CENTERGISTIC
SOLUTIONS, INC.
ANNUAL
REPORT
2007
October
26, 2007
To
the
Shareholders of Centergistic Solutions, Inc.:
Enclosed
please find the annual report of Centergistic Solutions, Inc. for the year
ended
June 30, 2007. We are pleased to report that we met our goal for the year;
achieving profitability. We hope current economic and business conditions allow
us to maintain our profitability in 2008.
We
have
included a notice of our shareholders meeting set for Friday November 9, 2007
at
8:00AM at our corporate headquarters located at 505 North Euclid Avenue, Suite
480, Anaheim, California 92801. We will be electing directors and addressing
any
other business the shareholders may bring. Also enclosed is a proxy for those
not planning to attend the meeting. If you are not planning on attending,
management recommends that you elect the current slate of directors by signing
your proxy and returning in the pre-addressed stamped envelope.
Thank
you
very much for your continued support of the management of Centergistic
Solutions, Inc. Please feel free to contact me if you have any questions or
require any information.
Sincerely,
David
M.
Cunningham Jr., CPA
President,
Chief Operating and Financial Officer
CENTERGISTIC SOLUTIONS, INC.
Consolidated Balance Sheet
As of June 30, 2007
and 2006
|
|
|
|
2007
|
|
2006
|
|
Current
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
60,462
|
|
$
|
58,992
|
|
Trade
receivables, less allowance for doubtful
|
|
|
|
|
|
|
|
accounts
of $98,145 and $59,250, respectively
|
|
|
868,292
|
|
|
772,750
|
|
Inventories
|
|
|
111,996
|
|
|
120,245
|
|
Prepaid
expenses
|
|
|
50,295
|
|
|
33,703
|
|
Miscellaneous
receivables
|
|
|
3,364
|
|
|
37,329
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
1,094,409
|
|
|
1,023,019
|
|
|
|
|
|
|
|
|
|
Property,
equipment, and leasehold
|
|
|
|
|
|
|
|
improvements
,
net of accumulated depreciation of $766,596
|
|
|
80,105
|
|
|
70,234
|
|
and
$731,396, respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized
software development costs
,
|
|
|
|
|
|
|
|
net
of accumulated amortization of $1,853,151 and $1,823,322
|
|
|
-
|
|
|
30,265
|
|
respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
|
|
|
|
|
Deferred
offering costs
|
|
|
540,754
|
|
|
540,754
|
|
Other
|
|
|
9,002
|
|
|
21,035
|
|
|
|
|
|
|
|
|
|
Total
other assets
|
|
|
549,756
|
|
|
561,789
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,724,270
|
|
$
|
1,685,307
|
|
|
|
|
|
|
|
|
|
CENTERGISTIC
SOLUTIONS, INC.
Consolidated
Balance Sheet
As
of June 30, 2007
and
2006
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Notes
payable - related parties
|
|
$
|
47,997
|
|
$
|
47,997
|
|
Line
of credit - related party
|
|
|
320,000
|
|
|
396,000
|
|
Accounts
payable
|
|
|
378,285
|
|
|
459,539
|
|
Accrued
expenses
|
|
|
230,561
|
|
|
220,812
|
|
Deferred
income
|
|
|
192,811
|
|
|
306,301
|
|
|
|
|
|
|
|
|
|
Total
liabilities, all current
|
|
|
1,169,654
|
|
|
1,430,649
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
(Notes
4 through 7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity (deficit)
|
|
|
|
|
|
|
|
Common
stock, no par value, 80,000,000 shares authorized;
|
|
|
|
|
|
|
|
10,724,312
shares issued and outstanding
|
|
|
3,058,510
|
|
|
3,058,510
|
|
Additional
paid-in capital
|
|
|
296,462
|
|
|
296,462
|
|
Accumulated
deficit
|
|
|
(2,732,902
|
)
|
|
(3,068,354
|
)
|
Unearned
stock compensation
|
|
|
-
|
|
|
(6,202
|
)
|
Common
stock to be redeemed
|
|
|
(67,454
|
)
|
|
(25,758
|
)
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity (deficit)
|
|
|
554,616
|
|
|
254,658
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’
|
|
|
|
|
|
|
|
equity
(deficit)
|
|
$
|
1,724,270
|
|
$
|
1,685,307
|
|
|
|
|
|
|
|
|
|
CENTERGISTIC
SOLUTIONS, INC.
