UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)
        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                 For the quarterly period ended: June 30, 2007

       [  ]   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                                  EXCHANGE ACT

               For the transition period from ________ to ________

                         Commission file number 0-17304
                                               --------

                             CISTERA NETWORKS, INC.
                        --------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

                  Nevada                                   91-1944887
------------------------------------            --------------------------------
     (State or other jurisdiction                        (IRS Employer
  of incorporation or organization)                   Identification No.)

                 17304 Preston Road, Suite 975, Dallas, TX 75252
                    (Address of principal executive offices)

                                 (972) 381-4699
                            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 past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ___

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

         At August 14, 2007, the issuer had 8,292,002 shares of its common stock
outstanding.

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



<PAGE>






                                     PART I

ITEM 1.  FINANCIAL STATEMENTS

                       CISTERA NETWORKS, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                            (Unaudited)
                                              June 30,           March 31,
                                                2007                2007
                                         ------------------- -------------------
Current Assets:
   Cash                                          $1,137,826            $534,871
   Accounts Receivable                              630,381             314,178
   Other Receivable                                  14,821              23,927
   Inventory                                        115,281              72,367
   Prepaid Expenses                                   8,575              10,143
                                         ------------------- -------------------

      Total Current Assets                        1,906,884             955,486
                                         ------------------- -------------------

Fixed Assets:
   Computer Equipment                               152,090             123,035
   Trade Show Booth & Fixtures                       10,641              10,641
   Office Equipment                                 169,788             129,064
   Property held under capital leases                10,205              10,205
   Less Accumulated Depreciation                  (163,891)           (150,899)
                                         ------------------- -------------------

      Net Fixed Assets                              178,833             122,046
                                         ------------------- -------------------

Intangible Assets:
   Intellectual property                          2,717,755           2,717,755
   Software development                             366,040             366,040
   Less Amortization                              (856,745)           (788,802)
                                         ------------------- -------------------

      Net Intangible Assets                       2,227,050           2,294,993
                                         ------------------- -------------------

Total Assets                                     $4,312,767          $3,372,525
                                         =================== ===================





<PAGE>



                       CISTERA NETWORKS, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                                   (continued)

                                            (Unaudited)
                                              June 30,            March 31,
                                                2007                2007
                                           ----------------- -------------------

Current Liabilities:
   Accounts payable                                $368,051            $544,796
   Accrued liabilities                              444,716             598,023
   Related party payables                            13,038              24,038
   Line of credit                                         -              62,094
   Convertible promissory notes                      94,000             144,000
   Current portion of long-term debt                  1,408               2,415
   Current portion of deferred income               592,078             351,698
                                           ----------------- -------------------

     Total Current Liabilities                    1,513,291           1,727,064
                                           ----------------- -------------------

Long-Term Liabilities
   Convertible promissory notes                   3,485,491           1,900,606
   Deferred income                                  114,912              84,968
                                           ----------------- -------------------
     Total Long-Term Liabilities                  3,600,403           1,985,574
                                           ----------------- -------------------

     Total Liabilities                            5,113,694           3,712,638
                                           ----------------- -------------------

Stockholders' Equity:
   Common Stock, Par Value $.001
     Authorized 50,000,000 shares,
     Issued 8,292,022 shares at
     June 30, 2007 and March 31, 2007                 8,292               8,292
   Paid-In Capital                                8,739,970           8,739,970
   Retained Deficit                             (9,549,189)         (9,088,375)
                                           ----------------- -------------------

     Total Stockholders' Equity                   (800,927)           (340,113)
                                           ----------------- -------------------

Total Liabilities and Stockholders' Equity       $4,312,767          $3,372,525
                                           ================= ===================






   The accompanying notes are an integral part of these financial statements.


<PAGE>

                       CISTERA NETWORKS, INC.& SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                  (Unaudited)
                                           For the three months ended
                                                    June 30,
                                            2007                2006
                                     ------------------- -------------------
Revenues                                       $629,224            $494,737
Cost of goods sold                               86,302              27,974
                                     ------------------- -------------------

     Gross Profit                               542,922             466,763
                                     ------------------- -------------------

Expenses:
   Sales and marketing                          176,092              55,710
   Research and development                     129,035             128,904
   Software consulting                          300,006             267,755
   General and administrative                   250,057             277,818
                                     ------------------- -------------------

     Total Expenses                             855,190             730,187
                                     ------------------- -------------------

Other Income (Expense)
   Interest income                                9,589                  15
   Interest expense                           (158,135)            (17,434)
                                     ------------------- -------------------

     Total Other Income (Expense)             (148,546)            (17,419)
                                     ------------------- -------------------

     Net Loss                                $(460,814)          $(280,843)
                                     =================== ===================

Basic & Diluted loss per share       $           (0.06)  $           (0.03)
                                     =================== ===================

Weighted Average Shares                       8,292,022           8,077,226
                                     =================== ===================









   The accompanying notes are an integral part of these financial statements.


<PAGE>

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

<TABLE>
<CAPTION>
                                                                (Unaudited)
                                                          For the three months ended
                                                                   June 30,
                                                           2007                2006
                                                    ------------------- -------------------
<S>                                                         <C>                 <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss                                                    $(460,814)          $(280,843)
Adjustments used to reconcile net loss to net cash
     provided by (used in) operating activities:
Depreciation and amortization                                   80,936             112,573
Deferred income                                                270,324              29,957
Decrease in other receivable                                     9,106                   -
(Increase) Decrease in accounts receivable                   (316,203)              36,265
(Increase) in inventory                                       (42,914)               (550)
(Increase) Decrease in prepaid expenses                          1,568            (95,088)
Increase (Decrease) in accrued liabilities                   (153,307)             250,994
 (Decrease) in accounts payable                              (176,745)           (186,837)
                                                    ------------------- -------------------
     Net Cash Used in operating activities                   (788,052)           (133,529)
                                                    ------------------- -------------------

CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash acquired from Xbridge                                           -                   -
Purchase of equipment                                         (69,780)             (2,598)
                                                    ------------------- -------------------
 Net cash provided by investing activities                    (69,780)             (2,598)
                                                    ------------------- -------------------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on capital lease                                      (1,007)               (832)
Cash received from convertible debt                          1,584,885             154,000
                                                    ------------------- -------------------
Payments on line of credit                                    (62,094)                   -
                                                    ------------------- -------------------
Payments on loans                                             (61,000)            (12,500)
                                                    ------------------- -------------------
 Net Cash Provided by Financing Activities                   1,460,784             140,668
                                                    ------------------- -------------------

Net Increase in cash and cash equivalents                      602,955               4,541
Cash and Cash Equivalents at beginning of period               534,871              60,990
                                                    ------------------- -------------------
Cash and Cash Equivalents at end of period                  $1,137,826             $65,531
                                                    =================== ===================
</TABLE>





<PAGE>

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

                                                            (Unaudited)
                                                     For the three months ended
                                                              June 30,
                                                      2007          2006
                                                    -------------- -------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest                                                 $9,798          $658
  Franchise and income taxes                                 $  -           $ -

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
None.

         On April 29, 2005,  the Company  issued  173,511 shares of common stock
for accrued liabilities of $482,364.

         On May 27, 2005, the Company issued 4,150,000 shares of common stock to
the shareholders of XBridge Software,  Inc. and cancelled  2,150,000 shares then
held by XBridge,  in connection with the Company's merger with XBridge Software,
Inc. In the merger,  the Company  acquired all of the assets and  liabilities of
XBridge Software,  valued at a net of $782,245, and intellectual property valued
at  $2,717,755.  Goodwill  of  $2,134,821  was also  acquired  and  subsequently
expensed.

         On June 24, 2005,  the Company  issued  100,000  shares of common stock
from the exercise of outstanding stock options at $2 per share.

         Effective  September  21, 2005,  the Company's  authorized  shares were
increased from 10 million shares to 50 million shares.

         On December 31, 2005,  the Company  issued  311,600  shares of stock in
connection with the exercise of warrants issued in the 2004 private placement of
notes and warrants at $1.30 per share.

         On December 31, 2005,  the Company  issued 946,392 shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal represented by these shares was $859,000.  The amount of
accrued interest represented by these shares was $87,392.  These notes converted
at $1.00 per share.

         On March 31, 2006, the Company issued 67,785 shares of stock due to the
conversion of note  principal and interest from private  placement fund holders.
The amount of principal  represented by these shares was $57,000.  The amount of
accrued interest represented by these shares was $10,785.


<PAGE>

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

         On March 31, 2006 the Company  issued 2,000 shares of stock to a former
contractor for providing project  management  services valued at $2,000. As part
of the initial  agreement with this  contractor,  these shares were to be issued
upon the delivery of services defined by the agreement.

         On March 31, 2006,  the Company issued 8,000 shares of stock as part of
a legal settlement.  The shares had been previously issued and were cancelled as
part of a court  order,  but were  never  returned  to the  Company.  As per the
settlement,  the 8,000  outstanding were cancelled and subsequently  reissued as
unrestricted shares.

