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


                                   FORM 10-QSB

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

                      For the Quarter Ended March 31, 2002

[ ] 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                (IRS Employer Identification No.)
of incorporation or organization)


                           204 NW Platte Valley Drive
                               Riverside, MO 64150
                    (Address of principal executive offices)

                                 (816) 583-8030
                           (Issuer's telephone number)



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 such shorter period that the Registrant was
required to file such report(s)), and (2) has been subject to such filing
requirements for the past 90 days.

                                    Yes X No

There were 48,307,512 shares of common stock, $0.001 par value, outstanding as
of May 7, 2002.


                                       1
<PAGE>



                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                                   FORM 10-QSB



                          QUARTER ENDED MARCH 31, 2002

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S>                                                                                                  <C>
                                                                                                    Page

                          PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

     Condensed Consolidated Balance Sheets - March 31, 2002 (Unaudited)
       and December 31, 2001..................................................................        3

     Condensed Consolidated Statements of Operations (Unaudited) for the
       Three Months Ended March 31, 2002 and 2001.............................................        4

     Condensed Consolidated Statements of Comprehensive Income for the
       Three Months Ended March 31, 2002 and 2001.............................................        5

     Condensed Consolidated Statement of Stockholders' Equity/(Deficiency) (Unaudited) for the
       Three Months Ended March 31, 2002......................................................        6

     Condensed Consolidated Statements of Cash Flows (Unaudited) for the
       Three Months Ended March 31, 2002 and 2001.............................................        7

     Notes to the Condensed Consolidated Financial Statements (Unaudited).....................        8

Item 2. Management's Discussion and Analysis of Financial Condition and
     Results of Operations....................................................................       16

                           PART II - OTHER INFORMATION

Item 2. Changes in Securities.................................................................       18

Item 6. Exhibits and Reports on Form 8-K......................................................       18

Signatures    ................................................................................       18

</TABLE>

                                       2
<PAGE>



PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>
<CAPTION>

                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                   (Unaudited)
                                                                                   March 31,      December 31,
                                                                                          2002            2001
                                                                                  -------------   --------------
                                     ASSETS
<S>                                                                                 <C>           <C>
Current Assets
     Cash...... .................................................................    $  148,240     $    282,307
     Accounts receivable, net of allowance for doubtful accounts
     of $16,000 and $4,000, respectively........................................        529,336           49,392
     Other receivables..........................................................          1,497            2,543
     Investments  - Available for sale..........................................        126,500          549,896
     Prepaid expenses...........................................................              -            6,571
     Other assets...............................................................        304,750                -
     Deferred income tax asset..................................................            812              812
                                                                                  -------------    --------------
         Total Current Assets...................................................      1,111,135          891,521
                                                                                  -------------    -------------
Property and Equipment, Net.....................................................        171,023           61,512
                                                                                  -------------    -------------
Other Assets
     Goodwill ..................................................................     13,549,932       13,549,932
     Other assets...............................................................              -           23,810
     Deposit  ..................................................................          4,491            4,491
     Deferred income tax asset - non-current....................................          2,908            2,908
                                                                                  -------------    -------------

Total Assets  ..................................................................  $  14,839,489    $  14,534,174
                                                                                  =============    =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
     Note payable - Line of credit..............................................  $      50,000    $           -
     Current maturities of long-term debt.......................................          8,003                -
     Trade accounts payable and accrued expenses................................        440,583          156,014
     Accrued federal and state income tax.......................................        134,674                -
     Reserve for sales returns and allowances...................................        100,000          100,000
                                                                                  -------------    -------------
         Total Current Liabilities..............................................        733,260          256,014
                                                                                  -------------    -------------

Long-term debt, net of current maturities.......................................         40,957                -
                                                                                  -------------    -------------

