669
              
              $
              418,571
              
              $
              360,181Net
                  income (loss)
              
              $
              43,050
              
              $
              54,473
              
              $
              3,793
              
              $
              70,895




*Net
      Loss Per Share*





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





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




See
        accompanying notes to condensed consolidated financial statements.
  10


**CENTERGISTIC
        SOLUTIONS, INC.**
 
 **Notes
        to Condensed Consolidated Financial Statements (Continued)**
 *(Information
        with Respect to the Six Months Ended*
 *December
        31, 2005 and 2004 is Unaudited)*




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




*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 December 31, 2005, 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 December 31, 2005, the Company’s
      largest customer accounted for 9% of total trade receivables. For each of the
      six months ended December 31, 2005 and 2004, the Company’s largest customer
      accounted for 15% and 21% of total Company net revenues, respectively. There
      were no other customers that exceeded 10% of such amounts as of each respective
      period-end.





As
      of
      December 31, 2005, customers of the Company’s Mexican subsidiary accounted for
      67% of total trade receivables. For each of the six months ended December 31,
      2005 and 2004 sales to customers of the Company’s Mexican subsidiary account for
      50% and 37%, respectively, of total Company net revenues.





*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 December
      31, 2005, the Company capitalized a net amount of $549,334 for these services
      and such are included in the accompanying condensed consolidated balance sheets
      as deferred offering costs. There can be no assurance that the Company will
      receive funding from private investors. If the Company is able to receive
      private funding, the deferred offering costs will be offset against the proceeds
      received; otherwise, such will be expensed when the offering efforts are
      terminated or the Company finds there is no market for the public
      shell.




See
          accompanying notes to condensed consolidated financial statements.


11


**CENTERGISTIC
          SOLUTIONS, INC.**
 
 **Notes
          to Condensed Consolidated Financial Statements (Continued)**
 *(Information
          with Respect to the Six Months Ended*
 *December
          31, 2005 and 2004 is Unaudited)*





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





*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.





In
      accordance with APB Opinion No. 25, the Company has incurred compensation
      cost aggregating $63,753 through December 31, 2005 for stock option grants,
      of
      which $3,726 was recognized during the six-month periods ended December 31,
      2005
      and 2004. Had compensation cost for the stock-based compensation plan been
      determined based on the fair value of awards (the method described in SFAS
      No.
      123), the reported net loss would have been as shown below:


See
            accompanying notes to condensed consolidated financial statements.
 12
 **CENTERGISTIC
            SOLUTIONS, INC.**
 
 **Notes
            to Condensed Consolidated Financial Statements (Continued)**
 *(Information
            with Respect to the Six Months Ended*
 *December
            31, 2005 and 2004 is Unaudited)*


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





*Accounting
      for Stock-based Compensation (continued*


Six
                  Months Ended December 31,2005
              
              2004Net
                  loss, as reported
              
              $
              (251,554
              )
              $
              (185,559
              )Add:
                  Stock compensation expense recorded in accordance with APB Opinion
                  No.
                  25
              
              
              3,726
              
              
              3,726Deduct:
                  Total stock-based employee compensation expense determined under
                  fair
                  value based method for all stock options, net of related tax
                  effects
              
              
              (8,738
              )
              
              (17,834
              )Pro
                  forma net loss
              
              $
              (256,566
              )
              $
              (199,667
              )Pro
                  forma net loss per share
              
              $
              (0.02
              )
              $
              (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 3.25% and 3.25% for the six month periods ended December
      31,
      2005 and 2004, respectively, and expected lives of ten years for all
      grants.


See
            accompanying notes to condensed consolidated financial statements.
 13
 **CENTERGISTIC
            SOLUTIONS, INC.**
 
 **Notes
            to Condensed Consolidated Financial Statements (Continued)**
 *(Information
            with Respect to the Six Months Ended*
 *December
            31, 2005 and 2004 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 condensed consolidated financial statements.
  14
 **CENTERGISTIC
            SOLUTIONS, INC.**
 
 **Notes
            to Condensed Consolidated Financial Statements (Continued)**
 *(Information
            with Respect to the Six Months Ended*
 *December
            31, 2005 and 2004 is Unaudited)*
  **3.** **Capitalized
              Software Development Costs**




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





Software
      costs are amortized on a product-by-product basis using the straight-line method
      over the remaining estimated economic life of the software product, which is
      typically six to five years. Actual future sales and remaining economic life
      of
      the product could differ significantly from these estimates. Amortization of
      software costs for the six months ended December 31, 2005 and 2004 was $40,920
      and $40,416, 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 December 31, 2005 and the related estimated lives:




Date
                  Technological Feasibility Established
              
              Estimated
                  LifeCenterStats
              
              
              December
                  2001
              
              
              5
                  yearsAgentView
              
              
              June
                  1999
              
              
              5
                  years
  The
                  following summarizes the costs capitalized by product as of December
                  31,
                  2005:
  CenterStats
              
              $
              398,998AgentView
                  (fully amortized)
              
              
              307,476Fully
                  amortized products
              
              
              1,146,6771,853,151Accumulatedamortization
              
              
              (1,781,971
              )$
              71,180




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





On
      November 30, 2004, as amended on 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
      President/CEO and Vice President/COO/CFO of the Company. The balance of the
      line
      at December 31, 2005 is $400,000.


