UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

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

                       For the Quarter Ended June 30, 2004

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

                       Commission File Number: 000-1084047

                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)

             California                                   95-4691878
  (State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
   Incorporation or Organization)

   204 NW Platte Valley Drive, Riverside, MO                       64150
   (Address of Principal Executive Offices)                      (Zip Code)


                                 (816) 584-8030 (Registrant's  Telephone Number,
              Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to Section 12(g) of the Act:  Common Stock, $.001
                                                             par value


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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 ___

     There were 53,112,424 shares of common stock, $0.001 par value, outstanding
as of August 23, 2004.

<PAGE>

                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                                   FORM 10-QSB

                           QUARTER ENDED JUNE 30, 2004


                                TABLE OF CONTENTS


                                                                            PAGE

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

     Condensed Consolidated Balance Sheets as of June 30, 2004
     (Unaudited) and December 31, 2003........................................3

     Condensed Consolidated Statements of Operation (Unaudited)
     for the Three and Six Months Ended June 30, 2004 and 2003................4

     Condensed Consolidated Statements of Cash Flow (Unaudited)
     for the Six Months Ended June 30, 2004 and 2003..........................5

     Notes to the Condensed Consolidated Financial Statements
     (Unaudited)..............................................................6

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.................................13

Item 3.  Controls and Procedures.............................................18


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings...................................................19

Item 3.  Defaults upon Senior Securities.....................................20

Item 6.  Exhibits and Reports on Form 8-K....................................20

Signatures    ...............................................................21

Index to Exhibits............................................................22


<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>

                                                        (UNAUDITED)
                                                          JUNE 30,      DECEMBER 31,
                                                            2004             2003
                                                        ------------    ------------
<S>                                                     <C>             <C>

                                     ASSETS

CURRENT ASSETS

    Cash                                                $  4,959,208    $  3,890,929
    Accounts receivable:
    Merchant accounts receivable                           1,159,882       1,104,051
    Other receivables                                         15,215         101,590
    Notes receivable, net of allowance
       for doubtful accounts of $359,018
         and $454,529 respectively                         1,315,964         949,891
    Inventory                                                 48,602          48,291
    Prepaid expenses and other current assets                463,832          15,986
    Deferred income taxes                                    457,890         457,890
                                                        ------------    ------------
    TOTAL CURRENT ASSETS                                   8,420,593       6,568,628
                                                        ------------    ------------
PROPERTY AND EQUIPMENT, NET                                  597,934         574,291
GOODWILL                                                   1,088,686       1,088,686
DEFERRED INCOME TAXES                                         17,688          17,688
DEPOSITS                                                      53,965          43,965
                                                        ------------    ------------
    TOTAL ASSETS                                        $ 10,178,866    $  8,293,258
                                                        ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES

    Accounts payable and accrued expenses               $  5,129,534    $  3,342,084
    Deferred revenue                                       1,305,437       1,857,247
    Accrued income taxes                                   1,088,795         822,533
    Current maturities of capital lease obligations           58,689          67,049
                                                        ------------    ------------
    TOTAL CURRENT LIABILITIES                              7,582,455       6,088,913
CAPITAL LEASE OBLIGATIONS                                    110,585         126,336
                                                        ------------    ------------
    TOTAL LIABILITIES                                      7,693,040       6,215,249
                                                        ------------    ------------

COMMITMENTS AND CONTINGENCIES (NOTE 5)                            --              --

STOCKHOLDERS' EQUITY

    Series A preferred stock; issued and outstanding,
     1,650,500 shares                                      1,650,500       1,650,500
    Series B preferred stock; issued and outstanding,
      428,491 shares                                         448,491         448,491
    Common stock - authorized, 100,000,000 shares of
     $.001 par value; issued
      and outstanding, 52,897,186                             52,897          52,897
    Additional paid-in capital                            13,163,749      13,163,749
    Accumulated deficit                                  (12,829,811)    (13,237,628)
                                                        ------------    ------------
    TOTAL STOCKHOLDERS' EQUITY                             2,485,826       2,078,009
                                                        ------------    ------------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 10,178,866    $  8,293,258
                                                        ============    ============

</TABLE>

                             See accompanying notes.

                                       3


<PAGE>


                                   INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                 (UNAUDITED)

<TABLE>
<CAPTION>

                                                 FOR THE THREE MONTHS ENDED       FOR THE SIX MONTHS ENDED
                                                          JUNE 30,                         JUNE 30,
                                               -----------------------------    ----------------------------
                                                                 (RESTATED)                      (RESTATED)
                                                   2004             2003            2004            2003
                                               ------------     ------------    ------------    ------------
<S>                                            <C>              <C>             <C>             <C>
REVENUE

     Services revenue                          $  4,063,888                     $  7,565,830
     Product sales                                3,200,204                        8,953,324
     Other revenue                                  354,001                          748,329
                                               ------------                     ------------
     TOTAL REVENUE                                7,618,093     $  6,992,995      17,267,483    $ 12,572,203

COST OF REVENUE

     Cost of services revenue                     1,995,586                        3,492,050
     Cost of product sales and other revenue      1,594,430                        4,609,625
                                               ------------                     ------------
     TOTAL COST OF REVENUE                        3,590,016        3,515,533       8,101,675       6,062,425
                                               ------------     ------------    ------------    ------------

GROSS PROFIT                                      4,028,077        3,477,462       9,165,808       6,509,778
                                               ------------     ------------    ------------    ------------

OPERATING EXPENSES

     General and administrative                   1,601,454        1,763,167       4,525,179       3,504,324
     Commissions and other selling expenses       2,193,531        1,611,699       4,078,989       3,066,817
                                               ------------     ------------    ------------    ------------
     TOTAL OPERATING EXPENSES                     3,794,985        3,374,866       8,604,168       6,571,141
                                               ------------     ------------    ------------    ------------
INCOME FROM OPERATIONS                              233,092          102,596         561,640         (61,363)
                                               ------------     ------------    ------------    ------------