Stockholders' Equity
     Preferred stock - no par; $1.00 stated value; 25,000,000 shares authorized
       Series A preferred stock; 1,850,000 shares issued and outstanding........      1,850,000        1,850,000
       Series B preferred stock; 248,491 shares issued and outstanding..........        248,491          248,491
     Common stock - $0.001 par value; 60,000,000 shares authorized
       48,289,283 and 48,285,283 shares issued and outstanding, respectively....         48,289           48,285
     Additional paid-in-capital.................................................     12,640,875       12,626,679
     Accumulated comprehensive loss.............................................       (627,750)        (204,354)
     Accumulated deficit........................................................        (94,633)        (290,941)
                                                                                  -------------    --------------
Total Stockholders' Equity......................................................     14,065,272       14,278,160
                                                                                  -------------    -------------

Total Liabilities and Stockholders' Equity......................................  $  14,839,489    $  14,534,174
                                                                                  =============    =============
</TABLE>

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


                                       3
<PAGE>


<TABLE>
<CAPTION>


                     Innovative Software Technologies, Inc.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)




                                                                                         For the Three Months
                                                                                            Ended March 31,
                                                                                            2002        2001
<S>                                                                                <C>           <C>
Sales................................................                               $  2,794,696   $           -

Cost of Sales........................................                                  1,122,455               -
                                                                                    ------------   -------------

Gross Profit.........................................                                  1,672,241               -
                                                                                    ------------   -------------

Operating Expenses
     Selling.........................................                                    600,891           1,000
     General and administrative......................                                    742,070          17,831
                                                                                    ------------   -------------

     Total Operating Expenses........................                                  1,342,961          18,831
                                                                                    ------------   -------------

Income/(Loss) From Operations........................                                    329,280         (18,831)
                                                                                    ------------   --------------

Other Income.........................................                                      1,702               -
                                                                                    ------------   -------------

Net Income Before Income Taxes.......................                                    330,982               -
                                                                                    ------------   -------------

Income Tax Expense...................................                                    134,674              -
                                                                                    ------------   -------------

Net Income...........................................                               $    196,308   $     (18,831)
                                                                                    ============   ==============

Basic and Diluted Income per Share...................                               $       0.00             0.00
                                                                                    ============   ==============

Weighted Average Number of Common
 Shares Outstanding Used in Per Share
 Calculation - Basic and Diluted.....................                                 48,287,416       43,593,213
                                                                                    ============   ==============
</TABLE>


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


                                       4
<PAGE>
<TABLE>
<CAPTION>



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



                                                                          For the Three Months
                                                                           Ended March 31,
                                                                             2002          2001
                                                                       -----------  -------------
<S>                                                                   <C>          <C>
Net income/(loss)....................................                  $   196,308  $    (18,831)
Other comprehensive loss:
Unrealized loss on investments.......................                     (423,396)      (25,200)
                                                                       ------------ -------------
         .........
Comprehensive loss...................................                     (227,088)      (44,031)
                                                                       ============ =============

</TABLE>






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



                                       5
<PAGE>


<TABLE>
<CAPTION>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 2002
                                   (UNAUDITED)


                                                                                                                       Total
                                 Preferred Stock           Common Stock       Additional   Accumulated                 Stockholders'
                             -----------------------  ---------------------   Paid in      Compreh-      Accumulated   Equity
                              Shares       Amount       Shares      Amount    Capital      ensive loss   Deficit       (Deficit)
                             ---------   -----------  ----------  ---------  ------------  ------------  ------------  -------------

<S>                         <C>         <C>          <C>         <C>        <C>            <C>            <C>         <C>
Balance - December 31, 2001  2,098,491   $ 2,098,491  48,285,283  $ 48,285   $ 12,626,679   $(204,354)    $(290,941)   $ 14,278,160

Issuance of common stock
 for Services provided......         -             -      4,000          4         14,196           -            -           14,200

Unrealized loss
 on investments                      -             -           -         -              -    (423,396)            -        (423,396)

Net income for the
 three months ended
 March 31, 2002.............         -             -           -         -              -           -       196,308         196,308
                             ---------   -----------  ----------  --------   ------------  ----------   -----------    ------------

Balance - March 31, 2002.... 2,098,491   $ 2,098,491  48,289,283  $ 48,289   $ 12,640,875  $ (627,750)     $(94,633)   $ 14,065,272
                             ----------------------   ----------  --------   ------------  ----------   -----------    ------------