See
        accompanying notes to condensed consolidated financial statements.
  15
 **CENTERGISTIC
            SOLUTIONS, INC.**
 
 **Notes
            to Condensed Consolidated Financial Statements (Continued)**
 *(Information
            with Respect to the Six Months Ended*
 *December
            31, 2005 and 2004 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
      balance of the note at December 31, 2005 is $15,272.





**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 December
      31, 2005, 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 condensed consolidated financial statements.
  16
 **CENTERGISTIC
            SOLUTIONS, INC.**
 
 **Notes
            to Condensed Consolidated Financial Statements (Continued)**
 *(Information
            with Respect to the Six Months Ended*
 *December
            31, 2005 and 2004 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 December 31, 2005, 320,000 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 December 31, 2005, 512,000 shares were
      available for grant under the terms of this plan.





A
      summary
      of the status of the plans, and changes during the six months ended December
      31,
      2005 is as follows:





Fixed
                Options
            
            Shares
            
            Weighted
                Average ExercisePriceOutstanding
                at beginningof
                period
            
            
            2,623,400
            
            $
            .53Expired
            
            
            (270,400
            )
            
            (.60
            )Granted
            
            
            48,000
            
            
            .36Outstanding
                at end of period
            
            
            2,401,000
            
            $
            .52Exercisable
                at end of period
            
            
            1,557,800
            
            $
            .58Weighted
                average fair value of options granted during the period
            
            
            
            
            $
            .36


See
        accompanying notes to condensed consolidated financial statements.
  17
 **CENTERGISTIC
            SOLUTIONS, INC.**
 
 **Notes
            to Condensed Consolidated Financial Statements (Continued)**
 *(Information
            with Respect to the Six Months Ended*
 *December
            31, 2005 and 2004 is Unaudited)*


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





*Stock
      Option Plans (continued)*





A
      summary
      of stock options outstanding at December 31, 2005 is as follows:





Options
                Outstanding
            
            Options
                ExercisableFixed
                Options
            
            NumberOutstanding
            
            Weighted
                Average Remaining ContractualLife
            
            Weighted
                Average
              ExercisePrice
            
            NumberExercisable
            
            Weighted
                Average ExercisePrice$0.30
                to $0.47
            
            
            1,452,200
            
            
            7.54
            
            $
            .39
            
            
            609,000
            
            $
            .38$0.52
                to $0.79
            
            
            948,800
            
            
            2.64
            
            
            .71
            
            
            948,800
            
            
            .712,401,000
            
            
            
            
            $
            .52
            
            
            1,557,800
            
            $
            .58





*Common
      Stock Purchase Warrants*





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





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


See
        accompanying notes to condensed consolidated financial statements.
  18
 **CENTERGISTIC
            SOLUTIONS, INC.**
 
 **Notes
            to Condensed Consolidated Financial Statements (Continued)**
 *(Information
            with Respect to the Six Months Ended*
 *December
            31, 2005 and 2004 is Unaudited)*


**7.** **Private
        Placement of Debt**





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





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





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





In
      connection with the above-described transactions, the Company paid, as a
      financial consulting fee, $20,750 in cash and issued warrants, exercisable
      at a
      price of $0.466 per share to purchase 44,512 shares of common stock. The Company
      estimated the value of the warrants at $3,915 which was recorded as a debt
      discount. The financial consulting fee and warrants were accreted as non-cash
      interest expense over the term of the Notes. The warrants expired during the
      six
      months ended December 31, 2005.


See
        accompanying notes to condensed consolidated financial statements.
  19


