| Colorado                                                      | 84-1434313                                |
|---------------------------------------------------------------|-------------------------------------------|
| (State or other jurisdiction ofincorporation or organization) | (I.R.S. Employer Identification No.) |

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| PART I.  | FINANCIAL INFORMATION                                                                                              | PAGE   |
|----------|--------------------------------------------------------------------------------------------------------------------|--------|
| Item 1.  | Financial statements                                                                                               |   |
|     |                                                                                                               |   |
|     | Consolidated Balance Sheets – March 31, 2010 (Unaudited) and June 30, 2009                                   | 3      |
|     |                                                                                                               |   |
|     | Unaudited Consolidated Statements of Operations – Three Months and Nine Months Ended March 31, 2010 and 2009 | 4      |
|     |                                                                                                               |   |
|     | Unaudited Consolidated Statements of Cash Flows – Nine Months Ended March 31, 2010 and 2009                  | 5      |
|     |                                                                                                               |   |
|     | Notes to Unaudited Consolidated Financial Statements                                                               | 6-7    |
|     |                                                                                                               |   |
| Item 2.  | Management's Discussion and Analysis and Results of Operations                                                     | 8-9    |
|     |                                                                                                               |   |
| Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                                         | 9      |
|     |                                                                                                               |   |
| Item 4.  | Controls and Procedures                                                                                            | 9      |
|     |                                                                                                               |   |
| PART II. | OTHER INFORMATION                                                                                                  |   |
|     |                                                                                                               |   |
| Item 1.  | Legal Proceedings                                                                                                  | 10     |
|     |                                                                                                               |   |
| Item 2.  | Unregistered Sales of Securities and Use of Proceeds                                                               | 10     |
|     |                                                                                                               |   |
| Item 3.  | Defaults upon Senior Securities                                                                                    | 10     |
|     |                                                                                                               |   |
| Item 4.  | Submission of Matters to a Vote of Security Holders                                                                | 10     |
|     |                                                                                                               |   |
| Item 5.  | Other Information                                                                                                  | 10     |
|     |                                                                                                               |   |
| Item 6.  | Exhibits and Reports on Form 8-K                                                                                   | 10     |
|     |                                                                                                               |   |