Consolidated
Statement of Operations and Comprehensive Income (Loss)
|
|
Years
Ended June 30,
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Software
and service revenues
|
|
$
|
2,915,656
|
|
$
|
2,749,083
|
|
$
|
3,018,436
|
|
Professional
services
|
|
|
153,588
|
|
|
80,199
|
|
|
16,560
|
|
Hardware
sales
|
|
|
17,900
|
|
|
340,711
|
|
|
365,366
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
3,087,144
|
|
|
3,169,993
|
|
|
3,400,362
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
Software
and service costs
|
|
|
384,246
|
|
|
584,852
|
|
|
674,708
|
|
Professional
services
|
|
|
-
|
|
|
20,011
|
|
|
4,780
|
|
Hardware
costs
|
|
|
61,979
|
|
|
275,896
|
|
|
348,858
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
cost of revenues
|
|
|
446,225
|
|
|
880,759
|
|
|
1,028,346
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
2,640,919
|
|
|
2,289,234
|
|
|
2,372,016
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling
and marketing
|
|
|
381,272
|
|
|
578,133
|
|
|
737,764
|
|
Research
and development
|
|
|
264,014
|
|
|
287,947
|
|
|
397,815
|
|
General
and administrative
|
|
|
1,612,826
|
|
|
1,685,010
|
|
|
1,862,192
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
2,258,112
|
|
|
2,551,090
|
|
|
2,997,771
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
|
382,807
|
|
|
(261,856
|
)
|
|
(625,755
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
3,370
|
|
|
(4,843
|
)
|
|
(5,130
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(47,525
|
)
|
|
(44,290
|
)
|
|
(27,982
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) before income taxes
|
|
|
338,652
|
|
|
(310,989
|
)
|
|
(658,867
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax provision
|
|
|
(3,200
|
)
|
|
(3,200
|
)
|
|
(3,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
335,452
|
|
|
(314,189
|
)
|
|
(662,067
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income, net of tax
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
|
$
|
335,452
|
|
$
|
(314,189
|
)
|
$
|
(662,067
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
income and diluted net loss per share
|
|
$
|
0.03
|
|
$
|
(0.03
|
)
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
income per share
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of
|
|
|
|
|
|
|
|
|
|
|
common
shares outstanding
|
|
|
10,724,312
|
|
|
10,710,065
|
|
|
10,555,389
|
|
|
|
|
|
|
|
|
|
|
|
|
CENTERGISTIC
SOLUTIONS, INC.
Consolidated
Statements of Cash Flows
|
|
Years
Ended June 30,
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
335,452
|
|
$
|
(314,189
|
)
|
$
|
(662,067
|
)
|
Adjustments
to reconcile net income (loss) to
|
|
|
|
|
|
|
|
|
|
|
net
cash (used) provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
106,437
|
|
|
144,034
|
|
|
177,225
|
|
Provision
for doubtful accounts
|
|
|
38,895
|
|
|
28,750
|
|
|
(29,700
|
)
|
Stock
compensation
|
|
|
6,202
|
|
|
7,452
|
|
|
7,452
|
|
Non-cash
interest expense
|
|
|
-
|
|
|
-
|
|
|
6,570
|
|
Increase
(decrease) from changes
|
|
|
|
|
|
|
|
|
|
|
in
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
|
|
(134,437
|
)
|
|
(242,585
|
)
|
|
134,904
|
|
Inventories
|
|
|
8,249
|
|
|
34,891
|
|
|
23,491
|
|
Prepaid
expenses
|
|
|
(16,592
|
)
|
|
29,975
|
|
|
12,840
|
|
Miscellaneous
receivables
|
|
|
-
|
|
|
(4,579
|
)
|
|
(8,591
|
)
|
Deposits
|
|
|
(1,590
|
)
|
|
1,655
|
|
|
-
|
|
Other
|
|
|
6,616
|
|
|
-
|
|
|
-
|
|
Accounts
payable
|
|
|
(81,254
|
)
|
|
(14,138
|
)
|
|
59,839
|
|
Accrued
expenses
|
|
|
(9,447
|
)
|
|
91,610
|
|
|
(19,681
|
)
|
Deferred
income
|
|
|
(113,490
|
)
|
|
124,684
|
|
|
24,235
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash (used) provided by operating activities
|
|
|
145,041
|
|
|
(112,440
|
)
|
|
(273,483
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sale of securities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Additions