         On July  1,  2006,  the  Company  issued  70,893  shares  of  stock  in
connection  with the  exercise of  warrants  issued in the merger of the Company
with Xbridge  Software,  Inc.  The  exercise  price of the warrants was $.46 per
share. The warrants were exercised for notes payable totaling $32,594.

         On August 1, 2006, the Company issued 4,034 shares of common stock upon
conversion  of  the  principal  and  accrued  interest  on a  previously  issued
convertible  note. The principal amount of the note converted was $1,000 and the
amount of accrued interest  converted  $3,034.  The notes converted at $1.00 per
share.

         On October 25, 2006,  the Company issued 122,028 shares of common stock
in connection  with the exercise of options  issued in the merger of the Company
with XBridge  Software,  Inc. The exercise  price for these options was $.01 per
share.

         On December 13, 2006,  the Company issued 17,931 shares of common stock
upon conversion of certain  outstanding  notes. The amount of principal of notes
converted was $15,000 and the amount of accrued  interest  converted was $2,391.
These notes were converted at $1.00 per share.















   The accompanying notes are an integral part of these financial statements.

<PAGE>

                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN

         The accompanying  consolidated  financial statements have been prepared
in  conformity  with  accounting  principles  generally  accepted  in the United
States,  which contemplate the Company as a going concern.  However, the Company
has  sustained  substantial  operating  losses  in  recent  years  and has  used
substantial amounts of working capital in its operations. Realization of a major
portion of the assets reflected on the  accompanying  balance sheet is dependent
upon continued  operations of the Company which,  in turn, is dependent upon the
Company's  ability to meet its financing  requirements and succeed in its future
operations. Management believes that actions presently being taken to revise the
Company's operating and financial requirements provide them with the opportunity
for the Company to continue as a going concern.

         These consolidated financial statements do not reflect adjustments that
would be necessary if the Company were unable to continue as a "going  concern".
While  management  believes  that the actions  already  taken or  planned,  will
mitigate the adverse  conditions and events which raise doubt about the validity
of the "going concern" assumption used in preparing these financial  statements,
there can be no assurance that these actions will be successful.

         If the  Company  were unable to  continue  as a "going  concern",  then
substantial adjustments would be necessary to the carrying values of assets, the
reported amounts of its liabilities, the reported revenues and expenses, and the
balance sheet classifications used.

Interim Reporting

         The unaudited  financial  statements  as of June 30, 2007,  and for the
three-month  period  then  ended  reflect,  in the  opinion of  management,  all
adjustments  (which  include  only normal  recurring  adjustments)  necessary to
fairly  state the  financial  position and results of  operations  for the three
months.  Operating results for interim periods are not necessarily indicative of
the results that can be expected for full years.

Organization and Basis of Presentation

         CNH  Holdings   Company,   a  Nevada   corporation  (the  Company)  was
incorporated in Delaware on April 15, 1987, under the name of I.S.B.C. Corp. The
Company subsequently  changed its name first to Coral Companies,  Inc., and then
to CNH Holdings  Company.  Domicile  was changed to Nevada in 1997.  The Company
conducted an initial public and secondary  offerings during the 1980's.  On June
15, 1998, the Company acquired  Southport  Environmental  and Development,  Inc.
This  acquisition  however was subsequently  rescinded by agreement  between the
parties and made a formal  order of the court  effective  April 19,  2000.  This
order put the Company in the position that it occupied


<PAGE>




                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (continued)

at June 14, 1998,  as if none of the actions that had occurred from that time to
the date of rescission had transpired.

         On May 5, 2003,  Corvero  Networks,  Inc., a Florida  corporation,  was
formed by CNH Holdings  Company as a wholly owned  subsidiary to acquire the use
of certain  technology known as the XBridge  Technology.  This technology has as
its principal  component the Corvero Convergence  Platform.  The acquisition was
accomplished by entering into a license agreement with XBridge Software, Inc., a
Delaware corporation.

         The Company was in the development stage from January 1, 1992 to May 5,
2003. Since May 5, 2003, the Company has commenced planned principal  operations
and is no longer in the development stage.

         On August  31,  2004,  as part of a  corporate  restructuring  aimed at
simplifying the Company's operating structure,  Corvero Networks merged into CNH
Holdings and began doing business as Cistera Networks. As a continuation of this
restructuring,  effective May 27, 2005, the Company acquired XBridge in a merger
of XBridge with a newly formed  Company  subsidiary.  As  consideration  for the
acquisition, we issued an aggregate of 4,150,000 shares of our common stock, net
of the  cancellation of 2,150,000  shares of our common stock held by XBridge at
the time of the acquisition.

         On September 27, 2005, we changed our name to Cistera Networks, Inc.

Nature of Operations

         We provide IP  network-based  application  appliances and services that
add features and enhanced functionality to the telecommunications  services used
by large enterprises, small and mid-sized organizations,  both in the commercial
and public sector. Our software-based and hardware-based solutions are delivered
on  our  open-architecture,   component-based  platform  known  as  the  Cistera
ConvergenceServer(TM),  which allows administrators to centrally manage advanced
applications  for  IP  telephony   environments  across  large  single-site  and
multi-site  private  voice/data  networks.  Although the origins of the solution
started back in 2000,  we began  operations in May 2003 as a public entity under
the name CNH Holdings Company.

         Our  general  business  plan  is  to  drive  adoption  of  the  Cistera
technology--establishing  the Cistera  ConvergenceServer as the leading platform
for  advanced   IP-based   applications,   through  the   strategic   technology
relationships with the IP Telephony equipment providers--Cisco, Nortel, Sylantro
and Avaya, as well as the leading channel resellers--AT&T, Verizon, Bell Canada,
Comstor, BT, etc. The



<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (continued)

Company  plans to extend our  product  and  technological  leadership  in the IP
communications industry, and to increase our market penetration by continuing to
expand our sales and  distribution  channels and by  capitalizing  on new market
opportunities like two-way radio interoperability mobile/wireless devices.

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES

         This  summary of  accounting  policies  for Cistera  Networks,  Inc. is
presented  to assist  in  understanding  the  Company's  consolidated  financial
statements.  The accounting  policies conform to generally  accepted  accounting
principles  and  have  been  consistently  applied  in  the  preparation  of the
consolidated financial statements.

Principles of Consolidation

         The  consolidated  financial  statements for the quarter ended June 30,
2007  include  the  accounts  of Cistera  Networks,  Inc.  and its  wholly-owned
subsidiary  XBridge Software,  Inc. XBridge  Software,  Inc. was acquired by the
Company on May 27, 2005.

         The  results  of  subsidiaries  acquired  or sold  during  the year are
consolidated  from their effective dates of acquisition  through their effective
dates of disposition.

         All  significant  inter-company  balances  and  transactions  have been
eliminated.

Use of Estimates

         Our consolidated  financial  statements are prepared in accordance with
accounting  principles  generally accepted in the United States. The preparation
of these  consolidated  financial  statements  requires us to make estimates and
assumptions that affect the reported amounts of assets,  liabilities,  revenues,
costs and expenses,  and related  disclosures.  On an ongoing basis, we evaluate
our  estimates  and  assumptions.  Our  actual  results  may  differ  from these
estimates under different assumptions or conditions.

Cash and Cash Equivalents

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.





                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Concentration of Credit Risk

         The Company has no  significant  off-balance  sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign hedging arrangements.

Inventory

         Inventory  consists  of  equipment  that has been  shipped  but not yet
installed  and  equipment  that has been  returned  to the  Company  because the
customer  has quit the project or there were  problems  with the  hardware.  The
machines are  refurbished  and used for future sales.  The inventory  assets are
recorded at cost.

Revenue Recognition

                  In an effort to establish an  accounting  policy that provides
shareholders with the most accurate representation of the company's performance,
the company has instated a new policy that only declares  revenue from software,
hardware and  services  once fully  installed  and  implemented.  This method of
revenue  reporting  will not reflect all orders  received and shipped during the
reporting  period,  but only  those  orders  received,  shipped  and  completely
installed within the reporting period. Prior to the adoption of this policy, the
Company  recognized  revenues  when orders for our products and  solutions  were
received and shipped.

         In future earnings reporting,  the Company will continue to provide the
"booked" revenue figures -- the amount based upon purchase orders (POs) received
from  customers  and  delivered to resellers -- during the  reporting  period in
addition to the new recognized revenue reporting policy.

         The Company  recognizes revenue according to SOP 97-2 (Software Revenue
Recognition)  as defined by  paragraphs  07-14 in SOP 97-2 and as amended by SOP
98-9 (Modification of SOP 97-2,  Software Revenue  Recognition,  With Respect to
Certain  Transactions).  This SOP provides  guidance on when  revenue  should be
recognized  and in what  amounts for  licensing,  selling,  leasing or otherwise
marketing computer software (including computer hardware and support services).