OTHER INCOME (EXPENSES)

Interest and penalties on late tax payments         (23,340)         (73,000)        (45,088)        (73,000)
Other income                                         34,053           30,760          87,567          74,872
Interest income, deposits                             5,485           18,444          10,969          35,831
Interest income, financing arrangements              31,879               --          64,070              --
Interest expense                                     (1,548)         (13,668)         (5,075)        (13,668)
                                               ------------     ------------    ------------    ------------
     TOTAL OTHER INCOME (EXPENSE)                    46,529          (37,464)        112,443          24,035
                                               ------------     ------------    ------------    ------------

INCOME BEFORE INCOME TAXES                          279,620           65,132         674,083         (37,328)

INCOME TAXES                                       (110,449)         (55,000)       (266,262)         70,000
                                               ------------     ------------    ------------    ------------

NET INCOME                                          169,171           10,132         407,821          32,672

UNDECLARED PREFERRED STOCK DIVIDENDS                (20,790)              --         (41,580)             --
                                               ------------     ------------    ------------    ------------

INCOME APPLICABLE TO COMMON STOCKHOLDERS       $    148,381     $     10,132    $    366,241    $     32,672
                                               ============     ============    ============    ============

BASIC INCOME PER COMMON SHARE                  $       0.00     $       0.00    $       0.01    $       0.00
                                               ============     ============    ============    ============

DILUTED INCOME PER COMMON SHARE                $       0.00     $       0.00    $       0.01    $       0.00
                                               ============     ============    ============    ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

USED IN BASIC PER SHARE CALCULATION              52,897,186       52,870,136      52,897,186      52,821,170
                                               ============     ============    ============    ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

USED IN DILUTED PER SHARE CALCULATION            57,188,189       52,870,136      57,188,189      52,821,170
                                               ============     ============    ============    ============

</TABLE>

                                           See accompanying notes.



                                                      4

<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (UNAUDITED)


<TABLE>
<CAPTION>


                                                           FOR THE SIX MONTHS
                                                             ENDED JUNE 30,
                                                       --------------------------
                                                                      (RESTATED)
                                                           2004          2003
                                                       -----------    -----------
<S>                                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)                                      $   407,820    $    32,672
Adjustments to reconcile net income to
   net cash provided by operating activities
  Depreciation and amortization                            166,123         45,093
  Prepaid non-cash compensation and expenses                    --         62,250
  Non-cash expenses                                             --         30,667
  Net change in operating assets and liabilities
    Merchant account receivables                           (55,832)            --
    Other receivables                                       86,373        (28,308)
    Inventory                                                 (311)          --
    Prepaid expenses and other current assets             (457,845)      (225,103)
    Accounts payable and accrued expenses                1,787,449        221,684
    Deferred revenue                                      (551,810)        97,392
    Accrued income taxes                                   266,262             --
                                                       -----------    -----------
NET CASH FLOWS FROM OPERATING ACTIVITIES                 1,648,229        236,347
                                                       -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES

  Change in notes receivable from financed sales          (366,073)            --
  Capital expenditures                                    (174,574)      (104,181)
                                                       -----------    -----------
NET CASH FLOWS FROM INVESTING ACTIVITIES                  (540,647)      (104,181)
                                                       -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

  Proceeds from borrowing under note payable                    --          8,085
  Repayments under line of credit agreement                     --        (36,142)
  Payments on capital lease obligations                    (39,303)       (46,859)
                                                       -----------    -----------
NET CASH FLOWS FROM FINANCING ACTIVITIES                   (39,303)       (74,916)
                                                       -----------    -----------

NET INCREASE IN CASH                                     1,068,279         57,251

CASH AT BEGINNING OF PERIOD                              3,890,929      1,338,345
                                                       -----------    -----------

CASH AT END OF PERIOD                                  $ 4,959,208    $ 1,395,596
                                                       ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION

Issuance of Series B Preferred Stock as Compensation   $        --    $    20,000
                                                       ===========    ===========
Property and equipment acquired under capital leases   $    15,192    $        --
                                                       ===========    ===========
</TABLE>

                             See accompanying notes.

                                       5


<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(1)  ORGANIZATION,   BASIS  OF  PRESENTATION,  AND  CERTAIN  INTERIM  ACCOUNTING
     POLICIES

     (a)  Organization and Description of Business:

          Innovative   Software   Technologies,   Inc.   (the   "Company")   was
          incorporated  in the  State of  California  in May 1998.  The  Company
          together  with  its  wholly-owned   subsidiaries  is  engaged  in  the
          development,  marketing  and  delivery  of  business-type  educational
          programs,  generally to  individuals,  throughout the United States of
          America. The Company's educational programs combine both self-training
          and coaching by Company  employees.  During the quarterly period ended
          June 30, 2004, the Company's educational programs were concentrated in
          two product lines, Real Estate and Internet Marketing,  which together
          comprised approximately 94% of second quarter 2004 revenues.

     (b)  Basis of Presentation:

          The accompanying unaudited condensed consolidated financial statements
          have been prepared in accordance  with generally  accepted  accounting
          principles for interim financial information and with the instructions
          to Form 10-QSB and Regulation  S-B.  Accordingly,  they do not contain
          all of the  information and footnotes  required by generally  accepted
          accounting principles for complete consolidated  financial statements.
          In the opinion of management,  the  accompanying  unaudited  condensed
          consolidated financial statements reflect all adjustments  (consisting
          only of normal recurring adjustments)  considered necessary for a fair
          presentation of the Company's financial condition as of June 30, 2004,
          and the results of their operations for the three and six months ended
          June 30, 2004 and June 30, 2003, and the cash flows for the six months
          ended June 30, 2004 and 2003. These unaudited  condensed  consolidated
          financial  statements should be read in conjunction with the Company's
          audited 2003 consolidated  financial  statements,  including the notes
          thereto, and the other information set forth therein,  included in the
          Company's Annual Report on Form 10-KSB for the year ended December 31,
          2003. Operating results for the three and six month periods ended June
          30, 2004 are not necessarily  indicative of the operating results that
          may be expected for the year ending December 31, 2004.