to capitalized software development costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Purchase
of equipment
|
|
|
(45,071
|
)
|
|
(7,384
|
)
|
|
(23,193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used by investing activities
|
|
|
(45,071
|
)
|
|
(7,384
|
)
|
|
(23,193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Deferred
offering costs
|
|
|
-
|
|
|
13,580
|
|
|
(86,463
|
)
|
Stock
issuance
|
|
|
-
|
|
|
5,000
|
|
|
-
|
|
Borrowings
on short-term debt
|
|
|
(76,000
|
)
|
|
79,750
|
|
|
319,000
|
|
Repurchase
of common stock
|
|
|
(22,500
|
)
|
|
-
|
|
|
(8,061
|
)
|
Payments
received on note receivable
|
|
|
-
|
|
|
-
|
|
|
2,840
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
(98,500
|
)
|
|
98,330
|
|
|
227,316
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
1,470
|
|
|
(21,494
|
)
|
|
(69,360
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents,
beginning
of period
|
|
|
58,992
|
|
|
80,486
|
|
|
149,846
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents,
end
of period
|
|
$
|
60,462
|
|
$
|
58,992
|
|
$
|
80,486
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow
|
|
|
|
|
|
|
|
|
|
|
Information:
|
|
|
|
|
|
|
|
|
|
|
Cash
payments for:
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
45,125
|
|
$
|
28,187
|
|
$
|
19,852
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax payments
|
|
$
|
-
|
|
$
|
3,200
|
|
$
|
3,997
|
|
|
|
|
|
|
|
|
|
|
|
|
DESCRIPTION
OF BUSINESS
Overview
Centergistic
develops, installs and services business performance and intelligence management
software used in customer call/contact centers. We are a California corporation
originally founded in 1972 as Account-A-Call Corporation. We initially developed
proprietary software and hardware which facilitated the collection and
processing of data from multiple telephone switches (PBX’s) and allowed our
customers to track and manage telephone calling patterns. From this technology
and the expertise developed to support it, a strong core competency of data
collection, integration and analysis evolved. In 1991, we introduced our
flagship AgentView product which is currently installed in approximately 3,500
locations around the world. The software monitors customer communications,
transactions and service performance. The call accounting business entailed
large scale computer centers from which data was collected nightly from various
client PBX’s located throughout the country. By collecting, processing and
analyzing the data collected, we were able to produce reports which analyzed,
tracked the routing and priced every outbound telephone call made by our client
companies. The business was operated essentially as a subscription, service
bureau-based business.
In
1993,
we opened our wholly owned subsidiary, Centergistic Solutions Latin America,
in
Mexico City. This subsidiary is a distribution company that sells, not only
our
products but other products, mainly to telecom equipment providers in Mexico,
Latin and South America.
By
1999,
we were operating and supporting two divergent businesses; call accounting,
whose revenues had been slowly eroding for years, and contact center performance
management systems, whose markets and applications were increasingly in demand.
After choosing to focus all of our attention on the growing contact center
market, we sold our call accounting business and used the proceeds to expand
our
flagship AgentView product and develop our new CenterStats product. To emphasize
our new focus, we changed our name to Centergistic Solutions, Inc.
In
2001,
we completed the development of our new CenterStats product, and began selling
and installing it at client facilities in 2002. Our AgentView and CenterStats
products help companies improve productivity by providing an integrated, unified
view of critical information. This information is provided in the form of real
time “smart” alerts and sophisticated reporting tools.