</TABLE>






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




                                       6
<PAGE>



<TABLE>
<CAPTION>
                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


                                                                                       For the Three Months
                                                                                          Ended March 31,
                                                                                   2002                    2001
                                                                              ---------------        ----------------
<S>                                                                      <C>                  <C>
Cash Flows From Operating Activities
 Net income/(loss)........................................................$        196,308     $         (18,831)
 Adjustments to reconcile net income/(loss) to net cash
 provided by operating activities:
   Depreciation and amortization...........................................         17,166                   630
   Allowance for doubtful accounts.........................................         12,000                     -
   Non-cash expenses.......................................................         14,200                     -
   Changes in operating assets and liabilities:
     Accounts receivable...................................................       (491,944)                    -
     Prepaid expenses......................................................          6,571                     -
     Other receivables.....................................................          1,046                     -
     Other Assets..........................................................       (280,940)                    -
     Accounts payable and accrued expenses.................................        284,569                     -
     Accrued federal and state income tax..................................        134,674                     -
                                                                           ---------------     -----------------

   Net Cash Used In Operating Activities...................................       (106,350)              (18,201)
                                                                           ---------------     ------------------

Cash Flows Used In Investing Activities
   Capital expenditures....................................................       (126,677)                   -
                                                                           ---------------     ----------------

   Net Cash Used In Investing Activities...................................       (126,677)                   -
                                                                           ----------------    ----------------

Cash Flows From Financing Activities
   Proceeds from borrowings under line of credit...........................         50,000                    -
   Proceeds from borrowing under note payable..............................         50,877                    -
   Repayments on notes payable.............................................         (1,917)               35,503
                                                                           ---------------     -----------------

   Net Cash Provided by Financing Activities...............................         98,960                35,503
                                                                           ---------------     -----------------

Net (Decrease)/Increase in Cash and Cash Equivalents.......................       (134,067)               17,302

Cash and Cash Equivalents at Beginning of Year.............................        282,307                   888
                                                                           ---------------     -----------------

Cash and Cash Equivalents at End of Period................................$        148,240     $          18,190
                                                                          ================     =================

Supplemental Cash Flow Information:
   Unrealized loss on securities available for sale.......................$       (423,396)    $               -
                                                                          ================     =================

</TABLE>


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



                                       7
<PAGE>




                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE A  -  COMPANY DESCRIPTION

       Innovative Software Technologies, Inc. (Innovative) is a software
       company, operating in one business segment, specializing in the
       aggregation and distribution of business-to-business and
       business-to-consumer eService platforms. Through its acquisition of
       Hackett Media, Inc. on April 16, 2001, the Company has four main products
       that consist of The Financial Toolkit 1.0, an integrated financial
       services educational program; Bizkit 1.0, a turnkey e-commerce solution
       targeted at small businesses which provides all the resources necessary
       to successfully plan, launch, and grow an online presence; Skills in
       Demand, an eLearning certification course catering to Information Systems
       and Internet Professionals; and etaxnet, a provider of online tax and
       consulting services.

       On April 16, 2001, Innovative, with immaterial net assets, acquired 100%
       of the outstanding common stock of Hackett Media, Inc. (Hackett). The
       acquisition resulted in the owners and management of Hackett having
       effective operating control of the combined entity after the acquisition,
       with the existing Innovative investors continuing as only passive
       investors. Accordingly, these condensed consolidated financial statements
       should be read in conjunction with the Company's financial statements and
       notes thereto included in the Form 8-K filed April 25, 2001, and Form
       8-K/A filed June 15, 2001.