     (c)  Principles of Consolidation:

          The  consolidated  financial  statements  include the  accounts of the
          Company and its  wholly-owned  subsidiaries,  EPMG,  Inc.  and Hackett
          Media,  Inc. All significant  intercompany  balances and  transactions
          have been eliminated in consolidation.

     (d)  Income Taxes in Interim Periods:

          Income taxes are accounted  for under the asset and liability  method.
          Deferred tax assets and  liabilities are recognized for the future tax
          consequences   attributable  to  differences   between  the  financial
          statement  carrying  amounts of existing  assets and  liabilities  and
          their   respective  tax  bases  and  operating  loss  and  tax  credit
          carryforwards.  For  purposes  of  interim  financial  reporting,  the
          Company  projects its effective  income tax rate for the entire fiscal
          year, taking into account all taxing  jurisdictions,  and applies such
          rate to interim pre-tax income. Changes in the projected effective tax
          rate in future  quarters,  if any, are accounted for  prospectively in
          the period of change.

                                       6


<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


     (e)  Earnings Per Common Share:

          Basic net income per common  share is computed by dividing (i) the net
          income (loss), as adjusted for the effects of cumulative  dividends on
          the Series A and B Preferred Stock by (ii) the weighted average common
          shares  outstanding  during the period.  Diluted net income (loss) per
          share is  computed  similarly  but  includes  the  effects of dilutive
          securities in the denominator. The diluted income per common share for
          the  quarterly  period  ended June 30,  2004  includes  the effects of
          6,712,919 common shares into which the Company's Series A and Series B
          Convertible  Preferred Stock is convertible on an if-converted  basis.
          The following  table  reflects the components of the basic and diluted
          income per common share for the  quarterly and six month periods ended
          June 30, 2004 and 2003:

<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED          SIX MONTHS ENDED
                                                         JUNE 30,                    JUNE 30,
                                                -------------------------   -------------------------
                                                   2004           2003         2004           2003
                                                -----------   -----------   -----------   -----------
<S>                                             <C>           <C>           <C>           <C>
Basic:

   Income applicable to common stockholders     $   148,381   $    10,132   $   366,241   $    32,672
                                                ===========   ===========   ===========   ===========
   Weighted average common shares outstanding    52,897,186    52,870,136    52,897,186    52,821,170
                                                ===========   ===========   ===========   ===========
   Basic income per common share                $      0.00   $      0.00   $      0.01   $      0.00
                                                ===========   ===========   ===========   ===========

Diluted:

   Income applicable to common stockholders     $   148,381   $    10,132   $   366,241   $    32,672
   Plus: Undeclared preferred stock dividends        20,790             0        41,580             0
                                                -----------   -----------   -----------   -----------
   Adjusted numerator                           $   169,169   $    10,132   $   407,820   $    32,672
                                                ===========   ===========   ===========   ===========

   Weighted average number of shares             52,897,186    52,870,136    52,897,186    52,821,170
   Shares convertible from preferred stock        6,712,919    17,478,701     6,712,919    17,478,701
                                                -----------   -----------   -----------   -----------
   Adjusted denominator                          59,610,105    70,348,837    59,610,105    70,299,871
                                                ===========   ===========   ===========   ===========

   Diluted income per common share              $      0.00   $      0.00   $      0.01   $      0.00
                                                ===========   ===========   ===========   ===========

</TABLE>

                                       7


<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(2)  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued expenses consist of the following:

                                                 JUNE 30,     DECEMBER 31,
                                                    2004         2004
                                                -----------   -----------
Accrued sales splits to lead providers          $   900,595   $ 1,255,770
Accrued wages and other                           1,846,298       773,707
Reserves for returns and refunds                    943,002       742,568
Accounts payable                                  1,177,194       351,089
Interest and penalties on late tax payments         262,446       218,950
Credit facility (a)                                      --         3,440
                                                -----------   -----------
                                                $ 5,129,534   $ 3,345,524
                                                ===========   ===========


     (a)  The Company has a credit  facility that provides for  borrowings up to
          $50,000, with interest at Prime Rate, plus 2%.

(3)  STOCKHOLDERS' EQUITY

     (a)  Convertible Preferred Stock:

          As of June 30, 2004,  the Company had  25,000,000  shares of preferred
          stock authorized and has 1,650,500 shares of Series A Preferred issued
          and  outstanding  and 428,491 shares of Series B Preferred  issued and
          outstanding.  The Series A and Series B Preferred Stock  (collectively
          "Preferred  Stock") have the same terms and conditions.  The Preferred
          Stock is (i) entitled to cumulative dividends at a rate of 4.0% of the
          liquidation value ($1.00 per share), (ii) convertible at any time into
          common stock at a rate of 95% of the average  closing  market price of
          the common stock for five days  preceding  conversion  (6,712,919  and
          8,105,228  common  shares as of June 30, 2004 and  December  31, 2003,
          respectively),  (iii)  redeemable at any time by the Company for $1.00
          per share, and (iv) entitled to one vote per share.

          As of June 30, 2004 and December 31, 2003, the Company had cumulative,
          undeclared dividends in arrears on the Preferred Stock of $103,500 and
          $82,510, respectively.

(4)  RELATED PARTY TRANSACTIONS

     During the periods shown, the Company  purchased sales leads from Education
     Success  Institute,  Inc. (ESI), which is owned by two individuals who were
     employees  of the  Company  during  such  periods.  The cost of sales leads
     purchased  during the six months ended June 30, 2004, which is based upon a
     percentage  of revenue,  amounted to  $3,927,171.  In addition,  during the
     periods  shown,  ESI  subleases  office space from the Company.  Sub-rental
     receipts amounted to $700 each month during such periods. See Note 5.