         Technical  support services revenue is deferred and recognized  ratably
over  the  period  during  which  the  services  are to be  performed,  which is
typically from one to three years.  Advanced services revenue is recognized upon
delivery or completion of performance.



<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

         We make sales to distributors and retail partners and recognize revenue
based on a sell-through method using information provided by them.

Accounting for Deferred Commissions

         We defer commission  payments to our direct and channel sales force for
the professional services and support and maintenance portions of our contracts.
These  commissions  are deferred and amortized to sales expense over the life of
the related  contracts,  which  typically  last 12 to 36 months.  The commission
payments,  which  are paid the month  after  the  service  is  delivered  to the
customer,  are a direct and incremental  cost of the revenue  arrangements.  The
deferred  commission amounts are recoverable  through the future revenue streams
under the customer  support and  maintenance  contracts.  We believe this is the
preferable method of accounting as the commission charges are so closely related
to  the  revenue  from  the  non-cancelable  customer  support  and  maintenance
contracts  that they should be recorded as an asset and charged to expense  over
the same period that the subscription revenue is recognized.

Depreciation and Amortization

         Fixed assets are recorded at cost and depreciated  using  straight-line
and accelerated methods over the estimated useful lives of the assets that range
from three to seven years.  Fixed assets  consisted of the following at June 30,
2007 and March 31, 2007:

                                        (Unaudited)
                                          June 30,            March 31,
                                            2007                2007
                                     ------------------- -------------------
 Computer Equipment                            $152,090            $123,035
 Trade Show Booth & Fixtures                     10,641              10,641
 Office Equipment                               169,788             129,064
 Property held under capital leases              10,205              10,205
 Less accumulated depreciation                (163,891)           (150,899)
                                     ------------------- -------------------

 Total                                         $178,833            $122,046
                                     =================== ===================

         Maintenance  and  repairs are charged to  operations;  betterments  are
capitalized.  The  cost  of  property  sold  or  otherwise  disposed  of and the
accumulated depreciation thereon are eliminated from the


<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

property and related accumulated  depreciation  accounts, and any resulting gain
or loss is credited or charged to income.

         Total depreciation expense for the three months ended June 30, 2007 and
2006 was $12,992 and $8,297, respectively.

Intangible Assets

         The Company has adopted the Financial  Accounting  Standards Board SFAS
No., 142, "Goodwill and Other Intangible Assets." SFAS 142 requires, among other
things,  that companies no longer amortize  goodwill,  but instead test goodwill
for  impairment  at least  annually.  In addition,  SFAS 142  requires  that the
Company identify reporting units for the purposes of assessing  potential future
impairments of goodwill,  reassess the useful lives of other existing recognized
intangible   assets,  and  cease  amortization  of  intangible  assets  with  an
indefinite  useful life.  An  intangible  asset with an  indefinite  useful life
should be tested for impairment in accordance with the guidance in SFAS 142.

         Intangible Assets consisted of the following at June 30, 2007 and March
31, 2007:

<TABLE>
<CAPTION>
                                  (Unaudited) June 30, March
                                    31,
           Intangible Asset           2007               2007            Amortization Period
------------------------------ ------------------- ------------------ --------------------------
<S>                                    <C>                <C>                 <C>
Intellectual Property                  $2,717,755         $2,717,755          10 Years
Software Development                      366,040            366,040           4 Years
Less accumulated amortization           (856,745)          (788,802)
                               ------------------- ------------------

Total                                  $2,227,050         $2,294,993
                               =================== ==================
</TABLE>

         Software development costs include all development costs incurred after
the Company's software became "technologically  feasible". Prior to the software
reaching that stage, all development  costs were expensed as incurred.  Once the
software was  developed to the point of being ready for sale,  the Company began
amortizing  the costs over the term of the  license  agreement  it entered  into
which was four  years.  The  software  development  costs were  acquired  in the
acquisition of XBridge Software, Inc.

         On May 27, 2005, the Company issued 2,000,000 shares of common stock to
acquire the assets and  liabilities  of XBridge  Software,  Inc. The shares were
valued at the market price on the effective


<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

date of the  acquisition,  which was $2.65 per share.  The Company  acquired net
assets valued at $782,245 and  intellectual  property valued at $2,717,755.  The
Company has determined  that the  intellectual  property has a useful life of 10
years, and is using straight-line amortization.

         Total amortization expense for the three months ended June 30, 2007 and
2006 was $67,944 and $104,548, respectively.

         The estimated amortization for the next five years is as follows:

               2008                                        $271,776
               2009                                         271,776
               2010                                         271,776
               2011                                         271,776
               2012                                         271,776
                                                 -------------------
              Total                                      $1,358,880
                                                 ===================

Earnings (Loss) per Share

         Basic  earnings  (loss) per share has been  computed  by  dividing  the
earnings for the period  applicable to the common  stockholders  by the weighted
average number of common shares outstanding during the years.

         Diluted  loss per common share for the three months ended June 30, 2007
and 2006 is not presented as it would be  anti-dilutive.  At June 30, 2007,  the
total number of potentially dilutive common stock equivalents was 10,123,893. At
June 30, 2006, the total number of potentially dilutive common stock equivalents
was 3,088,598.

Reclassification

         Certain   reclassifications  have  been  made  in  the  2007  financial
statements to conform with the 2008 presentation.

Deferred Income

         Deferred income represents contracts for certain revenue to be received
in the future and come from support and maintenance contracts as well as product
sales and professional services which have been shipped



<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

and billed but not installed.  Support and maintenance contracts are executed on
an annual basis and the revenue from these  contracts is recognized on a monthly
basis as the support fees are earned.

Research and Development

         Research and  development  expenses  consist  primarily of salaries and
related expenses, and allocated overhead related to increasing the functionality
and enhancing the ease of use of the convergence platform and applications.

Stock Options

         Effective April 1, 2006, the company adopted the provisions of SFAS No.
123(R).  SFAS No.  123(R)  requires  employee  equity awards to be accounted for
under the fair value method.  Accordingly,  share-based compensation is measured
at grant date, based on the fair value of the award. Prior to April 1, 2006, the
company  accounted for awards  granted to employees  under its equity  incentive
plans under the intrinsic value method prescribed by Accounting Principles Board
(APB) Opinion No. 25,  "Accounting  for Stock Issued to Employees" (APB 25), and
related  interpretations,  and  provided  the  required  pro  forma  disclosures
prescribed by SFAS No. 123, "Accounting for Stock-Based  Compensation" (SFAS No.
123), as amended.  No stock  options were granted to employees  during the three
months ended June 30, 2007 or 2006 and accordingly,  no compensation expense was
recognized under APB No. 25 for the three months ended June 30, 2007 or 2006. In
addition,  no compensation expense is required to be recognized under provisions
of SFAS No. 123(R) with respect to employees.

         Under the modified  prospective method of adoption for SFAS No. 123(R),
the  compensation  cost  recognized  by the company  beginning  on April 1, 2006
includes (a) compensation cost for all equity incentive awards granted prior to,
but not yet  vested as of April 1,  2006,  based on the  grant-date  fair  value
estimated in  accordance  with the original  provisions of SFAS No. 123, and (b)
compensation cost for all equity incentive awards granted subsequent to April 1,
2006,  based on the  grant-date  fair value  estimated  in  accordance  with the
provisions of SFAS No. 123(R).  The company uses the  straight-line  attribution
method to recognize  share-based  compensation  costs over the service period of
the award.  Upon  exercise,  cancellation,  forfeiture,  or  expiration of stock
options,  or upon vesting or forfeiture of restricted stock units,  deferred tax
assets for options and  restricted  stock units with multiple  vesting dates are
eliminated  for each vesting  period on a first-in,  first-out  basis as if each
vesting  period was a  separate  award.  To  calculate  the excess tax  benefits
available  for  use in  offsetting  future  tax  shortfalls  as of the  date  of
implementation, the company followed the alternative transition method discussed
in FASB Staff Position No. 123(R)-3.





<PAGE>


                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 3 - CONCENTRATION OF RISK

         As of June 30,  2007,  the Company  receives  approximately  33% of its
gross revenues from its top three  re-sellers.  This represents some decrease in
concentration  of business  from the 38% reported for the quarter ended June 30,
2006. The loss of these  re-sellers  would adversely  impact the business of the
Company.

NOTE 4 - INCOME TAXES

         As of March 31,  2007,  the  Company  had a net  operating  loss  carry
forward for income tax reporting  purposes of approximately  $9,089,000 that may
be offset against future taxable income through 2027. Current tax laws limit the
amount of loss  available  to be offset  against  future  taxable  income when a
substantial  change in  ownership  occurs.  Therefore,  the amount  available to
offset future taxable income may be limited. Due to the uncertainty with respect
to ultimate  realization,  the Company has established a valuation allowance for
all deferred income tax assets.