**ITEM
        2.**  **MANAGEMENT'S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS**
 
 **A
        NOTE ABOUT FORWARD-LOOKING STATEMENTS**
 
 The
        statements, other than statements of historical fact, included in this report
        are forward-looking statements.  Forward-looking statements generally can
        be identified by the use of forward-looking terminology such as “may,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “plan,” “seek,” or
“believe.”  We believe that the expectations reflected in such
        forward-looking statements are accurate.  However, we cannot assure you
        that such expectations will occur.  Our actual future performance could
        differ materially from such statements. These forward-looking statements
        are
        subject to risks and uncertainties that could cause actual results and events
        to
        differ materially. For a detailed discussion of these risks and uncertainties
        please see the “Factors That May Affect Future Results” section of this report.
        You should not unduly rely on these forward-looking statements, which speak
        only
        as of the date of this report.  Except as required by law, we are not
        obligated to release publicly any revisions to these forward-looking statements
        to reflect events or circumstances occurring after the date of this report
        or to
        reflect the occurrence of unanticipated events.
  **General**
  We
        are a provider of business performance and intelligence management software
        that
        enables companies to translate data into critical and meaningful metrics
        allowing for improved financial and operational performance. Our software
        provides managers with customizable reporting and analysis tools. These tools
        allow for real-time monitoring of and reporting against crucial benchmarks
        in an
        organization. This enables constant monitoring of a company’s progress against
        financial and operational goals, and helps achieve optimal operational
        performance.
  Business
        performance and intelligence management software uses historical and real-time
        data and metrics to provide managers with visibility on the business operations
        in real-time. We provide call/contact center managers with powerful reporting
        and analytic tools allowing the constant monitoring of the operational
        effectiveness and efficiency. While our current market focus is on the
        call/contact center, we offer software to all operational areas of the
        enterprise to gauge performance and profitable improvement. We also offer
        consulting, training, technical support and programming services for our
        customers and partners.
  Our
        company operates through its domestic headquarters and our wholly-owned Mexican
        subsidiary located in Mexico City, Mexico. Our domestic operation sells
        AgentView, CenterStats, and the related hardware necessary to run these
        applications or display statistics derived from these applications, training
        and
        educational services, installation, custom programming and support services.
        Our
        Lynch Young & Company Professional Services Group wound up operations in
        June 2004 and was subsequently merged into the operations of
        Centergistic...
  Centergistic
        Solutions, Inc., Inc. was incorporated in Los Angeles, California on
        March 13, 1972. Lynch Young Inc. (dba Lynch Young & Company) was
        incorporated in California on October 16, 1980. Centergistic Solutions,
        Inc. Latina America S. de R.L. de C.V., a limited liability partnership,
        was
        formed in Mexico City, Mexico on May 19, 2000. This partnership was a
        successor to Centergistic Solutions, Inc. Latina America S.A. de C.V., a
        Mexican
        corporation originally formed July 1, 1993.
  Our
        Lynch Young & Company Professional Services Group operated as a consulting
        firm selling consulting services to the call/contact center market. We ended
        our
        separate operations of Lynch Young & Company in June 2004. Our Mexican
        subsidiary acts as a distribution company selling our AgentView and CenterStats
        products along with other vendor sourced products to a variety of distributors
        and end-users in Latin and South America. They also sell training and
        educational services, installation and product support packages.
  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.
  20
  We
        are subject to a rapidly changing technological environment. Our ability
        to keep
        current with the demands of technology is critical to our success. Each time
        the
        data flow of a particular application in the call/contact center changes
        or new
        applications are created, we must be able to retrieve that data. Our products
        must be changed also so that we may retrieve that data. If we cannot continue
        to
        stay atop the technology curve, we will not be able to compete effectively
        in
        this market space. To combat this challenge, we have developed technology
        partnerships with many of the industry application providers such as Avaya,
        Cisco, Concerto, Genesys, Microsoft, and Nortel to name a few. These
        partnerships allow us the environment to test our products and certify that
        our
        products work with a specific vendor application and to get updates as their
        technology changes.
  **Current
        Conditions**
  We
        derive a substantial portion of our revenues from sales to customers in Mexico,
        Latin America and South America. For the six month periods ended
        December 31, 2005 and 2004, these customers represented approximately 50%
        and 37%, respectively, of our total net revenues.
  Our
        revenues in these countries are derived from our subsidiary, Centergistic
        Solutions, Inc. Latin America S. R. L. de C.V., a limited liability partnership.
        Its office is located in Mexico City and houses 20 employees. This company
        acts
        primarily as a distributor, selling our AgentView and CenterStats products
        along
        with others sourced from third party vendors such as PC call accounting,
        voicemail products, data collection devices, and LED display boards. This
        company sells its products primarily to companies such as Avaya, Siemens
        and
        Alcatel.
  On
        November 30, 2004, and amended 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 are currently at the maximum borrowing base of the line of
        credit. We believe current operations will provide sufficient working capital
        to
        sustain operations through the remainder of the fiscal year.
  In
        October 2005, we reduced headcount and eliminated programs in order to reduce
        our operating costs. With the decline in revenues from last fiscal year,
        we were
        forced to eliminate as much expense as possible in order to continue operating
        the business. We reduced our operating expenses by $272,000, or 18%, from
        last
        year. Much of this reduction was in payroll and related employment costs.
        We
        expect this cost reduction trend to continue throughout 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.
  21
 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.
 