Further
information about the company and our products and services can be found at
our
web site: www.centergistic.com.
The
Market
Our
products are targeted at the growing number and increasing complexity of
customer contact centers, addressing management’s need to integrate performance
data generated by operations, reporting and CRM (Customer Relationship
Management) systems.
Our
software, using sophisticated algorithms, allows call/contact centers to improve
performance and thereby customer satisfaction by providing the best possible
service, while maintaining the most economical use of resources and overhead.
The value behind what we term “The Centergistic Solution” is the real time
availability of performance metrics derived by selecting sub-sets of data from
critical sources throughout the contact center. These sub-sets are then combined
to form a new superset of “smart” performance metrics. Alert thresholds and
user-defined filters are applied to create a unique information set, profiled
to
each viewer. The resulting benefit of this information is faster and more
accurate anticipation of clients’ needs, more rapid response to service and/or
revenue goals and across-the-board performance improvement through integrated
real time and historical reports and analytics.
Our
flagship product, AgentView, is a real time performance monitoring and reporting
system that is currently installed in over 3,500 contact centers throughout
the
world, including Fortune 1000/FTSE 500 companies such as British Telecom,
Barclay’s Bank, ABN-AMRO, MicroSoft, and American Express.
Our
CenterStats product is a new enterprise-wide performance reporting system which
is currently installed in eleven contact centers in the U.S. CenterStats
incorporates a digital executive dashboard component and enables “drill-down”
analytics and historical reporting for true company-wide visibility and
performance analysis. It is a ready-to-install information system that is
compatible with all new and legacy systems, and can be installed without
disruption to existing systems and hardware. Notable CenterStats accounts
include Kaiser Permanente, 20
th
Century
Fox and Petro-Canada.
Our
Products and Services
AgentView
Our
flagship product, AgentView, is currently installed in over 3,500 contact
centers throughout the world. Its strength is its ability to collect from
diverse ACD (automatic call distributors) types and other applications, systems
and databases found in today’s contact centers. The AgentView system utilizes
sophisticated threshold filters, providing managers, supervisors and agents
with
evolving real time information on all aspects of the contact center. The system
is used to measure and take actions to improve performance.
AgentView
is unique in its ability to collect critical subsets of data from virtually
any
data source, create filters and real time alert thresholds, and publish the
enriched information to virtually any output media for twenty-four by seven
global access. Because of this “open” approach to information, AgentView stands
apart from hardware manufacturers and “one stop” application vendors in that it
is not centric to a particular system or application. This is attractive to
contact centers with applications that span a variety of brands and
manufacturers. These centers do not want to replace existing legacy systems.
They want to collect and integrate information from those already existing
systems within the center because they work and are costly to
re-create.
Architecturally,
AgentView is comprised of a core system, which includes a data collection
engine, a desktop metric ribbon (AgentLink), an advanced threshold template
and
a performance indicator (PI) building capacity. Modules can be added to
AgentView to enable information to be published to a web page, wireless hand
held device, plasma or LED (light emitting diode) display. A recently released
module, SnapView, provides snapshot reports that allow the comparison of actual
performance against forecasts or benchmark goals. Additional data sources can
be
added to provide greater performance visibility over multi-media transactions.
Additional contact center locations can also be added for centralized
performance reporting. We also offer professional services to provide training
and assistance with building smart metrics.
These
metrics consist of the combination of two or more data elements to form a more
refined metric. An example of this could be combining information from a
financial or sales database with an ACD metric to form a “$$ waiting to be
answered” as opposed to the more static metric of “Number of calls waiting to be
answered”.