                                        March 31,
                                 2007                2006
                          ------------------- -------------------
Net Operating Losses      $    1,363,350      $    1,187,100
Valuation Allowance            (1,363,350)         (1,187,100)
                          ------------------- -------------------
                                    $      -            $      -
                          =================== ===================

         The provision for income taxes differs from the amount  computed  using
the federal US statutory income tax rate as follows:

                                                       March 31,
                                                2007                2006
                                            ---------------- -------------------
Provision (Benefit) at US Statutory Rate    $    176,250             $  685,814
Increase (Decrease) in Valuation Allowance       (176,250)           (685,814)
                                            ---------------- -------------------
                                                   $      -            $      -
                                            ================ ===================

         The Company  evaluates its valuation  allowance  requirements  based on
projected future operations.  When  circumstances  change and causes a change in
management's  judgment  about the  recoverability  of deferred  tax assets,  the
impact of the change on the valuation is reflected in current income.



<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 5 - LEASE COMMITMENT

         The Company currently leases  approximately 4,264 square feet of office
space at 17304 Preston Road, Suite 975, Dallas,  Texas from Memshalah  Realty, a
successor to CMD Realty Fund.  The lease payments are  approximately  $7,626 per
month and the lease expires  November 30, 2009. This office space is used as the
Corporate Headquarters.

         The minimum  future lease  payments  under this lease for the next five
years are:

           April 1, 2007 - March 31, 2008                       $   92,225
           April 1, 2008 - March 31, 2009                           94,357
           April 1, 2009 - March 31, 2010                           63,852
           April 1, 2010 - March 31, 2011                                -
           April 1, 2011 - March 31, 2012                                -
                                                            ---------------
           Total minimum future lease payments                  $250,434
                                                            ===============

NOTE 6 - CAPITAL LEASE

         On October 20, 2004,  the Company  entered into an agreement  with Dell
Financial Services to lease five laptop computers and a laser printer. The lease
is for a period of thirty-six  months with a payment of  approximately  $369 per
month. The Company has an end of lease purchase option of $1.00. The Company has
capitalized  a total of  $10,205  under  capital  leases for the  computers  and
printer in the  financial  statements.  The assets  are  depreciated  over their
related lease terms.  Depreciation of assets under capital leases is included in
depreciation expense for the three months ended June 30, 2007.

         The minimum future lease payments under this capital lease for the next
five years are:

           April 1, 2007 - March 31, 2008                           $2,952
           April 1, 2008 - March 31, 2009
                                                                         -
           April 1, 2009 - March 31, 2010
                                                                         -
           April 1, 2010 - March 31, 2011
                                                                         -
           April 1, 2011 - March 31, 2012                                -
                                                            ---------------
           Total minimum lease payments
                                                                    2,952
           Less: Amount representing interest                      (1,544)
                                                            ---------------
           Present value of net minimum
                    lease payment                                   $1,408
                                                            ===============



<PAGE>




                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 7 - COMMON STOCK

         On April 29, 2005,  the Company  issued  173,511 shares of common stock
for accrued liabilities of $482,364.

         On May 27, 2005, the Company issued 4,150,000 shares of common stock to
the shareholders of XBridge Software,  Inc. and cancelled  2,150,000 shares then
held by XBridge,  in connection with the Company's merger with XBridge Software,
Inc. In the merger,  the Company  acquired all of the assets and  liabilities of
XBridge Software,  valued at a net of $782,245, and intellectual property valued
at  $2,717,755.  Goodwill  of  $2,134,821  was also  acquired  and  subsequently
expensed.

         On June 24, 2005,  the Company  issued  100,000  shares of common stock
from the exercise of outstanding stock options at $2 per share.

         Effective  September  21, 2005,  the Company's  authorized  shares were
increased from 10 million shares to 50 million shares.

         On December 31, 2005,  the Company  issued  311,600  shares of stock in
connection with the exercise of warrants issued in the 2004 private placement of
notes and warrants at $1.30 per share.

         On December 31, 2005,  the Company  issued 946,392 shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal represented by these shares was $859,000.  The amount of
accrued interest represented by these shares was $87,392.  These notes converted
at $1.00 per share.

         On March 31,  2006,  the  Company  issued  67,785  shares of stock upon
conversion of certain  outstanding  notes issued in the 2004 private  placement.
The amount of principal  represented by these shares was $57,000.  The amount of
accrued interest represented by these shares was $10,785.  These notes converted
at $1.00 per share.

         On March 31, 2006 the Company  issued 2,000 shares of stock to a former
contractor for providing project  management  services valued at $2,000. As part
of the initial  agreement with this  contractor,  these shares were to be issued
upon the delivery of services defined by the agreement.

         On March 31, 2006,  the Company issued 8,000 shares of stock as part of
a legal settlement.  The shares had been previously issued and were cancelled as
part of a court  order,  but were  never  returned  to the  Company.  As per the
settlement,  the 8,000  outstanding were cancelled and subsequently  reissued as
unrestricted shares.

<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 7 - COMMON STOCK (continued)

         On July 1, 2006,  the Company  issued  70,803 shares of common stock in
connection  with the  exercise of  warrants  issued in the merger of the Company
with XBridge  Software,  Inc.  The  exercise  price of the warrants was $.46 per
share. The warrants were exercised for notes payable totaling $32,594.

         On August 1, 2006, the Company issued 4,034 shares of common stock upon
conversion  of  the  principal  and  accrued  interest  on a  previously  issued
convertible  note. The principal amount of the note converted was $1,000 and the
amount of accrued interest  converted  $3,034.  The notes converted at $1.00 per
share.

         On October 25, 2006,  the Company issued 122,028 shares of common stock
in connection  with the exercise of options  issued in the merger of the Company
with XBridge  Software,  Inc. The exercise  price for these options was $.01 per
share.

                  On December  13, 2006,  the Company  issued  17,931  shares of
common  stock  upon  conversion  of  certain  outstanding  notes.  The amount of
principal  of notes  converted  was $15,000  and the amount of accrued  interest
converted was $2,391. These notes were converted at $1.00 per share.


NOTE 8 - LINE OF CREDIT

         On September 21, 2006, the Company  entered into a factoring  agreement
with Allied Capital Partners,  L.P., whereby Allied Capital provides a revolving
line of credit to the  Company up to $750,000  that is secured by the  Company's
accounts receivable. At June 30, 2007, the total amount outstanding on this line
of credit was $0.


<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 8 - LINE OF CREDIT (continued)

         On May 18,  2007,  the Company  secured a line of credit with  JPMorgan
Chase Bank in the amount of $50,000. The line of credit carries an interest rate
of prime  plus one  half-point.  The line of  credit is  secured  with a deposit
guarantee of $50,000.

NOTE 9 - RELATED PARTY TRANSACTIONS

         On May 31, 2004, the Company received a loan of $55,755 from one of its
executive officers.  The note carries an interest rate of 8% and was at December
31, 2005.  At June 30, 2007,  the total amount of principal  and interest due on
this note was $25,860.

         Effective  May  27,  2005,  we  acquired   XBridge   through  a  merger
transaction  in exchange for  4,150,000  shares of our common stock (which after
the cancellation of the 2,150,000  originally  issued to XBridge resulted in the
issuance of only  2,000,000  new shares) and the  elimination  of  approximately
$1.86 million on inter-company  payables owed to XBridge. Prior to entering into
the  agreement  governing  the  merger,  (a) Ms.  Cynthia  Garr,  the  Company's
Executive Vice  President,  acting Chief Financial  Officer and a director,  was
also the  President  and a director of XBridge,  (b),  Mr.  Gregory  Royal,  the
Company's Chief Technology Officer and a director, was also a Vice President and
a director of XBridge,  (c) Mr. Derek Downs the Company's acting Chief Executive
Officer and a director, was also a consultant to XBridge.

         At the time of the  merger,  Ms. Garr owned  451,000  shares of XBridge
common stock and held options to purchase  another 15,426 shares,  and Mr. Royal
owned  375,000  shares of XBridge  common  stock and held  options  to  purchase
another  100,000  shares.  At an exchange  ratio of 2.71174 shares of our common
stock for each share of XBridge  stock  outstanding,  post merger,  (1) Ms. Garr
owned 1,222,997  shares of our common stock and held options to purchase another
41,831 shares; (2) Mr. Royal owned 1,016,904 shares of our common stock and held
options to purchase an additional  271,174  shares.  Ms. Garr's  options  expire
April 1, 2009, and Mr. Royal's  options expire May 3, 2009. With regard to these
stock options and all other  outstanding  options to purchase  XBridge shares at
the time, the original  provisions for the XBridge stock options were applied in
a carry-forward manner to the options to purchase shares of our stock.

         On March 31,  2006,  the Company  received a loan of $6,400 from one of
its  executive  officers.  The note  carries an interest  rate of 8% and was due
March 31, 2007. At June 30, 2007, the total amount of principal and interest due
on this note was $0.




<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 9 - RELATED PARTY TRANSACTIONS (continued)

         On June 30,  2006,  the  Company  received a short term loan of $16,434
from one of its executive  officers.  At March 31, 2007, the balance of the loan
was $0.