 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 December 31, 2005 and June 30, 2005, our accounts
        receivable balances were $624,000 and $559,000, respectively, net of our
        estimated allowances for doubtful accounts of $42,000 and $31,000, respectively.
  The
        accounts receivable balance increased during the six month period ended
        December 31, 2005. The Company achieved lower revenue volumes during this
        period but the revenue mix included a higher percentage of Mexico and Latin
        America sales which have longer collection cycles therefore increasing the
        receivable 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 December 31, 2005 has degraded from 58 to
        74 days. We attribute this worsening to lower sales volume and the mix of
        Mexico
        and Latin America sales resulting in longer collection cycles. We do expect
        the
        turnover to slow down as we increase sales of CenterStats with larger invoice
        amounts and longer payment cycle.
  ***Capitalized
        Software Development Costs***
  We
        account for software development costs in accordance with Statement of Financial
        Accounting Standards (“SFAS”) No. 86, “Accounting for the Costs of Computer
        Software to be Sold, Leased, or Otherwise Marketed.” SFAS No. 86 specifies
        that software development costs incurred internally should be expensed as
        incurred until technological feasibility has been established. Once
        technological feasibility has been established, all software development
        costs
        should be capitalized until the product is available for general release
        to
        customers. Technological feasibility is defined as a completion of detail
        program design. Amortization of capitalized software costs totaled $41,000
        and
        $40,000 for the six month periods ended December 31, 2005 and 2004,
        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
        December 31, 2005, no such indicators of impairment were identified by
        management.
  22
  ***Stock-Based
        Compensation***
  From
        time to time, we provide compensation in the form of shares of our common
        stock
        as well as options or warrants to acquire shares of our common stock.
  We
        derive the value of rights to acquire our common stock granted to non-employees,
        such as options or warrants, from pricing models that consider current market
        and contractual prices for our stock, as well as time value and yield curve
        or
        volatility factors. Pricing models and their underlying assumptions impact
        the
        amount and timing of unrealized gains and losses we recognize, and use of
        different pricing models or assumptions could produce different financial
        results.
  Options
        granted to employees are valued using the intrinsic value method which bases
        compensation on the difference between the market value of the underlying
        shares
        of common stock and the exercise price at the date of grant.
  **Results
        of Operations for the Six Months Ended December 31, 2005 as Compared to the
        Six
        Months Ended December 31, 2004**
  We
        believe there is some improvement in the economy in general and corporate
        infrastructure technology spending in specific. Unfortunately, we saw decreases
        in revenue in our U.S. and European markets, but an improvement in our Mexican
        subsidiary. But we expect to see improvement in our revenue as long as corporate
        infrastructure technology spending remains consistent. Our biggest risks
        continue to be revenue growth, and the capital raise necessary to implement
        our
        sales and marketing strategy.
  ***Revenues***
  **Six
                  Month Period Ended December 31,**
                  **(In
                    thousands)****2004**
              
              
              %
              
              
              **2003**
              
              
              %Centergistic
                  (U.S.)
              