The
AgentView products are available in English, Spanish and Portuguese with
provisions for additional translations as more international distribution is
achieved. Our clients include:
·
British
Telecom
·
NatWest
Bank
·
Cable
& Wireless
·
Barclays
Bank
·
ABN-AMRO
Bank
|
·
Esso/Imperial
Oil
·
American
Express
·
Citicorp
·
Anheuser
Busch
·
MicroSoft
|
In
2003,
we introduced a portion of our newly developed CenterStats technology into
our
AgentView product and packaged it as AgentView Enterprise Performance Management
(EPM) (in the U.S.). The expanded performance capability resides fully on the
CenterStats platform and allows access to incrementally more data sources and
provides broader publishing capabilities. EPM provides a new sales opportunity
for distributors to revisit existing clients and may lead to future sales of
fully loaded versions of CenterStats.
We
offer
our AgentView products with a variety of annual support arrangements that are
a
source of recurring revenue for us. Typically, users pay 18% to 25% of the
initial license fee for annual support charges.
CenterStats
Our
newly
released CenterStats architecture is a powerful enterprise information system
that combines critical real time alarms with historical information for a
360-degree view of an organization. The system allows the user to define key
subsets of information from any data source to review on a regular
basis.
Data
sources could include:
·
Financial
·
Inventory
·
Sales
·
CRM
·
Business
Intelligence
|
·
Internet,
e-commerce systems
·
Supply
chain, MIS
·
Human
Resources
·
Any
other open data source
|
Categories
listed above would include such manufacturers as Nortel, Avaya, SAP, Siebel,
Cisco, Remedy, SalesLogix, PeopleSoft, Genesys and others. Each of these
applications produces hundreds of reports and voluminous databases, often
cumbersome and slow to respond. Senior managers, however, want to quickly access
only certain key sets of information from each. The CenterStats architecture
maps this selected information to the CenterStats database where it is combined
with other key subsets from other sources, forming a new superset of rich
information. Critical metrics can be displayed instantly on virtually any
pre-determined schedule. This information then can be sent to the user’s desktop
in the form of a “dashboard” of real time and historical information. It also is
retrievable from any wireless device or browser. CenterStats is best deployed
as
a management information tool, ideal in companies where important information
must be readily accessible and quickly interpreted.
Core
to
CenterStats architecture is the ability to collect data from multiple and
diverse systems across the enterprise. Our CenterStats architecture
patent-pending technology enables companies to extract critical subsets of
information from virtually any application, database and/or system throughout
the enterprise. CenterStats is non-intrusive in that it sits apart from the
data
sources so that it does not in any way alter or impair the backend system.
All
this is accomplished without having to dismantle the system or impeding its
operation. This allows companies to retain valuable legacy systems and
applications, while getting state-of-the-art transmission of vital performance
metrics across the enterprise. A separate database, created from the collection
subsets, allows the user to combine information from these disparate sources
and
create real time alerts that are profiled to meet performance metric goals.
Additionally, this same collected data is archived to create meaningful
historical reports that are enriched by combining critical information
together.
Our
CenterStats architecture includes the following significant
features:
·
|
Data
collection architecture
:
The
CenterStats engine has virtually no limit to the type or volume of
data it
collects. The strength of CenterStats is not only in what it collects
but
how it collects. Because it is not centric to a certain industry
or
market, there are no design limits on the type of data collected.
It can
therefore fit into virtually any
industry.
|
·
|
Real
time data collector/alarms
:
The CenterStats real time data collector is not only powerful, but
unique
in that it collects data in intervals as frequent as needed (or is
available). Alarms data is taken directly from the source and is
not
impaired by having to move through duplicated databases. Real time
information is constantly updated with each refresh cycle. Furthermore,
users can set different types of data to refresh every second, others
every hour, day, etc., since mission critical data may be needed
more
frequently than other types of information. Different individuals
can
receive different alarms.
|
·
|
Refined
information databases
:
The database created on the CenterStats server is comprised of only
information that is identified as being critical to the user. Unlike
other
systems, which replicate entire databases, CenterStats only brings
together information that is already identified as being useful.
This
results in an “intelligent” database that allows faster throughput and
more refined data mining. The database created by CenterStats is
literally
a new information set, whose access can be user defined and automated.