                                       8


<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(5)  COMMITMENTS AND CONTINGENCIES

     (a)  Leases:

          Future  minimum lease payments under  noncancelable  operating  leases
          (with initial terms in excess of one year) and future minimum  capital
          lease payments as of June 30, 2004 are as follows:

                                                  CAPITAL      OPERATING
          Year ending December 31:                 LEASES       LEASES
                                                -----------   -----------
          Six months ending December 31, 2004        43,268       152,931
          2005                                       70,717       174,426
          2006                                       48,066        37,467
          2007                                       28,772             0
                                                -----------   -----------
          Total noncancelable lease payments        190,823       364,823
                                                              ===========
          Less amount representing interest          21,549
                                                -----------
                                                    169,274
                                                ===========

          Principal amount due in one year           58,689
          Principal amount due after one year       110,585
                                                -----------
                                                $   169,274
                                                ===========

          Rent expense under all operating leases for the quarter ended June 30,
          2004 was  $152,931.  This amount was  exclusive of $4,200 of sub-lease
          payments received from a related party. See Note 4.

     (b)  Lead Arrangements:

          The  Company  is a party to several  lead  agreements  with  Education
          Success,  Inc.  and  certain  other lead  generators.  The  continuous
          generation  of sales  leads is a  critical  element  to the  Company's
          continuing viability. The agreements provide for the transfer of sales
          leads  to EPMG,  Inc.  for  commissions  of,  generally,  34% of gross
          revenue,  subject  to  certain  adjustments.

     (c)  Content Providers:

          The  Company is a party to several  agreements  that  provide  for the
          educational  content and multimedia  materials used in the educational
          offerings.  Generally,  these  agreements  provide  for a  commission,
          generally  8% to 10% of  actual  sales.  The  maintenance  of  content
          agreements  is  a  critical   element  to  the  Company's   continuing
          viability.

                                       9


<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


     (d)  Servicing Arrangements:

          The  Company is a party to a  servicing  agreement  with a third party
          financial  institution  for the  servicing of the  Company's  financed
          sales.  The  agreement  provides  for the  collection,  servicing  and
          remittance  of  notes  receivable  as an  agent  to the  Company.  The
          counterparty  receives  certain fees for this  servicing  arrangement,
          which is included as a reduction of the  interest  income on the notes
          receivable.

     (e)  SEC Investigation:

          On June 24, 2003,  the  Securities  and Exchange  Commission  issued a
          formal order of investigation  authorizing subpoenas for documents and
          testimony in connection with the  investigation of certain  securities
          matters.  The Company  has and intends to continue to fully  cooperate
          with the SEC in its investigation.

     (f)  Litigation:

          None.

     (g)  Income Tax Returns:

          The Company has not filed its 2003 and 2002  Federal and State of Utah
          income tax returns.  Combined  current  income taxes payable for these
          periods  are   currently   estimated  to  be  $224,306  and  $513,936,
          respectively.  Interest and penalties  through June 30, 2004 have been
          recorded  in the amount of  approximately  $262,446.  The  Company has
          engaged an accountant  who is in the process of preparing its past due
          returns.

(6)  UNAUDITED QUARTERLY RESTATEMENTS.

     The  following  table  reflects the  quarterly net income of the Company as
     previously  reported by the Company in its quarterly  report on Form 10-QSB
     for the  quarter  ended  June 30,  2003  and as  restated  for the  matters
     discussed below:

                                                       JUNE 30, 2003

                                                -------------------------
                                                THREE MONTHS  SIX MONTHS
                                                    ENDED        ENDED
                                                -----------   -----------
     Net income (loss) before adjustments       $   252,711   $   352,608
     Reserve for notes receivable (a)               (78,000)     (308,000)
     Deferred revenue (b)                            (5,000)       81,000
     Stock compensation (c)                         (31,579)      (89,936)
     Penalties and interest (d)                     (73,000)      (73,000)
     Income taxes (e)                               (55,000)       70,000
                                                -----------   -----------
     Net income (loss), adjusted                $    10,132   $    32,672
                                                ===========   ===========


                                       10


<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

     (a) The Company changed its estimate of reserve for bad debts in the fourth
     quarter based upon historical performance.  This adjustment gives effect to
     the estimate  change for each quarter using that annual rate applied in the
     fourth quarter.

     (b) This adjustment adjusts the quarterly deferred revenue  calculation for
     the  following  matter:  Prior to February  2003,  the  Company  outsourced
     coaching to a third party  contractor who was  responsible  for delivery of
     the services  and who  provided  the Company  with  records for  accounting
     purposes.  Since  February  2003,  the Company has  employed  its  internal
     coaching  staff and has developed  internal  operations  databases to track
     coach-student  encounters.  During the fourth fiscal  quarter of 2003,  the
     Company began utilizing the populated operations databases to calculate the
     number of future coaching sessions for purposes of deferred revenue.  Other
     estimates of future coaching sessions were used during the prior quarters.

     (c) This adjustment  allocates  certain stock based  compensation  that was
     recorded in the fourth fiscal quarter of 2003 to the quarters to which such
     compensation was earned.

     (d) There was no adjustment to reflect the  allocation of the penalties and
     interest for  non-payment  of the  Company's  2002 Federal and state income
     taxes.  Amounts that were recorded in the fourth  quarter were allocated to
     the second and third quarters of 2003.

     (e)  This  adjustment  includes  the tax  effects  for  the  aforementioned
     adjustments,  plus the allocation of income taxes to the quarterly  periods
     based upon the effective tax rate applicable to the year ended December 31,
     2003.

     The  Company  intends to amend its  previous  filing on Form 10-QSB for the
     quarterly period ended June 30, 2003 for these matters.

(7)  SUBSEQUENT EVENTS.