              $
              766
              
              
              49.9
              
              $
              1,131
              
              
              63.3Mexico
                  and Latin America
              
              $
              768
              
              
              50.1
              
              $
              655
              
              
              36.7Total
              
              $
              1,534
              
              
              100.0
              
              $
              1,786
              
              
              100.0
  Total
        net revenues decreased by $252,000 or 14% for the six month period ended
        December 31, 2005 (“PE 2005”) as compared to the six month period ended
        December 31, 2004 (“PE 2004”). Revenues from U.S. based operations
        decreased by $365,000 or 32% from the PE 2004. Revenues from our Mexican
        subsidiary increased by $113,000 or 17% during PE 2005.
  In
        the U.S. based operations, direct sales of AgentView decreased $110,000 or
        59%
        compared to PE 2004. We were not successful in penetrating the market and
        the
        sales cycle has taken longer than expected. Some the decline is due to
        reductions in advertising, promotions, travel and attendance at trade shows.
        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. dropped by $174,000 or 42% from PE 2004. Revenue from
        our
        largest distributor, Dacon, fell by $134,000 or 362% from PE 2004. We expect
        business from Dacon to increase during the next nine months as we hope to
        see
        increased volume as an upgrade program will soon be introduced to the British
        Telecom (“BT”) installed base, and an expected roll out of our CenterStats
        product to that base as well.
  Installation
        and training revenues decreased by $37,000 or 56% from PE 2004. These revenues
        dropped due to the reduction in software sales. We expect these revenues
        to
        increase as more Agent View and CenterStats products are sold.
  Mexico
        and Latin America revenues increased by $113,000 or 17% as compared to PE
        2004.
        The Mexican economy has stabilized and we except this trend to continue through
        the remainder of the fiscal year. We expect to see our revenues begin to
        steadily improve through the remainder of our fiscal year, with an improving
        trend as the economy improves.
  **Cost
        of Revenues**
  Cost
        of revenues increased to $530,000 or 35% of revenues as compared to $459,000
        or
        26% of revenues in PE 2004. Costs associated with hardware and third party
        products sales increased by nearly $70,000. As a lesser portion of our revenue
        over this past six months ended December 31, 2005 was derived from software
        and service sales, our costs related to hardware and third-party products
        increased accordingly. We are at risk of hardware and third party vendors
        passing on price increases that will affect our profitability. We expect
        declining hardware revenues and costs throughout this remainder of the fiscal
        year resulting in improved cost of revenue percentages.
  23
  **Gross
        Profit**
  Gross
        profit declined to 65% of revenues in PE 2005, or $1,004,000, as compared
        to
        74%, or $1,327,000, in PE 2004. The decline in gross profit percentage is
        attributable to the mix of revenue to hardware and third-party sourced products
        from software and service products. We expect this trend to end as we sell
        more
        AgentView and CenterStats to direct end-users throughout the remainder of
        the
        fiscal year.
  **Operating
        Expenses**
  *Sales
        and Marketing*
  Sales
        and marketing expenses decreased $65,000 or 18% as compared to PE 2004. We
        spent
        less on sales salaries and wages by $32,000 due to reduced staff. Advertising
        expenses were lower by $26,000 and travel expenses were lower by $10,000.
        We
        face the risk of not having the necessary capital to fully implement our
        sales
        and marketing strategy next fiscal year. If we do not receive the 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. We plan to slowly hire
        sales
        professionals and developers as funds permit. We will hire to the level that
        can
        be sustained from our existing operational cash flow.
  *General
        and Administrative*
  General
        and administrative expenses decreased by $158,000 or 17% as compared to PE
        2004.
        Salaries and wages and the related payroll taxes decreased by $127,000 due
        to
        reductions in pay by the CEO and CFO and the consolidation of our support
        personnel which eliminated 2 heads. Depreciation expense was reduced by $25,000.
        Insurance premiums were reduced by $40,000 by switching to a higher deductible
        plan for the employees.
  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 $49,000 or 24% over the same period
        as
        last year primarily due to closing our development office in India. We had
        previously employed a staff of four programmers in India to help with writing
        and testing new code. Due to cost and management constraints, we elected
        to
        terminate the staff. This resulted in a savings of $46,000 in salaries and
        wages
        from the previous year.
  We
        plan to increase the staffing level upon achieving sufficient operational
        cash
        flow. Primarily, these developers will develop interfaces to enable our products
        to work with “best of breed” call/contact center applications.
  **Other
        (Expense) Income**
  The
        interest expense during PE 2005 was related primarily to interest on the
        line of
        credit. This expense is expected to remain constant until we achieve sufficient