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|                                                                                                                                               |   | March 31,   |       |   | June 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|------------|--------|----------|--------|
|                                                                                                                                               |   | 2010        |       |   | 2009     |   |
|                                                                                                                                               |   | (Unaudited) |       |   |     |   |
| ASSETS                                                                                                                                             |   |        |       |   |     |   |
| Current Assets                                                                                                                                     |   |        |       |   |     |   |
| Cash and cash equivalents                                                                                                                          |   | $           | 46,927     |   |     | $      | 14,262 |   |
| Accounts receivable                                                                                                                                |   |        | 93,013     |   |     |   | 35,161 |   |
| Deferred commission expense – current portion                                                                                                |   |        | 36,762     |   |     |   | 36,762 |   |
| Refundable security deposit                                                                                                                        |   |        | -          |   |     |   | 17,413 |   |
| Prepaid expenses                                                                                                                                   |   |        | 18,929     |   |     |   | 11,422 |   |
| Total current assets                                                                                                                               |   |        | 195,631    |   |     |   | 115,020 |   |
| Property and equipment, net of accumulated depreciation                                                                                            |   |        | 34,254     |   |     |   | 41,425 |   |
| Other assets                                                                                                                                       |   |        |       |   |     |   |   |   |
|    Security deposit – long term                                                                                               |   |        | 8,707      |   |     |   | 8,707 |   |
|    Deferred commission  - long term                                                                                       |   |        | 9,191      |   |     |   | 36,762 |   |
| Total Assets                                                                                                                                       |   | $           | 247,783    |   |     | $      | 201,914 |   |
|                                                                                                                                               |   |        |       |   |     |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                        |   |        |       |   |     |   |   |   |
| Current Liabilities                                                                                                                                |   |        |       |   |     |   |   |   |
| Obligation from debt reduction agreement – current portion                                                                                   |   | $           | 120,000    |   |     | $      | 120,000 |   |
| Accounts payable                                                                                                                                   |   |        | 112,878    |   |     |   | 85,749 |   |
| Accrued expenses                                                                                                                                   |   |        | 189,158    |   |     |   | 139,362 |   |
| Current portion - deferred revenue                                                                                                                 |   |        | 111,926    |   |     |   | 119,671 |   |
| Current portion – deferred credits                                                                                                           |   |        | 15,014     |   |     |   | 14,462 |   |
| Convertible debentures                                                                                                                             |   |        | 733,635    |   |     |   | 733,635 |   |
| Total Current Liabilities                                                                                                                          |   |        | 1,282,611  |   |     |   | 1,212,879 |   |
|     Obligation from debt reduction agreement – long-term portion                                                         |   |        | 435,000    |   |     |   | 465,000 |   |
|     Note payable                                                                                                               |   |        | 118,667    |   |     |   | 118,667 |   |
|     Deferred revenues – net of current portion                                                                           |   |        | 17,945     |   |     |   | 63,445 |   |
|     Deferred credits – net of current portion                                                                            |   |        | 150,533    |   |     |   | 161,864 |   |
| Total liabilities                                                                                                                                  |   |        | 2,004,756  |   |     |   | 2,021,855 |   |
|                                                                                                                                               |   |        |       |   |     |   |   |   |
| Stockholders' Deficit                                                                                                                              |   |        |       |   |     |   |   |   |
| Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding at March 31, 2010 and June 30, 2009                   |   |        | -          |   |     |   | - |   |
|  Common stock, $0.0001 par value, 125,000,000 shares authorized, 51,931,553 shares issued and outstanding at March 31, 2010 and June 30, 2009 |   |        | 5,193      |   |     |   | 5,193 |   |
| Additional paid-in capital                                                                                                                         |   |        | 6,933,300  |   |     |   | 6,915,627 |   |
| Accumulated deficit                                                                                                                                |   |        | (8,695,466 | )      |     |   | (8,740,761 | ) |
| Total Stockholders' Deficit                                                                                                                        |   |        | (1,756,973 | )      |     |   | (1,819,941 | ) |
| Total Liabilities and Stockholders' Deficit                                                                                                        |   | $           | 247,783    |   |     | $      | 201,914 |   |

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|                                                             |   | (Unaudited)                  |          |   | (Unaudited)                 |   |
|------------------------------------------------------------------|--------|------------------------------|---------------|--------|-----------------------------|--------|
|                                                             |   | Three Months Ended March 31, |          |   | Nine Months Ended March 31, |   |
|                                                             |   | 2010                         |          |   | 2009                        |   |   | 2010 |   |   | 2009 |   |
| Revenue                                                          |   | $                            | 478,872       |   |                        | $      | 484,320 |   |   | $ | 1,464,996 |   |   | $ | 1,562,185 |   |
|  Cost of revenue                                            |   |                         |  157,646 |   |                        |   | 133,044 |   |   |   |  461,641 |   |   |   |  408,708 |   |
| Research and Development                                         |   |                         | 128,296       |   |                        |   | 145,513 |   |   |   | 375,743 |   |   |   | 415,982 |   |
| Marketing and selling                                            |   |                         | 59,588        |   |                        |   | 82,760 |   |   |   | 194,360 |   |   |   | 241,297 |   |
| General and administrative                                       |   |                         | 91,233        |   |                        |   | 100,789 |   |   |   | 314,248 |   |   |   | 341,363 |   |
| Total operating expenses                                         |   |                         | 436,763       |   |                        |   | 462,106 |   |   |   | 1,345,992 |   |   |   | 1,407,350 |   |
| Income (loss) from operations                                    |   |                         | 42,109        |   |                        |   | 22,214 |   |   |   | 119,004 |   |   |   | 154,835 |   |
| Interest expense, net                                            |   |                         | (20,395       | )      |                        |   | (19,950 | ) |   |   | (62,022 | ) |   |   | (60,387 | ) |
| Income (loss) before other income and provision for income taxes |   |                         |  21,714  |   |                        |   |  2,264 |   |   |   |  56,982 |   |   |   |  94,448 |   |
| Other income – Gain on debt reduction                      |   |                         | -             |   |                        |   | - |   |   |   | - |   |   |   | 698,769 |   |
| Income (loss) before provision for income taxes                  |   |                         |  21,714  |   |                        |   |  2,264 |   |   |   |  56,982 |   |   |   |  793,217 |   |
| Provision for state income taxes                                 |   |                         | 2,294         |   |                        |   | - |   |   |   | 11,687 |   |   |   | - |   |
| Net Income (loss)                                                |   | $                            | 19,420        |   |                        | $      | 2,264 |   |   | $ | 45,295 |   |   | $ | 793,217 |   |
|                                                             |   |                         |          |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (loss) per share – basic and diluted            |   | $                            | 0.00          |   |                        | $      | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.02 |   |
|                                                             |   |                         |          |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares – basic and diluted      |   |                         | 51,931,553    |   |                        |   | 51,931,553 |   |   |   | 51,931,553 |   |   |   | 51,511,845 |   |