     On July 2, 2004,  Innovative  Software  Technologies,  Inc. (the "Company")
     entered into a Settlement  Agreement  with James R. Garn,  Ethan W. Willis,
     and Ethan and Randy, LC (the "Settlement  Agreement") pursuant to which the
     parties agreed to settle all disputes between them,  including all disputes
     relating  to the  Company's  2001  acquisition  from Garn and Willis of the
     outstanding stock of Energy Professional Marketing Group, Inc. ("EPMG").

     Under  the  terms  of  the  Settlement  Agreement,  Garn  and  Willis  (the
     "Principals")  have  surrendered  to the  Company  all of their  shares  of
     capital stock of the Company,  comprising 6,784,762 shares of common stock,
     1,200,500 shares of Series A Preferred Stock, and 80,000 shares of Series B
     Preferred  Stock,  in exchange  for certain  assets of EPMG.  These  assets
     include  EPMG's  rights  under  certain  credit card  processing  contracts
     (including  receivables  relating to reserves under those  contracts in the
     amount of  approximately  $1,000,000),  substantially  all of the  tangible
     fixed  assets of EPMG's Utah  facility,  and certain  intangible  assets of
     EPMG, such as specified website domain names,  software,  and customer lead
     data.

     The Settlement  Agreement also sets forth certain  agreements and covenants
     relating to the relationship  between the parties on a going-forward  basis
     and the parties' respective businesses activities, including the following:

o    The Company and an entity  controlled by the  Principals  have entered into
     agreements  providing  for the  reciprocal  supply of products and customer
     leads to each other on a going-forward basis.


                                       11


<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


o    A company  controlled by the  Principals has agreed to assume all of EPMG's
     outstanding   service   obligations   to  EPMG's   coaching   customers  in
     consideration  of the  payment  of  service  fees by the  Company  totaling
     $425,000.

o    A newly created company  controlled and owned by the Principals has assumed
     the  lease of  EPMG's  facility  in  Provo,  Utah,  and  substantially  all
     employees at such facility have transferred  their employment to such newly
     created  company.  Pursuant to the  Settlement  Agreement,  the Company has
     released  all such  employees  from their  non-compete  obligations  to the
     Company.

o    The Company has agreed to refrain from  soliciting  the services of certain
     lead providers for a six-month period of time and from marketing to current
     active coaching customers for 120 days following the Settlement Agreement.

     Pursuant to the Settlement  Agreement,  the Company,  the  Principals,  and
     their  respective  affiliates have entered into mutual waivers and releases
     relating  to any and all claims  that they may have had against one another
     other at any time through the date of the Settlement Agreement.  Subsequent
     to the  settlement,  EPMG  will  remain a wholly  owned  subsidiary  of the
     Company and, together with the Company,  will focus on growing its business
     through its  traditional  coaching  and  mentoring  products,  new software
     products  relating to improving  the  efficiency of small  businesses,  and
     future planned software products targeting the IT departments of medium and
     large businesses.

     The  Company   recorded  the  settlement  on  the  effective  date  of  the
     settlement. No gain or loss arose from the settlement pursuant to generally
     accepted  accounting  principles which requires a company's  receipt of its
     own securities in such transactions to be treated as transactions affecting
     only stockholders' equity. In addition,  the Company has concluded that the
     transaction  does  not  meet  the  conditions  for  treatment  of EPMG as a
     discontinued  operation due to the fact that continuing  agreements between
     the Company and EPMG for cross selling of each others products and services
     rise to the level of the Company's  significant  continuing  involvement in
     the operations of the disposed component.


                                       12


<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following discussion includes statements that are forward looking in nature.
The accuracy of such statements  depends on a variety of factors that may affect
the business and operations of the Company.  When used in this  discussion,  the
words "expect(s)",  "feel(s)",  "believe(s)", "will", "may", "anticipate(s)" and
similar expressions are intended to identify  forward-looking  statements.  Such
statements  are subject to certain risks and  uncertainties,  and actual results
could differ  materially  from those  projected.  These risks and  uncertainties
include,  but are not  limited  to,  the  matters  discussed  under the  caption
"Factors Affecting Future Results" in the Company's Annual Report on Form 10-KSB
for the fiscal year ended  December  31, 2003 and other risks and  uncertainties
discussed in filings made with the Securities and Exchange Commission (including
risks described in subsequent reports on Form 10-QSB,  Form 10-KSB, Form 8-K and
other  filings).  Readers are  cautioned  not to place  undue  reliance on these
forward-looking  statements,  and are urged to carefully review and consider the
various disclosures elsewhere in this Form 10-QSB.

OVERVIEW

The following  discussion  summarizes  information about our accounting policies
and practices and information  about our operations in a comparative  manner for
the  three  and six  months  ended  June 30,  2004 and  2003.  Our  management's
discussion and analysis of financial  condition and results of operations should
be read in conjunction  with our consolidated  financial  statements and related
notes thereto included elsewhere herein.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations
are based upon the Company's consolidated financial statements,  which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported  amounts of
assets and  liabilities,  revenues  and  expenses,  and  related  disclosure  of
contingent  assets  and  liabilities  at the  date  of the  Company's  financial
statements.  Actual  results may differ  from these  estimates  under  different
assumptions or conditions.

Critical  accounting  policies  are  defined  as those  that are  reflective  of
significant  judgments and  uncertainties,  and potentially result in materially
different  results  under  different  assumptions  and  conditions.  The Company
believes that its critical accounting policies include those described below.

Allowances for Doubtful Accounts

Our net notes  receivable  amounted to $1,315,964 as of June 30, 2004 and relate
to product financing arrangements entered into with our clients. These notes are
unsecured,  bear  interest  at 15% and have terms  ranging  between  one and two
years.  The  Company has not and does not intend to sell or  otherwise  transfer
these receivables.