         Pursuant to an employment  agreement dated January 1, 2005, the Company
agreed to pay $125,000  per year to Derek Downs,  an officer and director of the
Company. This agreement was mutually terminated by the parties,  effective March
31, 2007.

         Pursuant to an employment  agreement dated January 1, 2005, the Company
agreed to pay $125,000 per year to Cynthia  Garr, an officer and director of the
Company. This agreement was mutually terminated by the parties,  effective April
1, 2006.

         Pursuant to an employment  agreement dated October 1, 2004, the Company
agreed to pay $130,000 per year to Gregory Royal, an officer and director of the
Company. This agreement was mutually terminated by the parties,  effective March
31, 2007.

NOTE 10 - ACQUISITIONS

         On  May 5,  2003,  the  Company,  Corvero  Networks,  Inc.,  a  Florida
corporation our wholly owned subsidiary (Corvero), and XBridge Software, Inc., a
Delaware corporation, entered into a license agreement pursuant to which Corvero
agreed to license from XBridge Software, Inc. all rights, title, and interest of
XBridge in and to certain technologies and intellectual properties (the "XBridge
Technology").  The  exclusive  license was  worldwide in scope and had a term of
twenty  years,  and  included,  but  was  not  limited  to,  the  right  to make
alternations and/or derivative works and to license,  sublicense,  cross-license
or otherwise  transfer the XBridge Technology for commercial  purposes,  and all
rights to derivative  works would be the Company's sole and exclusive  property.
This license did not, however,  give the Company the right to transfer or resell
the XBridge  Technology  without the consent of XBridge.  CNH Holdings  Company,
through multiple subsequent  amendments to the licensing  agreement,  ultimately
issued an aggregate of 2,000,000 shares of its common stock to XBridge.

         On August 31, 2004,  CNH  Holdings  Company  absorbed its  wholly-owned
subsidiary Corvero Networks,  Inc., and began operating as Cistera Networks.  As
of that date, all of Corvero's  rights under the License  Agreement dated May 5,
2003 passed to Cistera Networks, Inc.

         Effective  May  27,  2005,  we  acquired   XBridge   through  a  merger
transaction  in exchange for  4,150,000  shares of our common stock (which after
the cancellation of the 2,150,000  originally  issued to XBridge resulted in the
issuance of only  2,000,000  new shares) and the  elimination  of  approximately
$1.86  million  on  inter-company   payables  owed  to  XBridge.   Through  this
acquisition, the Company acquired net assets valued at


<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 10 - ACQUISITIONS (continued)

$782,245  and  intellectual  property  valued  at  $2,717,755.  Of this  amount,
$2,134,821 was allocated to goodwill and has subsequently been expensed.

NOTE 11 - CONVERTIBLE DEBT

         Effective  December 13, 2004,  the Company issued and sold an aggregate
of $1,146,000 in principal  amount of Senior  Unsecured  Convertible  Promissory
Notes (the "notes"),  and issued  warrants to purchase  1,146,000  shares of our
common stock, par value $0.001 per share (the "warrants").  Of the $1,146,000 in
notes,  $1,004,000  in  principal  amount of notes  were  issued  for cash,  and
$142,000  in  principal  amount  of notes  were  issued in  connection  with the
cancellation  of an equal amount of the Company's  outstanding  obligations.  At
December  31,  2005,  a number of note  holders  opted to convert  their debt as
provided in their note agreements. The total number of shares issued due to this
conversion was 946,392. The amount of principal  represented by these shares was
$859,000.  The  amount of  accrued  interest  represented  by these  shares  was
$87,392.  At March 31, 2006,  three note holders  opted to convert their debt as
provided in their note agreements. The total number of shares issued due to this
conversion was 67,785.  The amount of principal  represented by these shares was
$57,000. The amount of accrued interest represented by these shares was $10,785.
These notes  converted at $1.00 per share.  The total  amount of  principal  and
interest due at December  13, 2006 was  $196,088.  At August 31, 2006,  one note
holder  who had  previously  converted  most of his  outstanding  debt  opted to
convert the outstanding  balance.  The total number of shares issued due to this
conversion  was 4,034.  The remaining  amount of principal  represented by these
shares  was  $1,000.  The  amount  of  interest  earned  on  his  original  note
represented  by these shares was $3,034.  At December 13, 2006,  one note holder
opted to convert their outstanding  balance.  There were 17,931 shares issued at
$1.00 per shares to convert principal of $15,000 and accrued interest of $2,931.
At December  13,  2006,  two note  holders  opted to convert  their  outstanding
balance to the second private placement. The total amount converted was $56,071.
During the three  months  ended  June 30,  2007,  the  Company  paid  $50,000 of
principal and accrued  interest of $9,770 towards these notes. At June 30, 2007,
there was $94,000 of principal and $24,121 of interest due on these notes.

         The  notes  bear  interest  at the  rate  of 8% per  annum,  compounded
quarterly on each March 31, June 30, September 30 and December 31 that the notes
are outstanding (each, an interest compounding date). The outstanding  principal
on the notes and all accrued  interest  become due and payable on the earlier of
(a)  December  9,  2006,  or (b) the date on which a change  in  control  of the
Company occurs.

         The  outstanding  principal  and  accrued  interest  on the  notes  are
convertible into shares of common stock at a conversion rate equal to the lesser
of (a) $1.30 per share,  or (b) a 25% discount to the average  closing bid price
of the  Company's  common  stock for the five  days  including  and  immediately
preceding  the interest  compounding  date,  provided that in no event shall the
conversion  price  per  share be less than  $1.00  per  share.  The notes may be
converted, in whole or in part, at the option of the note holder on any interest
compounding date occurring after the effective date of a registration  statement
covering  the resale of shares of common stock to be issued upon  conversion  of
the notes.


<PAGE>

                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 11 - CONVERTIBLE DEBT (continued)

         In  addition,  if the  Company  subsequently  issues  or sells  any new
securities  convertible,  exercisable or exchangeable  into shares of our common
stock  ("convertible  securities")  in a private  transaction and receives gross
proceeds of at least $500,000,  the notes may be converted,  in whole or in part
at the option of the note holders,  into the  convertible  securities,  upon the
same terms and conditions  governing the issuance of the convertible  securities
in the private  transaction.  The right of the note  holders to convert the note
into convertible  securities does not apply to any convertible securities issued
by the Company (a) in connection with a merger,  acquisition or consolidation of
the Company,  (b) in connection  with  strategic  license  agreements  and other
partnering  arrangements  so long as such  issuances  are not for the purpose of
raising  capital,  (c) in  connection  with bona fide firm  underwritten  public
offerings of its securities,  (d) pursuant to the Company's  incentive and stock
option  plans,  (e) as a result  of the  exercise  of  options  or  warrants  or
conversion of convertible  notes or preferred stock which were granted or issued
as of December 13, 2004.

         The Company may prepay the notes in whole or in part,  upon thirty days
prior written notice to note holders;  provided that partial  prepayments may be
made only in increments of $10,000 and, provided further,  that the note holders
may  convert  the amount of the  proposed  prepayment  into shares of our common
stock,  regardless  of the  period  of  time  that  the  notes  have  then  been
outstanding.

         The  warrants  have a term of five  years  and  are  exercisable  at an
exercise  price  of  $1.30  per  share.  Subject  to an  effective  registration
statement  covering  the  resale of the  shares of common  stock  issuable  upon
exercise of the  Warrants,  the  Company  may,  upon  thirty days prior  written
notice,  redeem the  warrants for $0.10 per share,  in whole or in part,  if our
common  stock  closes with a bid price of at least $3.50 for any ten (10) out of
fifteen  (15)  consecutive  trading  days.  Because  at that  price  it would be
profitable for the warrant  holders to exercise  their  warrants  rather than to
allow the  redemption  to  proceed,  we assume  they would  choose to  exercise.
However,  there is no assurance  that our stock price will rise to the $3.50 per
share redemption trigger price, or that all of the warrants will be exercised.

         The  Company  issued  and sold a second  offering  of Senior  Unsecured
Convertible  Promissory  Notes.  This second  offering  mirrors the terms of the
previous Private Placement Funding as stated above, except for the conversion of
stock and  interest  is set at a fixed  rate of $1.00 per  share.  The notes and
accrued  interest are due and payable two years from the date of the note. As of
June 30, 2007, $3,485,491 had been received by the Company from this offering.










<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 12 - STOCK OPTIONS

         As of June 30,  2007,  1,015,000  of the total  stock  options  are not
exercisable, as they are not yet approved or registered.

         The following table sets forth the options  outstanding as of March 31,
2007.

<TABLE>
<CAPTION>
                                                                      Weighted
                                                 Option /              Average            Weighted
                                                 Warrants             Exercise            Average
                                                  Shares                Price            Fair Value
                                             -----------------     ----------------    ---------------
<S>                                          <C>                   <C>                 <C>
Options and warrants outstanding,
       March 31, 2006                               2,722,584                $1.29              $1.43
Warrants outstanding from Private Placement         1,842,690                 1.00               1.00
Granted, Exercise price more than fair value                -                    -                  -
Granted, Exercise price less than fair value                -                    -                  -
Expired                                              (51,814)                    -                  -
                                             -----------------
Exercised                                           (192,831)                 0.18                  -
                                             -----------------
Options and warrants outstanding,
       March 31, 2007                             4,320,629                  $1.04
                                             =================     ================
</TABLE>

         The following  table sets forth the options  outstanding as of June 30,
2007.