The
result is the right information, delivered to the right individual
at the
right time.
|
·
|
Expertise
in telecommunications and ACDs
:
The CenterStats collectors are able to connect and extract data from
the
most popular ACD/Contact Center
systems.
|
Professional
Services
We
offer
consulting services to complement our product offerings. Our Professional
Services Group provides contact center systems design, integration, and
implementation as well as ongoing training.
As
we
continue our strategy of adding locations and data sources to existing clients
and transitioning them to the new CenterStats architecture, the opportunity
for
added consulting services is expected to rise. The process of identifying key
performance metrics and creating new reports is ideally suited to our
consultants who have the knowledge of the products and understand the needs
and
issues of the contact center.
Our
Professional Services Group generates incremental revenue, develops customer
loyalty, and is an important source of market intelligence for
Centergistic.
Marketing
and sales
Marketing
We
have
sold our data management system products primarily through distributors of
related automatic call distribution (ACD) systems and hardware. Since the sale
of our Account-A-Call unit in September 1999, we have operated with a
streamlined sales force of two people in the United States and five in Mexico.
One of our two U.S. salespersons focuses on direct sales to end-users and the
other is focused on relationships with distributors in the U.S. and abroad.
The
five
Mexico-based salespersons focus on both distributors and end-users throughout
Mexico and South America, and also offer a small line of administrative software
products that is not cost-effective for us to sell in the U.S. In March 2002,
we
added two people to our California-based sales staff in order to begin
development of our direct sales force that will be necessary to support our
strategic marketing plan. At present, the corporate marketing function and
associated services are performed by a senior marketing manager.
We
promote our products at general telecommunications, computer telephony, contact
center, and Customer Relationship Management (CRM) shows throughout the U.S.
and
abroad. We have a print advertising campaign and a monthly direct mail “Fresh
Start” program that reaches over 1,000 top prospects with each mailing. We also
have an active web site, which describes our products and permits our
distributors to order additional copies of the product or to expand an existing
license by simply entering purchase requests. Distributors are automatically
issued a key code to permit upgrades of licenses without the intervention of
any
personnel.
We
espouse a customer-driven marketing philosophy. AgentView clients have been
instrumental in effecting many of the enhancements to this product line over
the
years. We regularly visit our clients, and conduct focus group sessions to
keep
abreast of their changing environments and needs. As an example, the AgentView
Web publishing capability was developed to meet real world needs of customers
for twenty-four by seven internet access to metrics and reports. We believe
this
gives us a competitive advantage over other vendors sharing this market
space.
Our
customers regularly receive communications in the form of targeted direct mail
programs, special electronic sales memos, monthly technical webinars and a
monthly electronic newsletter, The RealTime Reporter™.
Sales
In
the
last three years, 75%-90% of AgentView sales have been made through a network
of
distributors who are major providers of telecommunications hardware, software,
and support services. In approximately 80% of the installations, the AgentView
system is delivered with the contact center hardware and software.
We
have
developed a strong platform for international sales of our products, especially
in Europe and Latin America. In Europe, we use our U.S.-based sales force to
develop close ties with our distributors who have established a significant
market presence for AgentView.
Our
largest re-seller, Dacon, who sells to British Telecom (BT), located in the
United Kingdom, accounts for over 2,000 existing AgentView installations. The
AgentView system is represented as a line item on the BT ordering sheet. When
a
real time system is needed AgentView is the default choice, in the form of
a
“checked box” on the order form. The solid relationship between Centergistic and
BT is further evidenced in the commitment to add CenterStats as a new “line
item” to their order sheet as BT’s recommended enterprise reporting dashboard
tool. Centergistic, in conjunction with our European distributor, has recently
qualified CenterStats at the BT labs in Burmingham, U.K.