The  allowance  for  doubtful  accounts  is based upon our best  estimate of the
amount of probable credit losses in the existing notes based upon our historical
loss rates  experienced  on such  financing  arrangements.  A note is considered
impaired  pursuant  to  Financial  Accounting  Standards  Board  Statement  114,
Accounting by Creditors for  Impairment of a Loan.  Pursuant to Statement 114, a
note is  impaired  if it is  probable  that the  Company  will not  collect  all
principal and interest  contractually  due. The  impairment is measured based on
the present value of expected future cash flows discounted at the note's


                                       13


<PAGE>


effective  interest  rate.  The Company does not accrue  interest when a note is
considered  impaired.  When ultimate  collectibility of the principal balance of
the impaired note is in doubt,  all cash receipts on impaired  notes are applied
to reduce  the  principal  amount of such  notes  until the  principal  has been
recovered and are recognized as interest income  thereafter.  Impairment  losses
are charged  against the allowance  when all possible  means of collection  have
been exhausted and the potential for recovery is considered remote.

Revenue Recognition and Returns and Allowances

We  have  evaluated  our  product  offerings  in the  context  SAB  101  Revenue
Recognition and EITF 00-21 Revenue  Arrangements with Multiple  Deliverables and
have  determined  that  revenues  associated  with  the  multimedia  educational
materials (product sales) require  accounting  separate from the educational and
coaching  services  (services  revenue).  The fair value of these  offerings  is
established  through  separate  third party sales of each of these  products and
services.

Product  Sales:  We recognize  product sales upon  delivery to our students,  as
evidenced  by third  party  shipping  providers,  which is the  point  where the
student  assumes  ownership  and risk of loss.  Shipping  costs  are  billed  to
students and are  included as a component of revenue and cost of product  sales.
Returns are provided for based upon the Company's historical return experience.

Services Revenues: The Company's educational offering includes multiple sessions
with a  Company  employed  coach.  We  recognize  services  revenue  pro rata as
coaching/training  sessions are rendered.  Deferred revenue represents the price
of future coaching sessions that students have paid for  ($3,150,600),  less the
applicable commissions to lead generators and content providers ($1,228,739) and
sales commissions ($616,424).

Our  obligation to provide  coaching and training  ceases one year following the
sale.  Refunds for unused courses are not provided for in the sales  arrangement
with the student.  However, the Company offers refunds in certain  circumstances
for which a history has been developed to estimate and reserve such amounts.

RESULTS OF OPERATIONS

Three and six month periods ended June 30, 2004 and June 30, 2003.

Revenues

Revenues for the three months ended June 30, 2004 and 2003 were  $7,618,093  and
$6,992,995,  respectively,  which represents a 9% increase. Revenues for the six
months  ended June 30, 2004 were  $17,267,483,  and  $12,572,203,  respectively,
which represents a 37% increase.  The Company's  principal source of revenue for
the three  months ended June 30, 2004 and 2003  consisted of business  education
and coaching  services.  Revenues  increased  substantially in the first quarter
2004 (73% over the first  quarter of 2003) as a result of  increasing  the sales
staff and focusing on the offerings that, based upon our accumulated experience,
have the higher sales rate among our targeted  customer  base.  The slow down in
sales during the second quarter 2004 resulted from operations  being hampered by
the continued negotiations between the former principals of EPMG and the Company
and the efforts to split the Utah operations of our EPMG subsidiary.

We record  revenues for  multimedia  education  materials  (product  sales) upon
delivery of the  material  to our  students.  We record  revenues  for  coaching
sessions  rendered and we defer revenue for coaching  sessions that are paid for
but have not yet been rendered. Our total services revenue deferral as of June


                                       14


<PAGE>


30, 2004 was  $3,150,600  compared to $4,461,883 as of December 31, 2003.  These
deferred revenues are partially offset by lead splits and sales commissions paid
when funds are  received.  Our  deferral  as of June 30,  2004 was less than the
amount deferred as of December 31, 2003 as the number of open coaching  sessions
decreased.

Substantially  all of our  revenues  through June 30, 2004 were derived from our
EPMG subsidiary.  On September 26, 2003,  legal counsel  representing the former
principals of EPMG, who are currently employees of our EPMG subsidiary, notified
us with an allegation that they were entitled to rescind the 2001 acquisition of
EPMG.  The  notification  alleged that the former  principals  were defrauded in
connection  with  our  acquisition  of  EPMG,  Inc.  and that  they  would  seek
litigation to effect a rescission of the 2001 purchase.

On July 2, 2004, the Company entered into a Settlement Agreement with the former
principals of EPMG  pursuant to which the parties  agreed to settle all disputes
between them. Under the terms of the Settlement Agreement, the former principals
have  surrendered  to the  Company all of their  shares of capital  stock of the
Company, comprising 6,784,762 shares of common stock, 1,200,500 shares of Series
A Preferred  Stock,  and 80,000 shares of Series B Preferred  Stock, in exchange
for certain  assets of EPMG.  These assets  include  EPMG's rights under certain
credit card processing  contracts  (including  receivables  relating to reserves
under those contracts in the amount of approximately $1,000,000),  substantially
all of the tangible fixed assets of EPMG's Utah facility, and certain intangible
assets of EPMG, such as specified website domain names,  software,  and customer
lead data. (See Form 8-K report filed on July 19, 2004.)

Cost of Sales and Margins

Cost of sales for the three months ended June 30, 2004 and 2003 were  $3,590,016
and  $3,515,533,  respectively,  representing  gross margins of 52.9% and 49.7%,
respectively.  For the six months  ended June 30,  2004 and 2003,  cost of sales
were $8,101,675 and $6,062,425 respectively, representing gross margins of 53.1%
and 51.8%,  respectively.  Cost of sales include (i) the cost of the  multimedia
educational  materials that we ship to our students,  (ii) the wages paid to our
coaches and (iii) the  commissions  that we pay to lead  sources.  Our increased
gross profit margins reflect slight  decreases in our lead split and fulfillment
costs.