        operating cash necessary to begin to pay down the debt. We did incur
        approximately $5,000 in exchange rate losses from funds in Mexico and the
        U.K in
        PE 2005.
  **Net
        Income (Loss)**
  Net
        loss increased to $252,000 as compared to $186,000 in PE 2004, a $66,000
        or 35%
        decline. The decline was primarily due to lower revenue levels achieved in
        the
        quarter.
  We
        anticipated generating an operating loss given that we planned to invest
        any
        excess cash flow back into operations through increased sales and marketing
        and
        development expenditures.
  **Liquidity
          and Capital Resources**
 24
  Net
        cash used in operating activities was $53,000 in PE 2005 and $136.000 in
        PE
        2003. The net cash used for operations in PE 2005 was comprised primarily
        of
        loss from operations of $252,000 offset by depreciation and amortization
        of
        $74,000, and a net increase from changes in assets and liabilities of $115,000.
        The net cash used for operations in PE 2004 was comprised primarily of the
        loss
        from operations of $186,000 offset by depreciation and amortization of $96,000
        and a net decrease from changes in assets and liabilities of $47,000.
  Net
        cash from investing activities used $7,000 in PE 2005 as compared to a use
        of
        $10,000 in PE 2004. The cash used in both period ends were primarily due
        to
        purchase of fixed assets.
  Net
        cash provided from financing activities was $105,000 in PE 2005 as compared
        to
        $65,000 in PE 2003. The amount provided in PE 2005 was primarily due to
        borrowings of $81,000 and reductions in deferred offering costs of $25,000.
        The
        PE 2004 amount came from a net $150,000 in borrowings offset by deferred
        offering costs of $81,000.
  We
        had deficit working capital of $401,000 at December 31, 2005.
  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 December 31,
        2004, the balance of these loans is $24,975.
  In
        July 2003, we agreed to purchase 148,328 shares of our common stock from
        Al
        Wild, a former employee, for $44,220 and issued our secured promissory note
        payable to Mr. Wild in such amount. Our note bears interest at the rate of
        5% per annum, and monthly payments of principal and interest in the amount
        of
        $2,700 are due and payable on the note commencing September 30, 2003. As
        each monthly payment is made on our note, we may cancel and retire 8,728
        of the
        shares. Mr. Wild may cancel our note at any time and elect to receive the
        remainder of the shares we purchased from him that have not been cancelled
        and
        retired by us in accordance with our agreement. Payment of our note to Mr.
        Wild
        is secured by all of our assets.
  In
        November 2003, and amended March 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 December 31,
        2005
        was $400,000.
  As
        of December 31, 2005, including the results of operations for the six
        months then ended, our working capital decreased to a deficit of $401,000
        including $307,000 of deferred income. A substantial portion of the deferred
        income will be converted into revenue during the remainder of our fiscal
        year.
        We believe that the cost reductions undertaken during the past six months
        will
        continue to provide expense reductions and cash flow relief necessary to
        continue operations for the balance of fiscal year 2006.
  We
        face the risk that we will not be able to raise the necessary capital to
        fully
        fund our sales and marketing plan. If we are not successful in raising capital,
        we will have to scale back our plans for the future. This will impact our
        future
        revenue growth and profitability.
  If
        a capital raise is not successful, we will reduce our planned hires to the
        level
        that can be sustained from our existing operational cash flow. We will also
        scale back our future product launch and marketing of CenterStats to the
        level
        that they will be funded by operational cash flow. We will also implement,
        necessitated on business conditions, several cost cutting strategies identified
        by management.
  We
        currently have not entered into any agreements nor are we currently in
        discussions with any potential merger or acquisition candidate. However,
        we
        intend to pursue an acquisition strategy upon successful completion of a
        capital
        raise and the listing of our stock on the OTC Bulletin Board. As we believe
        our
        current market space has a number of relatively small companies, our strategy
        will be to increase market share, customer base, and technology by acquiring
        these companies. We also believe that acquiring certain key distributors,
        thereby securing our sales channels, makes sound business sense. We may possibly
        seek to acquire one or more distributors in the future.
  **Results
        of Operations for the Three Months Ended December 31, 2005 as Compared to
        the
        Three Months Ended December 31, 2004**
  We
        believe there is some improvement in the economy in general and corporate
        infrastructure technology spending in specific. We saw decreases in revenue
        in
        almost all lines of business this past quarter, but expect to see improvement
        in
        our revenue as long as corporate infrastructure technology spending remains
        consistent. Our biggest risks continue to be revenue growth, and the capital
        raise necessary to implement our sales and marketing strategy.
  25
  ***Revenues***
  **Three
                  Month Period Ended December 31,**
                  **(In
                    thousands)****2005**
              