<TABLE>
<CAPTION>
                                                                       Weighted
                                                  Option /              Average            Weighted
                                                  Warrants             Exercise            Average
                                                   Shares                Price            Fair Value
                                              -----------------     ----------------    ---------------
<S>                                           <C>                   <C>                 <C>
Options and warrants outstanding,
       March 31, 2007                                4,320,629                $1.04              $1.43
Warrants outstanding from Private Placement          1,653,010                 1.00               1.00
Granted, Exercise price more than fair value                 -                    -                  -
Granted, Exercise price less than fair value                 -                    -                  -
Expired                                                      -                    -                  -
                                              -----------------
Exercised                                                    -                    -                  -
                                              -----------------
Options  and warrants outstanding,
       June 30, 2007                                 5,973,639                $1.03
                                              =================     ================
</TABLE>



<PAGE>



                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 12 - STOCK OPTIONS (continued)

         Exercise  prices for optioned  shares  outstanding  as of June 30, 2007
ranged  from  $1.10 to $2.00.  A summary of these  options by range of  exercise
prices is shown as follows:

<TABLE>
<CAPTION>
                                                                                        Weighted-             Weighted-
                                              Weighted-           Shares/                Average               Average
                           Shares /            Average            Warrants           Exercise Price          Contractual
     Exercise              Warrants           Exercise           Currently              Currently             Remaining
      Price              Outstanding            Price           Exercisable            Exercisable               Life
-------------------    -----------------    --------------    -----------------    --------------------    -----------------
<S>                    <C>                  <C>               <C>                  <C>                     <C>
$          1.10                  85,000     $        1.10                    -     $             1.10          7 years
              1.30              105,000              1.30                    -                    1.30         4 years
              2.00              700,000              2.00              700,000                    2.00         10 years
               .23               81,352               .23               81,352                     .23         3 years
               .46              325,565               .46              325,565                     .46         3 years
               .46              189,822               .46              189,822                     .46         3 years
              1.30              990,200              1.30              990,200                    1.30         5 years
              1.00            1,842,690              1.00            1,842,690                    1.00         5 years
              1.00            1,653,010              1.00            1,653,010                    1.00         5 years
</TABLE>

         In September 2005, although the stock price had not achieved the levels
necessary  to allow the Company to redeem the  warrants,  warrant  holders  were
offered an  incentive  of one-half  warrant  for each  warrant  exercised.  This
incentive  expired on  December  31,  2005.  The  Company  raised an  additional
$405,080  from the  exercise of 311,600  warrants and issued  155,800  incentive
warrants.

NOTE 13 - CONTINGENCIES

         The  Company,  and  certain  of its  current  and former  officers  and
directors are defendants in litigation pending in Dallas,  Texas, styled KINGDON
R. HUGHES VS. GREGORY T. ROYAL,  CYNTHIA A. GARR, JAMES T. MILLER,  JR., CHARLES
STIDHAM, CNH HOLDINGS COMPANY D/B/A CISTERA NETWORKS AND XBRIDGE SOFTWARE, INC.;
Cause No.  DV05-0600-G;  G-134th  District  Court,  Dallas  County,  Texas.  The
plaintiff has alleged a number of complaints  against the defendants,  including
breach of fiduciary duty,  misappropriation of corporate  opportunities,  fraud,
fraudulent inducement,  breach of contract, tortuous interference with contract,
fraudulent transfer,  and shareholder  oppression arising in connection with the
license  agreement  between  the  Company  and  XBridge  in  May  2003  and  the
acquisition  of XBridge by the Company in May 2005. The parties held a mediation
conference in April 2006 and have come to an  understanding  with respect to the
principle elements of a potential settlement. We are currently in the process of
negotiating definitive settlement agreements.



<PAGE>

                       CISTERA NETWORKS, INC.& SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 13 - CONTINGENCIES (continued)

         The  Company is a defendant  in  litigation  pending in Dallas,  Texas,
styled  Collaborative  Search  Partners,  Inc. vs. Xbridge  Software,  Inc., and
Cistera  Networks,  Inc.,  Cause No.  07-03189;  J191st District  Court,  Dallas
County,  Texas.  The plaintiff  has alleged a number of  complaints  against the
defendants,  including  breach of  contract,  promissory  estoppel,  and quantum
meruitt arising in connection with two separate employment search agreements. In
May 2007,  the parties came to an  understanding  with respect to the  principle
elements  of a potential  settlement,  and a Rule 11 letter  agreement  has been
filed with the Court,  however, a definitive settlement agreement is still being
negotiated among the parties.  The Rule 11 letter agreement provides for payment
by the defendants of $44,000 to the plaintiff  over a period of six months,  and
in the event the defendants fail to make such payments,  a default  judgment may
be rendered against the defendants.

NOTE 14 - UNCERTAIN TAX POSITIONS

         Effective  April 1, 2007,  the company  adopted the  provisions of FASB
Interpretation  No.  48,  "Accounting  for  Uncertainty  in  Income  Taxes  - an
interpretation  of FASB  Statement  No. 109" ("FIN  48").  FIN 48  prescribes  a
recognition  threshold and a measurement  attribute for the financial  statement
recognition  and measurement of tax positions taken or expected to be taken in a
tax  return.  For  those  benefits  to be  recognized,  a tax  position  must be
more-likely-than-not to be sustained upon examination by taxing authorities. The
adoption  of the  provisions  of FIN 48 did not have a  material  impact  on the
company's condensed  consolidated  financial position and results of operations.
At April 1, 2007, the company had no liability for unrecognized tax benefits and
no accrual for the payment of related interest.

         Interest costs related to  unrecognized  tax benefits are classified as
"Interest  expense,  net"  in  the  accompanying   consolidated   statements  of
operations.  Penalties,  if any, would be recognized as a component of "Selling,
general and  administrative  expenses".  The Company  recognized  $0 of interest
expense  related to  unrecognized  tax benefits  for the quarter  ended June 30,
2007.  In many cases the  company's  uncertain  tax positions are related to tax
years that remain subject to examination by relevant tax  authorities.  With few
exceptions,  the company is generally no longer subject to U.S. federal,  state,
local or non-U.S.  income tax  examinations  by tax authorities for years before
2003. The following describes the open tax years, by major tax jurisdiction,  as
of April 1, 2007:

                  United States (a)         2003 - Present

                  (a)  Includes  federal  as  well as  state  or  similar  local
jurisdictions, as applicable.







<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following  discussion and analysis of the Company's  financial condition and
results  of  operations  should  be  read  in  conjunction  with  the  Company's
consolidated  financial statements and related notes that appear in this filing.
In addition to  historical  consolidated  financial  information,  the following
discussion contains forward-looking information as defined in Section 21E of the
Securities Exchange Act of 1934.

FORWARD LOOKING STATEMENTS:
Forward-looking  statements  include  statements  concerning plans,  objectives,
goals,  strategies,  future events or performance and underlying assumptions and
other statements,  which are other than statements of historical facts.  Certain
statements  in this Form 10-QSB are  forward-looking  statements.  Words such as
"expects", "believes",  "anticipates", "may", "intends", "projects", "estimates"
and similar expressions are intended to identify forward-looking statements. The
Company's expectations,  beliefs and projections are expressed in good faith and
are  believed  by the  Company to have a  reasonable  basis,  including  without
limitation,  management's  examination  of  historical  operating  trends,  data
contained in the Company's  records and other data available from third parties,
but  there  can  be no  assurance  that  management's  expectation,  beliefs  or
projections  will be  achieved or  accomplished.  However,  forward-looking  are
subject to risks and  uncertainties  that could cause  actual  results to differ
materially from those projected.  Such risks and uncertainties  include, but are
not limited to, limited operating history,  historical  operating losses and the
uncertainty  of the  Company's  profitability  in the future,  the need to raise
additional capital to sustain operations and implement its future business plan,
and other  factors  that may be beyond  the  Company's  control.  These  factors
include  changes in  regulations  or  legislation,  adverse  determination  with
respect to litigation or other claims,  ability to recruit and retain employees,
availability of mortgage note portfolios at acceptable  prices, and increases in
operating  costs.  Factors that could cause or contribute  to these  differences
have been included  throughout the public filings from the Company.  The Company
has no obligation to publicly update or revise these forward-looking  statements
to reflect the occurrence of future events or circumstances.