Selling Expenses

Selling  expenses  for the  three  months  ended  June 30,  2004  and 2003  were
$2,193,531 (28.8% of revenue) and $1,611,699  (23.0% of revenue),  respectively.
Selling expenses for the six months ended June 30, 2004 and 2003 were $4,078,989
(23.6% of revenue)  and  $3,066,817  (24.4% of revenue),  respectively.  Selling
expenses consisted  primarily of commissions paid to sales associates as well as
marketing and  advertising  expenses  associated with key products and services.
The overall  increase in selling expenses is attributed to the increase in sales
of products and services.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2004 and
2003 were  $1,601,454  (21.0% of revenue)  and  $1,763,167  (25.2% of  revenue),
respectively.  General and administrative expenses for the six months ended June
30, 2004 and 2003 were  $4,525,179  (26.2% of revenue) and $3,504,324  (27.9% of
revenue), respectively.  General and administration expenses consisted primarily
of salaries and wages, professional fees, rent, travel expenses, payroll taxes,


                                       15


<PAGE>


telephone  expenses and other general and  administrative  expenses necessary to
support  the   operations   of  the   Company.   The  decrease  in  general  and
administrative expenses was attributable to lower legal fees.

Other Income (Expense)

Other income, net of other expenses for the three months ended June 30, 2004 and
2003 was $46,529 and $(37,464),  respectively. For the six months ended June 30,
2004 and 2003,  other  income,  net of other  expenses was $112,443 and $24,035,
respectively.  The  increase  is  principally  attributable  to the  increase in
interest on our financing notes  receivable of $64,070 offset by the recognition
of $45,088 in interest and  penalties on late tax  payments,  for the six months
ended June 30, 2004.

Income Taxes

Our income tax provision amounted to $266,262 for the period ended June 30, 2004
and a benefit of $70,000 for the period  ended June 30,  2003.  For  purposes of
interim financial reporting,  the Company projects its effective income tax rate
for the entire fiscal year (39.5% for the six month period ended June 30, 2004),
taking into account all taxing  jurisdictions,  and applies such rate to interim
pre-tax income.  Changes in the projected effective tax rate in future quarters,
if any, are accounted for prospectively in the period of change.  Our income tax
for the quarterly  period ended June 30, 2003 was  different  than the statutory
rates applicable to our taxing jurisdictions because of valuation allowances and
non-deductible permanent differences (primarily income tax penalties).

Net Income

Our net income for the three and six months  ended  June 30,  2004  amounted  to
$169,171  and  $407,821,  respectively,  compared to $10,132 and $32,672 for the
three and six months ended June 30, 2003.  These increases were  attributable to
the matters discussed above.

LIQUIDITY AND CAPITAL RESOURCES

At June 30,  2004 we had  current  assets of  $8,420,593,  which  represents  an
increase of $1,851,964  over current assets as of December 31, 2003. Much of the
increase is attributable to an increase in cash. At June 30, 2004 we had cash on
hand of $4,959,208, which represents an increase of $1,068,279 over the balances
as of December 31, 2003.  Other material  increases in current  assets  resulted
from notes receivable and deferred income taxes. Notes receivable of $1,315,964,
as of June 30, 2004 is net of our  estimated  reserve of $359,018 for bad debts.
Gross  notes  receivable  were  $1,602,982  as of  June  30,  2004  compared  to
$1,507,358 as of June 30, 2003.

At June 30, 2004 we had current  liabilities of $7,582,455,  which represents an
increase of $1,493,542  over current  liabilities  as of December 31, 2003.  Our
current   liabilities  include  significant  amounts  associated  with  deferred
revenue,  commissions and reserves for returns.  These accounts  require complex
subjective  estimates.  Our net deferred  revenue of $1,305,437,  which will not
require cash  outlays,  decreased  $551,810  from the balance as of December 31,
2003. This decrease is attributable to our increase in our number of coaches and
associated  coaching  sessions  completed.  We are liable for commissions to our
sales force and to lead  providers.  These  commissions  payable,  included as a
component of accounts payable and accrued liabilities, are $1,746,892 as of June
30, 2004.

As June 30, 2004 our working  capital  increased to $838,139 from $479,176 as of
December 31,  2003.  We believe that our  operating  activities  in 2004 will be
sufficient to fulfill our obligations as they become due in the normal course of
business.


                                       16


<PAGE>


We have no material commitments for capital  expenditures.  Capital expenditures
in the quarter and six months ended June 30, 2004 were  $119,934  and  $189,766,
respectively.  We may require additional facilities and support equipment if our
growth rate continues at the current rate.

We have not  filed  our  2003 and 2002  Federal  and  State of Utah  income  tax
returns.  Combined  current income taxes payable for these periods are currently
estimated to be $224,306 and $513,936, respectively. Interest and penalties have
been recorded in the amount of approximately  $262,446.  The Company has engaged
an accountant who is in the process of preparing its past due returns.

We  currently  do not  have a stock  option  or  stock  purchase  plan.  We also
currently do not have any employee  benefit  plans that would require the use of
our securities.

EPMG TRANSACTION AND POSSIBLE FUTURE EFFECTS

On September 26, 2003, counsel representing the former principals of EPMG, Inc.,
who were then  employees  of EPMG,  Inc.,  notified  the Company  that they were
allegedly  entitled to rescind the Company's  2001  acquisition  of EPMG,  Inc.,
which  was  accomplished  in a  stock-for-stock  exchange,  accounted  for  as a
purchase  business  combination.   The  notification  alleged  that  the  former
principals were defrauded in connection with the Company's  acquisition of EPMG,
Inc.  and that they would seek  litigation  to effect a  rescission  of the 2001
purchase.