              
              **%**
              
              
              **2004**
              
              
              **%**Centergistic
                  (U.S.)
              
              $
              354
              
              
              58.4
              
              $
              565
              
              
              58.4Mexico
                  and Latin America
              
              $
              513
              
              
              41.6
              
              $
              402
              
              
              41.6Total
              
              $
              867
              
              
              100.0
              
              $
              967
              
              
              100.0
  Total
        net revenues decreased by $100,000 or 10% for the three month period ended
        December 31, 2005 (“PE 2005”) as compared to the three month period ended
        December 31, 200 (“PE 2004”). Revenues from U.S. based operations decreased
        by $211,000 or 37% from the PE 2004. Revenues from Mexico increased by $111,000
        or 28% during PE 2005.
  In
        the U.S. based operations, direct sales of AgentView decreased $76,000 or
        71%
        compared to PE 2004. We were not successful in penetrating the market and
        the
        sales cycle has taken longer than expected. Some the decline is due to
        reductions in advertising, promotions, travel and attendance at trade shows.
        We
        also saw a decline is direct hardware sales of $80,000 during PE 2005. Our
        foucs
        has turned away from hardware sales, concentrating primarily on selling software
        and services. We expect this trend of reducing hardware sales to continue
        throughout the remainder of the fiscal year and beyond. 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. dropped by $79,000 or 32% from PE 2004. Revenue from
        our
        largest distributor, Dacon, fell by $114,000 or 63% from PE 2004. We believe
        the
        weakness in the U.K. market is concluding and we expect to see additional
        business as Dacon is currently undergoing a management led buy out. We expect
        business from Dacon to increase during the next nine months as we hope to
        see
        increased volume as an upgrade program will soon be introduced to the British
        Telecom (“BT”) installed base, and an expected roll out of our CenterStats
        product to that base as well.
  Installation
        and training revenues decreased by $20,000 or 57% from PE 2004 due to the
        decreased sales of AgentView and CenterStats. We expect these revenues to
        increase as more Agent View and CenterStats products are sold.
  Mexico
        and Latin America revenues increased by $111,000 or 28% as compared to PE
        2004.
        The Mexican economy has stabilized and we except this trend to continue through
        the remainder of the fiscal year. We expect to see our revenues begin to
        steadily improve through the remainder of our fiscal year, with an improving
        trend as the economy improves.
  **Cost
        of Revenues**
  Cost
        of revenues increased to $315,000 or 36% of revenues as compared to $276,000
        or
        29% of revenues in PE 2004. Costs associated with hardware and third party
        products sales increased by $39,000. As a lesser portion of our revenue over
        this past three months ended December 31, 2005 was derived from software
        and service sales, our costs related to hardware and third-party product
        sales
        increased accordingly. We are at risk of hardware and third party vendors
        passing on price increases that will affect our profitability. We expect
        declining hardware revenues and costs to occur throughout the remainder of
        our
        fiscal year resulting in improved cost of revenue percentages.
  **Gross
        Profit**
  Gross
        profit declined to 64% of revenues in PE 2005, or $551,000, as compared to
        71%,
        or $690,000, in PE 2004. The decline in gross profit percentage is attributable
        to the mix of revenue to hardware and third-party sourced products from software
        and service products. We expect this trend to reverse as we sell more AgentView
        and CenterStats to direct end-users and reduce our hardware sales.
  26
  **Operating
        Expenses**
  *Sales
        and Marketing*
  Sales
        and marketing expenses decreased $24,000 or 13% as compared to PE 2004. We
        saw
        decreased salaries and wages of $20,000 and lower advertising costs of $14,000.
        These decreases were offset by an increase in trade show expenditures of
        $5,000.
        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 the 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 $63,000 or 13% as compared to PE
        2004.
        Salaries and wages and the related payroll taxes decreased by $41,000 due
        to
        reductions in pay by the CEO and CFO and the consolidation of our support
        personnel which eliminated 2 heads. Insurance premiums were reduced by $18,000
        by switching to a higher deductible plan for the employees. We reduced our
        office supplies by $3,000.
  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 $27,000 or 27% over the same period
        as
        last year primarily due to closing our development center which opened in
        India
        in May 2003. Salaries decreased by $20,000 due to the reductions related
        to the
        India closure and travel costs decreased by $4,000 due to not traveling to
        India
        as frequently.
  We
        plan to increase the staffing level upon generating sufficient operational
        cash
        flow. Primarily, these developers will develop interfaces to enable our products
        to work with “best of breed” call/contact center applications.
  **Other
        (Expense) Income**
  The
        interest expense during PE 2005 was related to interest on the line of credit.
        This expense is expected to remain constant until we achieve sufficient
        operating cash necessary to begin to pay down the debt. We did incur
        approximately $4,000 in exchange rate losses from funds in Mexico and the
        U.K.
  **Net
        Income (Loss)**
  Net
        loss decreased to $99,000 as compared to $67,000 in PE 2004, a $32,000 or
        48%
        decline. The decline was primarily due to lower revenue levels achieved in
        the
        quarter.
  We
        anticipated generating an operating loss given that we planned to invest
        any
        excess cash flow back into operations through increased sales and marketing
        and
        development expenditures.
  **Factors
        That May Affect Future Results**
  **We
        have experienced losses in the past, anticipate losses for the foreseeable
        future and may never achieve profitability.**
  We
        incurred a net loss of $252,000 during the six months ended December 31,
        2005,
        and as of such date our accumulated deficit was $3,006,000. 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.
  27
  **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 six month periods ended
        December 31, 2005 and 2004 were $1,534,000 and $1,786,000, 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
        investor’s, ownership in us.**
  We
        believe that the proceeds of a private placement offering or public stock
        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.
  **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,
  28
  ·
              