OVERVIEW

We  provide  IP  network-based  application  appliances  and  services  that add
features and enhanced functionality to the  telecommunications  services used by
large enterprises, small and mid-sized organizations, both in the commercial and
public sector. Our software- and  hardware-based  solutions are delivered on our
open-architecture,    component-based    platform    known   as   the    Cistera
ConvergenceServer,  which allows  administrators  to centrally  manage  advanced
applications  for  IP  telephony   environments  across  large  single-site  and
multi-site   private   voice/data   networks.   Because  our  solutions  improve
productivity  and  efficiencies  for customers  using IP telephony  systems,  we
believe that our  convergence  solutions  complement the efforts of IP telephony
solution  providers  to increase  the  overall  return on  investment  and value

<PAGE>

contribution  associated  with IP  telephony  systems.  This has  allowed  us to
establish  cooperative  relationships with IP telephony solution  providers,  as
well as large value added resellers (VARs) and systems integrators (SIs) focused
on delivering IP telephony systems and services.

Currently,  we offer  new  customers  a robust  IP-based  applications  platform
pre-loaded  with a  variety  of  packaged  applications  (we  refer  to  them as
application  engines).  We market our software and hardware  solutions through a
VAR  channel,  and in some cases  directly to Fortune 500  customers.  To foster
growth  scalability,  our VAR channel is being  trained to deliver  professional
services for standard installations,  which we believe will allow us to focus on
advanced professional services for complex installations.

Our  objective is to be the leading  provider of IP  communications  application
platforms  and advanced  IP-based  applications  for  businesses  worldwide.  To
address our market  opportunity,  our management  team is focused on a number of
short and  long-term  challenges  including:  strengthening  and  extending  our
solution  offerings;  adding new  customers and expanding our sales efforts into
new territories;  deepening our relationships with our existing customers, VARs,
and SIs; and  encouraging  the  development of third-party  applications  on our
platform.

In order to increase our revenues and take advantage of our market  opportunity,
we will need to add substantial  numbers of customer  installations.  We plan to
reinvest our earnings for the foreseeable  future in the following ways:  hiring
additional  personnel,  particularly  in sales and  engineering;  expanding  our
domestic and  international  selling and marketing  activities;  increasing  our
research and development activities to upgrade and extend our solution offerings
and to develop  new  solutions  and  technologies;  growing  our VAR and systems
implementation  channel; adding to our infrastructure to support our growth; and
expanding our operational and financial systems to manage a growing business.

FISCAL YEAR
Our fiscal year ends on March 31. References to fiscal 2007, for example,  refer
to the fiscal year ended March 31, 2007.

QUARTER SUMMARY
While the Company's  reported revenues were  insufficient to support  operations
and it reported a net loss of $460,814 in this period,  the actual cash flow for
the period  enabled  the Company to support  operations  with a draw of $310,000
from the funds raised to date. Operations were supported with financing obtained
from a second private placement that closed in April 2007.

Sales and marketing costs for this quarter totaled $176,092 and represented 27.9
percent of  revenues,  as  compared  to $55,710  and 11.3  percent  for the same
quarter last year.  On an annual basis,  we expect  marketing and sales costs to
continue  to track  higher and will  represent  a  substantial  portion of total
revenues  in the future as we seek to add and manage  more  customers,  increase
sales and marketing  programs to enable our VAR channel,  build brand  awareness

<PAGE>

and increase  the number of web-based  seminars  and  sponsored  events.  As the
Company  develops  support for  additional  platforms,  we  anticipate  that the
Company  will  increase  visibility  through  participation  in future  industry
events. While we also anticipate that the Company will continue to leverage some
of the marketing  programs  funded by large  technology  and VAR  partners,  the
Company's  participation  will be  reflected in  increased  sales and  marketing
costs.

The Company's sales continue to show  diversification  across industries.  Sales
for the quarter ended June 30, 2007 were distributed  among six primary vertical
markets in the following percentages: financial services 35.2%, healthcare 5.9%,
government 15.6%,  education 15.9%,  manufacturing  8.4%,  management and retail
18.8%. The Company has continued to reduce  dependency on any single reseller as
it has continued to expand its VAR relationships.

RESULTS OF OPERATIONS

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

OVERVIEW OF RESULTS OF OPERATIONS FOR FIRST QUARTER FISCAL 2008,  ENDED JUNE 30,
2007

The Company recognized  $629,224 in revenue for the quarter, a 22% increase over
the previous  quarter of $516,000,  and a 27% increase over the same period last
year of $495,000. The Company received over $1 million dollars in orders for the
quarter,  booking  (shipping the system(s) and invoicing the customer)  revenues
for the quarter of $925,000.  The Company only "recognized" revenues of $629,244
for the quarter,  because we only recognize revenue from projects that have been
fully  implemented.  Revenues for a number of the  projects  that were near full
completion at the end of the quarter have not yet been recognized.

With the recent capital infusion from a private  placement of convertible  notes
and warrants to purchase  common stock,  the Company added a number of resources
in the sales,  pre-sales and channel management roles as well as in engineering.
These new resources are dedicated to further enabling the VAR channel to market,
sell and  deliver  the  Company's  solutions.  During the  quarter,  the Company
initiated efforts to review current channel partner  performance and establish a
scorecard  system for each  reseller  partner.  This will  allow the  Company to
better  determine  the  allocation  of resources to partner  sales and marketing
efforts.  The plan  also  includes  coordinated  sales and  technical  training,
demonstration kit development, and joint marketing programs.

Gross profit during the quarter was $542,922,  or 86% of revenues.  Gross profit
for the  previous  quarter  was  $391,000 or 78% of  revenues,  and for the same
period in fiscal year 2007, it was $467,000 or 94% of revenues.

The Company's  software revenue results in higher margins than hardware revenue.
Because a  substantial  portion  of the  Company's  revenues  are  derived  from

<PAGE>

software  sales,  our gross margins are positively  impacted.  For this quarter,
margins were higher than the previous year, in part due to the  establishment of
a new supplier relationship with better pricing on computer equipment as well as
the introduction of new products with greater margins.

Management  expects that as sales continue to ramp up, margins will remain above
75 percent.

As expected,  the Company's revenues were insufficient to support operations and
the Company sustained a net loss in this period.


LIQUIDITY AND CAPITAL RESOURCES

At June 30,  2007,  the  Company  had  cash,  cash  equivalents  and  short-term
marketable securities of $1,137,826,  as compared to $534,871 at March 31, 2007.
At June 30, 2007, the Company had accounts  receivable of $630,381,  as compared
to  $314,178 at March 31,  2007,  and  deferred  revenue of $706,990 at June 30,
2007, as compared to $436,666 at March 31, 2007.

From the start of operations in May 2003 through the end of the current quarter,
operations have been funded  primarily  through sales,  financing  obtained from
private investors, and from two private placements.

The Company does not have any special purpose entities, and other than operating
leases for office space and computer  equipment,  which are described below, the
Company does not engage in off-balance sheet financing arrangements. The Company
does have a bank line of credit  with Chase bank for  $50,000  and has a funding
agreement  with Allied  Capital  Group  whereby  Allied  Capital  will provide a
revolving credit line secured by Accounts Receivable. Last quarter the revolving
credit line under the Allied Capital agreement was increased to $750,000.  These
agreements,  although  not  heavily  used,  enable  the  Company  to smooth  its
cash-flow  cycles  and to expand its  capability  to fund  manufacturing  credit
requirements.

Future  capital  requirements  will depend on many  factors  including:  rate of
revenue growth; the expansion of marketing and sales activities;  the timing and
extent of spending to support product development efforts and expansion into new
territories;  the timing of  introductions  of new services and  enhancements to
existing  services;  and  the  continuing  market  acceptance  of the  Company's
products and services.  To the extent that existing cash and securities and cash
from  operations are  insufficient to fund future  activities,  the Company will
need to  raise  additional  funds  through  public  or  private  equity  or debt
financing.  Although  the Company is currently  not a party to any  agreement or
letter of intent with respect to potential  investments in, or acquisitions  of,
complementary businesses,  services or technologies,  the Company may enter into
these types of arrangements in the future,  which could also require  additional

<PAGE>

equity or debt financing.  Additional  funds,  however,  may not be available on
terms favorable to the Company or at all.

ITEM 3.  CONTROLS AND PROCEDURES

As of the end of the reporting period, June 30, 2007, the Company carried out an
evaluation,  under the  supervision  and with the  participation  of management,
including the Company's Chief Executive Officer and the Chief Financial Officer,
of the  effectiveness  and design and operation of the  disclosure  controls and
procedures  pursuant to Rule  13a-15(e) of the  Securities  Exchange Act of 1934
(the "Exchange Act"),  which disclosure  controls and procedures are designed to
insure that  information  required to be  disclosed  by a company in the reports
that it files under the  Exchange  Act is recorded,  processed,  summarized  and
reported  within  required time periods  specified by the SEC's rules and forms.
Based upon that evaluation,  the Chief Executive Officer and the Chief Financial
Officer  concluded that the disclosure  controls and procedures are effective in
timely alerting them to material information relating to the Company required to
be included in the  Company's  period SEC filings.  There were no changes in the
Company's  internal  control over  financial  reporting  during the three months
ended  June 30,  2007 that  materially  affected,  or are  reasonably  likely to
materially affect, the Company's internal control over financial reporting.