On July 2, 2004, the Company entered into a Settlement Agreement with the former
principals  pursuant to which the parties agreed to settle all disputes  between
them. Under the terms of the Settlement  Agreement,  the former  principals have
surrendered  to the Company all of their shares of capital stock of the Company,
comprising  6,784,762  shares  of  common  stock,  1,200,500  shares of Series A
Preferred  Stock, and 80,000 shares of Series B Preferred Stock, in exchange for
certain assets of EPMG.  These assets include EPMG's rights under certain credit
card  processing  contracts  (including  receivables  relating to reserves under
those contracts in the amount of approximately $1,000,000), substantially all of
the tangible fixed assets of EPMG's Utah facility, and certain intangible assets
of EPMG,  such as specified  website domain names,  software,  and customer lead
data. (See Form 8-K report filed on July 19, 2004.)

OFF BALANCE-SHEET ARRANGEMENTS

The Company has no material off-balance sheet arrangements as of June 30, 2004.


                                       17


<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

(a)  As of June 30,  2004,  the Chief  Executive  Officer  and  Chief  Financial
     Officer of the Company, with the participation of the Company's management,
     carried out an evaluation of the effectiveness of the Company's  disclosure
     controls and procedures pursuant to Exchange Act Rule 13a-14. Based on that
     evaluation,  the Chief Executive  Officer and the Chief  Financial  Officer
     believe that, as of the date of the  evaluation,  the Company's  disclosure
     controls and  procedures  are  effective  in making known to them  material
     information   relating  to  the   Company   (including   its   consolidated
     subsidiaries) required to be included in this report.

(b)  There  were no  changes  in the  Company's  internal  controls  or in other
     factors that could  significantly  affect internal  controls,  known to the
     Chief Executive Officer or the Chief Financial  Officer,  subsequent to the
     date of the evaluation.


                                       18


<PAGE>


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

SEC Investigation

On June 24, 2003 the Securities and Exchange  Commission ("SEC") issued a formal
order  of   investigation   with  respect  to  the  Company,   authorizing   the
investigation of certain  securities  matters  relating to the Company.  The SEC
staff has  taken the  testimony  of  certain  officers  of the  Company  and has
informed the Company that it intends to take additional testimony. The SEC staff
has also issued additional  requests for the voluntary  production of documents.
Prior to the  issuance  of the  order,  the  Company  had  voluntarily  provided
documents and  information to the SEC staff in response to informal,  non-public
inquiries by the staff.  The Company  intends to fully cooperate with the SEC in
its investigation.

Garn & Willis Settlement

On September 26, 2003, counsel representing the former principals of EPMG, Inc.,
who were then  employees  of EPMG,  Inc.,  notified  the Company  that they were
allegedly  entitled to rescind the Company's  2001  acquisition  of EPMG,  Inc.,
which was accomplished in a stock-for-stock  exchange.  The notification alleged
that the former  principals  were  defrauded in  connection  with the  Company's
acquisition  of EPMG,  Inc.  and that they  would  seek  litigation  to effect a
rescission of the 2001 purchase.

On July 2, 2004, the Company entered into a Settlement Agreement with the former
principals  pursuant to which the parties agreed to settle all disputes  between
them. Under the terms of the Settlement  Agreement,  the former  principals have
surrendered  to the Company all of their shares of capital stock of the Company,
comprising  6,784,762  shares  of  common  stock,  1,200,500  shares of Series A
Preferred  Stock, and 80,000 shares of Series B Preferred Stock, in exchange for
certain assets of EPMG.  These assets include EPMG's rights under certain credit
card  processing  contracts  (including  receivables  relating to reserves under
those contracts in the amount of approximately $1,000,000), substantially all of
the tangible fixed assets of EPMG's Utah facility, and certain intangible assets
of EPMG,  such as specified  website domain names,  software,  and customer lead
data. (See Form 8-K report filed on July 19, 2004.)


                                       19


<PAGE>


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

(b)  There has not been any  material  arrearage  in the payment of dividends on
     any preferred stock. The Company has withheld a dividend payment of 137,942
     shares  of  common  stock  payable  on  Series  A  Preferred  Stock  to two
     stockholders in connection with a dispute with such stockholders.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

          a.   Exhibits

               The  exhibits  required  by this item are  listed in the Index to
               Exhibits set forth at the end of this Form 10-QSB.

          b.   Reports on Form 8-K

          During the period covered by this report, the Company did not file any
          reports on Form 8-K.


                                       20


<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.


                                          INNOVATIVE SOFTWARE TECHNOLOGIES, INC.


Date:  August 23, 2004                    /s/ Peter M. Peterson
                                          --------------------------------------
                                          Peter M. Peterson
                                          Chief Executive Officer


                                          /s/ Christopher J. Floyd
                                          --------------------------------------
                                          Christopher J. Floyd
                                          Chief Financial Officer


                                       21


<PAGE>

                                INDEX TO EXHIBITS

EXHIBIT

NUMBER    DESCRIPTION
-------   ----------------------------------------------------------------------

10.1      Employment Contract for Peter M. Peterson,  Chief Executive Officer of
          Innovative Software Technologies, Inc.

10.2      Employment Contract for Christopher J. Floyd, Chief Financial Officer,
          Vice President Finance, and Corporate Secretary of Innovative Software
          Technologies, Inc.

31.1      Certification  of  Chief  Executive  Officer  of  Innovative  Software
          Technologies,  Inc.  pursuant to Rule  13a-15(e)  or  15d-15(e) of the
          Securities Exchange Act of 1934, as amended.

31.2      Certification  of  Chief  Financial  Officer  of  Innovative  Software
          Technologies,  Inc.  pursuant to Rule  13a-15(e)  or  15d-15(e) of the
          Securities Exchange Act of 1934, as amended.

32.1      Certification  of  Chief  Executive  Officer  of  Innovative  Software
          Technologies, Inc. pursuant to 18 U.S.C. 1350.

32.2      Certification  of  Chief  Financial  Officer  of  Innovative  Software
          Technologies, Inc. pursuant to 18 U.S.C. 1350.


                                       22