              our
                  success in maintaining relationships with our third-party distributors
                  and
                  adding new ones, and·
              
              fluctuations
                  in general economic conditions.
  We
        believe that period-to period comparisons of our results of operations are
        not a
        good indication of future performance. There can be no assurance that future
        revenues and results of operations will not vary substantially. It is also
        possible that in future quarters; our operating results will be below the
        expectations of public market analysts and investors. In that event, the
        trading
        price of our common stock may fall.
  **The
        loss of Dacon PLC as a customer would materially adversely affect our business,
        operating results and financial condition.**
  We
        sell a substantial portion of our products to Dacon PLC, which is based in
        the
        United Kingdom and has been a distributor of our products for the past
        12 years. For the six month periods ended December 31, 2005 and 2004,
        Dacon accounted for 15% and 21%, respectively, of net revenues, and 9% of
        total
        trade receivables as of December 31, 2005. The loss of Dacon PLC as a
        customer would have a material adverse effect on our business, operating
        results
        and financial condition.
  **We
        face risks associated with operations in Mexico, Latin America and South
        America
        which could adversely affect our business, operating results and financial
        condition.**
  We
        derive a substantial portion of our revenues from sales to customers in Mexico,
        Latin America and South America. For the six month periods ended
        December 31, 2005 and 2004, these customers represented approximately 50%
        and 37%, respectively, of our total net revenues.
  We
        face certain risks inherent in conducting business internationally, and such
        specific risks in Mexico, Latin America and South America as languages and
        cultural differences, legal and governmental regulatory requirements and
        potential political and economic unrest. Any of these factors could seriously
        harm our ability to generate future revenues from these customers, and,
        consequently, our business, operating results and financial condition.
  **We
        operate in a competitive business environment and if we cannot compete
        effectively, we may face price reductions and decreased demand for our products.**
  The
        market for our products and services is intensely competitive and subject
        to
        technological change. Competitors vary in size and in the scope and breadth
        of
        the products and services they offer. We encounter competition from a number
        of
        sources, all of which offer performance management reporting systems to the
        call/contact center market. We expect additional competition from other
        established and emerging companies as the market for performance management
        reporting solutions and complementary products continues to develop and expand.
        We encounter competition in the United States from a number of sources,
        including Symon and Innova, all of which offer performance management reporting
        systems to the call/contact center market. Some of our current and many of
        our
        potential competitors have longer operating histories, greater name recognition,
        larger client bases and significantly greater financial, engineering, technical,
        marketing and other resources than we do. As a result, these companies may
        be
        able to respond more quickly to new or emerging technologies and changes
        in
        customer demands or to devote greater resources to the development, promotion
        and sale of their products than we can.
  In
        addition, current potential competitors have established or may establish
        cooperative relationships among themselves or with third parties to increase
        the
        ability of their products to address the needs of our prospective customers.
        Accordingly, it is possible that new competitors or alliances among competitors
        may emerge and acquire significant market share. We expect that the call/contact
        center market will continue to attract new competitors and new technologies,
        possibly involving alternative technologies that are more sophisticated and
        cost-effective than our technology. New product introductions by our competitors
        could cause a decline in sales, a reduction in the sales price, or a loss
        of
        market acceptance of our existing products. There can be no assurance that
        we
        will be able to compete successfully against current or future competitors
        or
        that competitive pressures faced by us will not materially adversely affect
        our
        business, financial condition and results of operations.
  **We
        rely in part, on third-party distributors to market and distribute our products,
        and their failure to do so successfully could significantly harm our ability
        to
        maintain and expand our customer base, which would adversely affect our
        operating results and financial condition.**
  Our
        sales and marketing strategy includes channels of third party distributors.
        We
        have developed a number of these relationships and intend to develop new
        ones.
        Our inability to attract new distributors or their inability to penetrate
        their
        respective market segments or the loss of any of our third-party distributors
        as
        a result of competitive products offered by other companies, or products
        similar
        to ours that are developed internally by them or otherwise, could harm our
        ability to maintain and expand our customer base. Our ability to achieve
        revenue
        growth in the future will depend in part on our success in developing and
        maintaining successful relationships with these third-party distributors.
        If we
        are unable to develop or maintain our relationships with these third-party
        distributors, our operating results and financial condition will suffer.
  29
  **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.**
  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.
  30
  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.
  **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 December 31, 2005 our officers and directors beneficially owned a total
        of 6,884,294 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 December 31, 2005), or
        approximately 58% of our outstanding common stock. You may be subject to
        certain
        risks due to the concentrated ownership of our common stock. For example,
        these
        stockholders, if acting together, would be able to influence or control matters
        requiring approval by our stockholders, including the election of directors
        and
        the approval of mergers, acquisitions or other extraordinary transactions.
        They
        may also have interests that differ from yours and may vote in a way with
        which
        you disagree and which may be adverse to your interests. The concentration
        of
        ownership may have the effect of delaying, preventing or deterring a change
        of
        control of our company, could deprive our stockholders of an opportunity
        to
        receive a premium for their common stock as part of a sale of our company
        and
        might ultimately affect the market price of our common stock.
  **Future
        sales of shares of our common stock which are eligible for sale by our
        stockholders may decrease the price of our common stock.**
  We
        had 10,699,312 shares of common stock outstanding on December 31,
        2005. All of these shares are “restricted securities” under Rule 144 of the
        Securities Act of 1933. An additional 2,512,110 shares underlying options
        and warrants outstanding on December 31, 2005 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.
  31
  **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 very limited trading on the over-the-counter market
        on the
        OTC Electronic Bulletin Board, we can give no assurance that an active trading
        market will develop. 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.
  **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.
 
 32
  **PART
        II. OTHER INFORMATION**
  **(UPDATE
        AS APPROPRIATE)**
  **ITEM
        1. LEGAL PROCEEDINGS**
 
 None.
 
 **ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**
 
 None.
 
 **ITEM
        3. DEFAULTS UPON SENIOR SECURITIES**
  The
          Company has a note payable to a former employee in connection with a stock
          repurchase agreement that requires monthly payments of $2,750 pursuant
          to
          contractual terms. The current balance of the note payable is $15,272 and
          the
          Company’s most recent payment under the note agreement was in August 2004. The
          note is secured by substantially all of the Company’s assets.
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 None.
 
 **ITEM
        5. OTHER INFORMATION**
 
 None.
 
 **ITEM
        6. EXHIBITS**
 
 None.
  33
 
 **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 **CENTERGISTIC
                  SOLUTIONS, INC.**Date: January
                18, 2007
              
              /s/ Ricardo
                G. BrutocaoRicardo
                  G. Brutocao,
                Chief
                  Executive Officer
  Date:
                January
                18, 2007
              
              /s/ David
                M.
                CunninghamDavid
                  M. Cunningham,
                Chief
                  Operating Officer and Chief Financial
                Officer
                  (Principal Accounting Officer)
 
 34
  **EXHIBIT
                  INDEX**No.
              
              Description31.1
              
              Certification
                  of CEO - Rule 13a - 14(a) or 15d - 14(a)*31.2
              
              Certification
                  of CFO - Rule 13a - 14(a) or 15d - 14(a)*32
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002+
  *  Filed
          herewith
 +  Furnished
          herewith
  35