Management,  including the Chief Executive Officer and Chief Financial  Officer,
does not expect that the disclosure controls or internal controls over financial
reporting will prevent all errors or all instances of fraud.  A control  system,
no matter how well  designed  and  operated,  can provide only  reasonable,  not
absolute,  assurance that the control system's  objectives will be met. Further,
the design of a control  system must  reflect  the fact that there are  resource
constraints,  and the benefits of controls must be considered  relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud,  if any,  within  the  Company  have  been  detected.  These  inherent
limitations  include the  realities  that  judgments in  decision-making  can be
faulty,  and that  breakdowns  can occur  because  of simple  error or  mistake.
Controls can also be  circumvented  by the individual  acts of some persons,  by
collusion of two or more people, or by management override of the controls.  The
design of any system of controls is based in part upon certain assumptions about
the likelihood of future events, and any design may not succeed in achieving its
stated goals under all  potential  future  conditions.  Over time,  controls may
become  inadequate  because of changes in  conditions  or  deterioration  in the
degree of  compliance  with  policies  or  procedures.  Because of the  inherent
limitation of a  cost-effective  control system,  misstatements  due to error or
fraud may occur and not be detected.



<PAGE>


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The  Company,  and  certain  of its  current  and former  officers  and
directors are defendants in litigation pending in Dallas,  Texas, styled KINGDON
R. HUGHES VS. GREGORY T. ROYAL,  CYNTHIA A. GARR, JAMES T. MILLER,  JR., CHARLES
STIDHAM, CNH HOLDINGS COMPANY D/B/A CISTERA NETWORKS AND XBRIDGE SOFTWARE, INC.;
Cause No.  DV05-0600-G;  G-134th  District  Court,  Dallas  County,  Texas.  The
plaintiff has alleged a number of complaints  against the defendants,  including
breach of fiduciary duty,  misappropriation of corporate  opportunities,  fraud,
fraudulent inducement,  breach of contract, tortuous interference with contract,
fraudulent transfer,  and shareholder  oppression arising in connection with the
license  agreement  between  the  Company  and  XBridge  in  May  2003  and  the
acquisition  of XBridge by the Company in May 2005. The parties held a mediation
conference in April 2006 and have come to an  understanding  with respect to the
principle elements of a potential settlement. We are currently in the process of
negotiating definitive settlement agreements.

         The  Company is a defendant  in  litigation  pending in Dallas,  Texas,
styled  Collaborative  Search  Partners,  Inc. vs. Xbridge  Software,  Inc., and
Cistera  Networks,  Inc.,  Cause No.  07-03189;  J191st District  Court,  Dallas
County,  Texas.  The plaintiff  has alleged a number of  complaints  against the
defendants,  including  breach of  contract,  promissory  estoppel,  and quantum
meruitt arising in connection with two separate employment search agreements. In
May 2007,  the parties came to an  understanding  with respect to the  principle
elements  of a potential  settlement,  and a Rule 11 letter  agreement  has been
filed with the Court,  however, a definitive settlement agreement is still being
negotiated among the parties.  The Rule 11 letter agreement provides for payment
by the defendants of $44,000 to the plaintiff  over a period of six months,  and
in the event the defendants fail to make such payments,  a default  judgment may
be rendered against the defendants.

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

         Effective  April 5, 2007,  the Company  issued and sold an aggregate of
$3,625,754.00  in principal amount of Senior  Unsecured  Convertible  Promissory
Notes, and issued warrants to purchase 3,625,754 shares of our common stock, par
value  $0.001  per  share.  Of the  $3,625,754.00  in  Notes,  $2,815,000.00  in
principal amount of Notes were issued for cash, and $810,754 in principal amount
of Notes were issued in connection  with the  cancellation of an equal amount of
the Company's  outstanding  obligations.  The warrants have a term of five years
and are  exercisable  at an  exercise  price of $1.00 per  share.  Subject to an
effective  registration  statement  covering  the resale of the shares of common
stock issuable upon exercise of the warrants,  the Company may, upon thirty days
prior written notice, redeem 1,815,000 warrants for $0.10 per share, in whole or
in part,  if our common  stock closes with a bid price of at least $3.50 for any
ten (10) out of fifteen (15) consecutive  trading days. An additional  1,000,000
warrants may be redeemed  under the same terms if the above  conditions  are met
plus the daily volume for the 20  consecutive  trading days preceding the notice
of redemption on the OTCBB or the principal  exchange  where the common stock is
traded  is in excess of  100,000  shares.  The  structure  of the note  purchase
agreement and the issuance of the convertible notes and warrants were determined
through arm-length negotiations between us and the other parties involved and no
material relationship existed between us and the other parties at that time.




<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None/Not Applicable.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None/Not Applicable.


ITEM 5.  OTHER INFORMATION

None.


ITEM 6.  EXHIBITS

(a) EXHIBITS

         The  following  documents  are filed  herewith or have been included as
         exhibits to previous  filings with the Commission and are  incorporated
         herein by this reference:

         Exhibit No.       Exhibit

         4.1      Form  of  Convertible  Note  Purchase  Agreement  dated  as of
                  December 13, 2004  (Incorporated by reference from Exhibit 4.1
                  to the  Company's  Current  Report on Form 8-K filed  with the
                  Commission on December 20, 2004)

         4.2      Form of Senior  Unsecured  Convertible  Note  (Incorporated by
                  reference from Exhibit 4.2 to the Company's  Current Report on
                  Form 8-K filed with the Commission on December 20, 2004)

         4.3      Form of Warrant (Incorporated by reference from Exhibit 4.3 to
                  the  Company's  Current  Report  on Form  8-K  filed  with the
                  Commission on December 20, 2004)

         4.4      Registration  Rights  Agreement  dated as of December 13, 2004
                  (Incorporated  by reference  from Exhibit 4.4 to the Company's
                  Current  Report  on Form  8-K  filed  with the  Commission  on
                  December 20, 2004)

         4.5      Form of Convertible Note Purchase  Agreement dated as of April
                  5, 2007  (Incorporated  by  reference  from Exhibit 4.1 to the
                  Company's Current Report on Form 8-K filed with the Commission
                  on April 12, 2007)

         4.6      Form of Senior  Unsecured  Convertible  Note  (Incorporated by
                  reference from Exhibit 4.2 to the Company's  Current Report on
                  Form 8-K filed with the Commission on April 12, 2007)


<PAGE>

         4.7      Form of Warrant (Incorporated by reference from Exhibit 4.3 to
                  the  Company's  Current  Report  on Form  8-K  filed  with the
                  Commission on April 12, 2007)

         4.8      Registration  Rights  Agreement  dated  as of  April  7,  2005
                  (Incorporated  by reference  from Exhibit 4.4 to the Company's
                  Current  Report on Form 8-K filed with the Commission on April
                  12, 2007

         6.1      License  Agreement  (incorporated by reference to Exhibit 10.1
                  to the  Company's  Annual Report on Form 10-KSB for the fiscal
                  year ended March 31, 2004)

         10.1     Employment  Agreement  by and between  Derek Downs and Cistera
                  Networks,  Inc. dated as of January 1, 2005  (Incorporated  by
                  reference  from  Exhibit  10.1 to the  Company's  Registration
                  Statement  on Form SB-2 filed with the  Commission  on May 23,
                  2007)

         10.2     Employment  Agreement by and between  Cynthia Garr and Cistera
                  Networks,  Inc. dated as of January 1, 2005  (Incorporated  by
                  reference  from  Exhibit  10.2 to the  Company's  Registration
                  Statement  on Form SB-2 filed with the  Commission  on May 23,
                  2007)

         10.3     Employment   Agreement   between  Gregory  Royal  and  Cistera
                  Networks Canada, Inc. dated as of October 1, 2004(Incorporated
                  by reference  from Exhibit 10.3 to the Company's  Registration
                  Statement  on Form SB-2 filed with the  Commission  on May 23,
                  2007)

         31.1     Certification  Pursuant to Section  302 of the  Sarbanes-Oxley
                  Act of 2002

         31.2     Certification  Pursuant to Section  302 of the  Sarbanes-Oxley
                  Act of 2002

         32.1     Certification  Pursuant to 18 U.S.C.  Section 1350, As Adopted
                  Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

         32.2     Certification  Pursuant to 18 U.S.C.  Section 1350, As Adopted
                  Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002







<PAGE>
                                   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.

                                 CISTERA NETWORKS, INC.


Date: August 14, 2007            /s/    Derek P. Downs
---------------------            -----------------------------------
                                 Derek P. Downs
                                 President
                                 (Principal Executive Officer)

                                 /s/    Cynthia A. Garr
                                 -----------------------------------
                                 Cynthia A. Garr
                                 Chief Financial Officer,
                                 Executive Vice-President of
                                 Corporate Development, and Director
                                 (Principal Financial Officer)