The
following table lists our largest distributors and the revenue generated from
each over the past two fiscal years:
Distributor
|
|
FY2007
|
|
FY2006
|
|
Dacon
(British Telecom)
|
|
$
|
757,931
|
|
$
|
399,466
|
|
America
Latina Tecnologia
|
|
|
31,568
|
|
|
358,524
|
|
Alcatel
|
|
|
176
961
|
|
|
82,367
|
|
Avaya
de Mexico
|
|
|
98,762
|
|
|
255,222
|
|
Aspect
|
|
|
37,579
|
|
|
60,939
|
|
Siemens
de Mexico
|
|
|
156,758
|
|
|
91,714
|
|
Surtronics
|
|
|
268,262
|
|
|
0
|
|
We
plan
to sell our new CenterStats product through three channels: approximately 40%
through our direct sales staff to end-users; approximately 40% through large
systems integrators (e.g. EDS, Perot Systems, Unisys, IBM Global Services,
Accenture) and about 20% through equipment distributors. As of the date of
this
filing, we have not entered into any agreement or had any discussions with
any
of the above-named or other large systems integrator.
Directors
and Executive Officers
The
following table sets forth information regarding our executive officers and
directors:
Name
|
Age
|
Office
|
Ricardo
G. Brutocao
|
61
|
President,
Chief Executive Officer and Director
|
David
M. Cunningham
|
46
|
Chief
Operating Officer, Chief Financial Officer, Secretary and
Director
|
Jerome
Fahey
|
79
|
Chairman
of the Board and Director
|
Jay
Kurtz
|
70
|
Director
|
William
J. Battison
|
57
|
Director
|
Directors
hold office for a period of one year from their election at the annual meeting
of stockholders and until their successors are duly elected and qualified.
Officers are elected by, and serve at the discretion of, the Board of Directors.
None of the above individuals has any family relationship with any
other.
Ricardo
G. Brutocao
joined
Centergistic as President, Chief Executive Officer and a director in 1988.
Prior
to joining Centergistic, Mr. Brutocao served as President and CEO of Logical
Data Management, a firm he co-founded which served the then burgeoning Cable
TV
industry from 1976 to 1988. Prior to 1976, Mr. Brutocao served as Director
of
International Operations for Whittaker Corporation, where he was a member of
a
small team that started a $400 million International Hospital Management
Division. In 1972, while a young engineer at the Burroughs Corporation, Mr.
Brutocao was selected to be the Project Manager for a new main-frame class
computer system that was subsequently the first system at Burroughs released
and
delivered on schedule. Mr. Brutocao earned a BSEE from Santa Clara University
and an MBA in Finance from California State University, Los
Angeles.
David
M. Cunningham
joined
Centergistic as Controller in September 1991 and Secretary in 1992 and was
appointed Chief Financial Officer and Chief Operating Officer in 1995 and 2000,
respectively. He was appointed President in 2006. He has served on the
Centergistic Board of Directors since April 2001. Prior to joining Centergistic,
he was employed by Frazer & Torbet, public accounting firm, from 1987 to
1991. In addition to being a CPA, Mr. Cunningham holds a BS in Business from
California State University, Northridge.
Jerome
Fahey
has
served on the Centergistic Board since 1994. Mr. Fahey formerly held the
positions within VONS Grocery Company of President from 1983 to 1985 and Chief
Operating Officer from 1975 to 1983, and is now retired.
Jay
Kurtz
has
served on the Centergistic Board since 1996. Mr. Kurtz is the founder and
President of Kappa West Incorporated. He is an internationally acclaimed
authority on the application of military concepts and principals in the
competitive business environment. Mr. Kurtz helped to pioneer and popularize
the
concepts of “Business Warfare” worldwide as a speaker and lecturer in over
thirty countries on five continents and as a consultant to more than 150
companies (more than 100 of which are high technology ventures who sought out
Mr. Kurtz for consulting intended to increase their strategic and operational
effectiveness).
William
J. Battison
has
served on the Centergistic Board since 2001. Mr. Battison has served as Managing
Director of Angeles Capital Group, LLC, an investment banking firm and NASD
licensed broker dealer, since January 2002. From February 2001 to January 2002,
he served as CEO of RXN Radio Systems, an internet radio/technology company.
From March 2000, to February 2001, he served as CEO of BuyItNow, Inc., an
internet E-commerce company. In January 2001, a petition in bankruptcy was
filed
against BuyItNow, Inc. under Chapter 7 of the Bankruptcy Act in the U.S.