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|                                                                                                                                                |   | (Unaudited)                 |         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------------|
|                                                                                                                                                |   | Nine Months Ended March 31, |         |
|                                                                                                                                                |   | 2010                        |         |   | 2009 |   |
| Operating activities:                                                                                                                               |   |                        |         |   |   |   |
| Net income (loss)                                                                                                                                   |   | $                           | 45,295       |   |   | $ | 793,217 |   |
| Depreciation                                                                                                                                        |   |                        | 15,667       |   |   |   | 16,506 |   |
| Amortization of deferred commission                                                                                                                 |   |                        | 27,572       |   |   |   | 27,572 |   |
| Non-cash transactions for:                                                                                                                          |   |                        |         |   |   |   |   |   |
|             Compensation from share-based payment arrangements                          |   |                        | 17,673       |   |   |   | - |   |
|             Gain on debt reduction agreement                                            |   |                        | -            |   |   |   | (698,769 | ) |
|             Interest charge for beneficial conversion feature in convertible debentures |   |                        | -            |   |   |   | 1,211 |   |
| Changes in:                                                                                                                                         |   |                        |         |   |   |   |   |   |
| Accounts receivable                                                                                                                                 |   |                        | (57,852      | ) |   |   | (34,684 | ) |
| Prepaid expenses and other assets                                                                                                                   |   |                        | 9,905        |   |   |   | (7,523 | ) |
| Accounts payable                                                                                                                                    |   |                        | 27,130       |   |   |   | 11,763 |   |
| Accrued expenses                                                                                                                                    |   |                        | 49,795       |   |   |   | 81,726 |   |
| Deferred revenue                                                                                                                                    |   |                        | (53,245      | ) |   |   | (68,730 | ) |
| Deferred credits                                                                                                                                    |   |                        | (10,779      | ) |   |   | (10,254 | ) |
|                                                                                                                                                |   |                        |         |   |   |   |   |   |
| Net cash provided by operating activities                                                                                                           |   |                        | 71,161       |   |   |   | 112,035 |   |
|                                                                                                                                                |   |                        |         |   |   |   |   |   |
| Investing activities:                                                                                                                               |   |                        |         |   |   |   |   |   |
| Purchases of property and equipment                                                                                                                 |   |                        |  (8,496 | ) |   |   | (26,159 | ) |
| Net cash used in investing activities                                                                                                               |   |                        | (8,496       | ) |   |   | (26,159 | ) |
|                                                                                                                                                |   |                        |         |   |   |   |   |   |
| Financing activities:                                                                                                                               |   |                        |         |   |   |   |   |   |
|             Payment under debt reduction agreement                                      |   |                        | (30,000      | ) |   |   | (60,000 | ) |
|             Proceeds from issuance of convertible debentures                            |   |                        | -            |   |   |   | 10,000 |   |
| Net cash used in financing activities                                                                                                               |   |                        | (30,000      | ) |   |   | (50,000 | ) |
|                                                                                                                                                |   |                        |         |   |   |   |   |   |
| Increase in cash and cash equivalents                                                                                                               |   |                        | 32,665       |   |   |   | 35,876 |   |
| Cash and cash equivalents, beginning of period                                                                                                      |   |                        | 14,262       |   |   |   | 87,117 |   |
| Cash and cash equivalents, end of period                                                                                                            |   | $                           | 46,927       |   |   | $ | 122,993 |   |
|                                                                                                                                                |   |                        |         |   |   |   |   |   |
| Supplemental disclosure of non-cash financing and investing activities                                                                              |   |                        |         |   |   |   |   |   |
|  Interest paid                                                                                                                                 |   | $                           | 37,119       |   |   | $ | 81 |   |
|  Additional paid-in capital from beneficial conversion feature in convertible debenture                                                        |   | $                           | -            |   |   | $ | 2,500 |   |
|  Gain on debt reduction agreement                                                                                                              |   | $                           | -            |   |   | $ | 698,769 |   |
|  Decrease in accounts payable due to debt reduction agreement                                                                                  |   | $                           | -            |   |   | $ | (1,578,769 | ) |
|  Increase in short term and long term debt                                                                                                     |   | $                           | -            |   |   | $ | 740,000 |   |
|  Issuance of common stock in payment of debt reduction agreement                                                                               |   | $                           | -            |   |   | $ | 140,000 |   |