       Under accounting principles generally accepted in the United States, the
       above noted acquisition is considered to be a capital transaction in
       substance, rather than a business combination. That is, the acquisition
       is equivalent to the issuance of stock by Hackett for the net monetary
       assets of Innovative, accompanied by a recapitalization, and is accounted
       for as a change in capital structure. Accordingly, the accounting for the
       acquisition is identical to that resulting from a reverse acquisition,
       except that no goodwill intangible is recorded. Under reverse takeover
       accounting, the post reverse-acquisition comparative historical financial
       statements of the "legal acquirer" (Innovative Software Technologies),
       are those of the "legal acquiree" (Hackett) (i.e. the accounting
       acquirer). The Securities and Exchange Commission requires that capital
       transactions consummated after year end but prior to the issuance of the
       consolidated financial statements should be given retroactive effect as
       if the transaction had occurred on December 31, 2000.

       On December 31, 2001, the Company purchased all of the outstanding shares
       of Energy Professional Marketing Group, Inc.'s (EMPG), a technology
       marketing company specializing in product fulfillment for outside vendors
       and technology and database marketing, based in Orem, UT. In connection
       with the acquisition, the Company issued 1,500,000 and 3,529,412 of
       Series A preferred and common shares, respectively.





                                       8
<PAGE>




                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


       NOTE A  -  COMPANY DESCRIPTION - Continued

       The purchase price for the acquisition above has been allocated on the
       basis of the fair value on the acquisition dates as follows:
<TABLE>
<CAPTION>


         Assets acquired:
         <S>                                                       <C>
         Goodwill...............................................    13,549,932
         Net assets acquired....................................        25,068
                                                                ---------------

         Total Assets Acquired..................................    13,575,000
                                                                ==============

         Total Purchase Price...................................    13,575,000
                                                                ==============

</TABLE>

       The acquisition described above was accounted for as a purchase
       transaction in accordance with Statements of Financial Accounting
       Standards No. 141 (SFAS 141), "Business Combinations," and, accordingly,
       the results of operations and assets and liabilities of the acquired
       company are included in the consolidated financial statements from their
       respective acquisition dates.

       A summary of the company's significant accounting policies applied in the
       preparation of the accompanying financial statements follows.

        NOTE B - SUMMARY OF ACCOUNTING POLICIES

1.       Interim Condensed Financial Statements

         The accompanying condensed consolidated financial statements are
         unaudited. In the opinion of management, all necessary adjustments
         (which include only normal recurring adjustments) have been made to
         present fairly the financial position, results of operations and cash
         flows for the periods presented. Certain information and disclosures
         normally included in financial statements prepared in accordance with
         accounting principles generally accepted in the United States have been
         condensed or omitted. Accordingly, these condensed consolidated
         financial statements should be read in conjunction with the Company's
         financial statements and notes thereto included in the Form 10-KSB
         dated December 31, 2001. The results of operations for the three months
         ended March 31, 2002 are not necessarily indicative of the operating
         results to be expected for the full year.

2.       Recent Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
         Statement of Financial Accounting Standards ("SFAS") 141, Business
         Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is
         effective for all business combinations completed after June 30, 2001.
         SFAS 142 is effective for fiscal years beginning after December 15,
         2001; however, certain provisions of this Statement apply to goodwill
         and other intangible assets acquired between July 1, 2001 and the
         effective date of SFAS 142. Major provisions of these Statements and
         their effective dates for the Company are as follows:



                                       9
<PAGE>


                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


     o    All business  combinations  initiated after June 30, 2001 must use the
          purchase  method of  accounting.  The pooling of  interests  method of
          accounting is prohibited except for transactions initiated before July
          1, 2001.
     o    Intangible assets acquired in a business  combination must be recorded
          separately from goodwill if they arise from contractual or other legal
          rights or are  separable  from the  acquired  entity  and can be sold,
          transferred,  licensed, rented or exchanged, either individually or as
          part of a related contract, asset or liability.
     o    Goodwill, as well as intangible assets with indefinite lives, acquired
          after June 30, 2001,  will not be  amortized.
     o    Effective  January 1, 2002,  all  previously  recognized  goodwill and
          intangible  assets with indefinite  lives will no longer be subject to
          amortization.
     o    Effective  January  1,  2002,  goodwill  and  intangible  assets  with
          indefinite  lives will be tested for impairment  annually and whenever
          there is an impairment indicator.
     o    All acquired goodwill must be assigned to reporting units for purposes
          of impairment testing and segment reporting.