Bankruptcy Court in New Jersey. The company was dissolved on June 25, 2001.
From
March 1999 to March 2000, Mr. Battison served as senior vice president of
Valence Technology, a company involved in portable energy storage
technology.
Stock
and Dividend Information
The
Company’s stock is currently traded on the “pink sheets” of the Over-the-Counter
Bulletin Board. The Company has not paid dividends at any time in the past
and
has no current intentions of paying any dividends in the future. The Company
currently has 62 shareholders. The quarterly high and lows in bid and asked
prices for the year ended June 30, 2007 are below:
|
High
|
Low
|
|
Bid
|
Asked
|
Bid
|
Asked
|
|
|
|
|
|
September 2006
|
.15
|
.25
|
.05
|
.10
|
December 2006
|
.15
|
.25
|
.02
|
.02
|
March 2007
|
.27
|
.27
|
.02
|
.08
|
June 2007
|
.25
|
.25
|
.10
|
.20
|
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
OF
CENTERGISTIC SOLUTIONS, INC.
TO:
Shareholders
of Centergistic Solutions, Inc.
NOTICE
IS HEREBY GIVEN THAT
the
annual meeting of the shareholders of Centergistic Solutions, Inc., a California
Corporation (“Company”) will be held at the Corporate Offices located at 505
North Euclid Avenue, Suite 480, Anaheim, CA on Friday November 9, 2007
at 8:00
AM for the following purposes:
1.
|
To
elect Company Directors. The Board of Directors intends to present
the
following persons to serve as members of the Board of
Directors:
|
A.
Ricardo
G. Brutocao
B.
William
J. Battison
C.
David
M.
Cunningham Jr.
D.
Jerome
C.
Fahey
E.
C.
J.
Kurtz
2.
|
To
transact any other business which is within the power of the
shareholders.
|
Only
shareholders of record on October 16, 2007 will be entitled to vote at
the
meeting. David M. Cunningham, Jr., the Company’s President, will preside over
the meeting as Chairman. Susan Saldibar, the Company’s Vice President of Sales
and Marketing has been appointed to serve as the sole Inspector of
Election.
Shareholders
who do not expect to be present personally at the meeting are urged to
fill in,
date, sign and return the accompanying proxy in the enclosed self-addressed
envelope.
Dated
this 26th day of October 2007.
CENTERGISTIC
SOLUTIONS, INC.
David
M.
Cunningham, Jr., CPA
Secretary
Enclosure
Management
recommends the election of the following Directors not in order of
preference:
A.
|
Ricardo
G. Brutocao
Director,
Centergistic Solutions, Inc.
|
B.
|
William
J. Battison
Director,
Angelus Capital Group
|
C.
|
David
M. Cunningham Jr., CPA
President,
COO/CFO - Centergistic Solutions,
Inc.
|
D.
|
Jerome
C. Fahey
Chairman
of the Board - Centergistic Solutions, Inc.
President
Vons Markets/Vice President Lucky Stores,
Retired
|
E.
|
C.
J. Kurtz
President
& Founder of the Kappa Group
|
PROXY
I,
the
undersigned shareholder, do hereby designate and appoint the President and/or
Secretary of Centergistic Solutions, Inc., my proxy to represent me at the
annual shareholders’ meeting of Centergistic Solutions, Inc. to be held at the
Corporate Offices, 505 North Euclid Avenue, Suite 480 Anaheim, California
92801
on Friday, November 9, 2007, at 8:00 AM, and at all adjourned sessions of
shareholders’ meetings, and I authorize and empower my said proxy to vote any
and all things which I myself might do if personally present and
acting.
____________________
___________________
Signature
Date
____________________
___________________
Signature
Date
By:
Title:
Address:_________________________________________________________
________________________________________________________
Please
sign exactly as your name appears on your stock certificate. Joint owners
should
each sign personally. A corporation should sign full corporate name by duly
authorized officers. When signing as attorney, executor, administrator, trustee
or guardian, give full title as such. Please date, sign and mail proxy promptly
in the enclosed reply envelope.
BoardDirectors/ShareholdersProxyForm
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