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|                                                       |   | Nine Months EndedMarch 31, 2010 |   |
|------------------------------------------------------------|--------|---------------------------------|--------|
| Long term portion of deferred commission in other assets   |   | $                               | 9,191  |   |
| Current portion of deferred commission in prepaid expenses |   | $                               | 36,762 |   |
| Amount of commission expensed in this period               |   | $                               | 27,572 |   |

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|                                                        |   | March 31, |    |   | June 30, |   |
|-------------------------------------------------------------|--------|-----------|---------|--------|----------|--------|
|                                                        |   | 2010      |    |   | 2009     |   |
| 401 (K) obligation                                          |   | $         | 34,291  |   |     | $      | 24,813 |   |
| Accrued interest on convertible debentures and note payable |   |      | 78,637  |   |     |   | 59,843 |   |
| Other                                                       |   |      | 76,230  |   |     |   | 54,706 |   |
|      Totals                        |   | $         | 189,158 |   |     | $      | 139,362 |   |

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| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS |
|---------|------------------------------------------------------------|

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|                                                                                            |   | Three Months EndedMarch 31, |                                                                    |   | Nine Months EndedMarch 31, |                                                                          |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------------------------------------------------------------------|--------|----------------------------|-------------------------------------------------------------------------------|
|   Interest expense                                                                    |   |                        |             2010 |   |                       |              2009 |   |   |              2010 |   |   |             2009 |   |   |   |
| Accrued interest on convertible debentures                                                      |   | $                           | 16,281                                                                  |   |                       | $                                                                             | 16,284 |   |   | $ | 49,566 |   |   | $ | 49,332 |   |
| Amortization of the discount of the beneficial conversion feature in the convertible debentures |   |                        |   -                                                                |   |                       |                                                                          |    616 |   |   |   |   - |   |   |   |    1,211 |   |
| Accrued interest on loan payable                                                                |   |                        | 2,077                                                                   |   |                       |                                                                          | 1,750 |   |   |   | 6,230 |   |   |   | 5,250 |   |
| Interest incurred from the deferred credits issued to consortium members                        |   |                        |   2,212                                                       |   |                       |                                                                          |    2,288 |   |   |   |    6,684 |   |   |   |    7,020 |   |
| Interest income earned on cash and cash equivalents                                             |   |                        | (175                                                                    | )      |                       |                                                                          | (988 | ) |   |   |  (458 | ) |   |   |  (2,426 | ) |
| Net interest expense                                                                            |   | $                           | 20,395                                                                  |   |                       | $                                                                             | 19,950 |   |   | $ | 62,022 |   |   | $ | 60,387 |   |

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|   | Exhibits                                   |
|--------|--------------------------------------------|
| 31.    | Certification                              |
|   |                                       |
| 32.    | Certification pursuant to USC Section 1350 |
|   |                                       |

|                                      | XFormity Technologies, Inc.                                                                                                                                 |
|-------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      |                                                                                                                                                        |
| Date:  May 17 2010    | /s/ Christopher Ball           Christopher BallChief Executive Officer                               |
| Date:  May 17, 2010   | /s/ Jack Rabin                  Jack RabinChief Financial Officer |

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