         On January 1, 2002, the Company adopted SFAS 142 and as required
         discontinued amortization of goodwill and certain intangible assets
         determined to have indefinite useful lives acquired prior to July 1,
         2001. This statement also required that within the first interim period
         of adoption, the intangible assets with indefinite lives should be
         tested for impairment as of the date of adoption, and that if any
         impairment results, it should be recognized as a change in accounting
         principle. Additionally, SFAS 142 requires that, within six months of
         adoption, goodwill be tested for impairment at the reporting unit level
         as of the date of adoption. If any impairment is indicated to have
         existed upon adoption, it should be measured and recorded before the
         end of the year of adoption. SFAS 142 requires that any goodwill
         impairment loss recognized as a result of initial application be
         reported in the first interim period of adoption as a change in
         accounting principle and that the income per share effects of the
         accounting change be separately disclosed. The Company has not yet
         determined the effect of these new impairment tests related to goodwill
         on its consolidated financial position or results of operations.

         In August 2001, the FASB issued SFAS 143, Accounting for Asset
         Retirement Obligations. SFAS 143 applies to all entities, including
         rate-regulated entities, that have legal obligations associated with
         the retirement of a tangible long-lived asset that result from
         acquisition, constructions or development and (or) normal operations of
         the long-lived asset. The application of this Statement is not limited
         to certain specialized industries, such as the extractive or nuclear
         industries. This Statement also applies, for example, to a company that
         operates a manufacturing facility and has a legal obligation to
         dismantle the manufacturing plant and restore the underlying land when
         it ceases operation of that plant. A liability for an asset retirement
         obligation should be recognized if the obligation meets the definition
         of a liability and can be reasonable estimated. The initial recording
         should be at fair value. SFAS 143 is effective for financial statements
         issued for fiscal years beginning after June 15, 2002, with earlier
         application encouraged. The provisions of the Statement are not
         expected to have a material impact on the financial condition or
         results of operations of the Company.

         In August 2001, the FASB issued SFAS 144, Accounting for the Impairment
         or Disposal of Long-Lived Assets. SFAS 144 retains the existing
         requirements to recognize and measure the impairment of long-lived
         assets to be held and used or to be disposed of by sale. However, SFAS
         144 makes changes to the scope and certain measurement requirements of
         existing accounting guidance. SFAS 144 also changes the requirements
         relating to reporting the effects of a disposal


                                       10
<PAGE>


                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

         or discontinuation of a segment of a business. SFAS 144 is effective
         for financial statements issued for fiscal years beginning after
         December 15, 2001 and interim periods within those fiscal years. The
         adoption of this Statement did not have a significant impact on the
         financial condition or results of operations of the Company.

3.       Principles of Consolidation

         The accompanying consolidated balance sheet includes the accounts of
         Innovative Software Technologies, Inc. and the accounts of its
         wholly-owned subsidiary Energy Professional Marketing Group, Inc.
         (EPMG) as of and for the quarter ended March 31, 2002. All significant
         intercompany transactions and balances have been eliminated in
         consolidation.

4.       Revenue Recognition

         The Company recognizes revenue in accordance with Statement of Position
         97-2, Software Revenue Recognition, which states that revenue is
         recognized after delivery of the product. In most cases this occurs the
         same day payment is received from our customers. The Company also
         reserves for sales returns and allowances based upon historical
         experience.

         The Company provides support services for some of its products. The
         associated revenue is recognized over the term of the sessions which
         are typically six weeks in duration.

5.       Investments in Equity Securities

         All equity securities are classified as available-for-sale. These
         securities have been adjusted to their fair market value based upon
         quoted market prices. Unrealized holding gains and losses are reported
         as a separate component of Stockholder's equity. Unrealized holding
         losses amounted to $627,750 and $204,354 as of March 31, 2002 and
         December 31, 2001, respectively. Investments consist of 75,000 shares
         of common stock of Ensurge, Inc. and 1,900,000 shares of common stock
         of Knowledge Transfer Systems, Inc.

6.       Property and Equipment

         Property and equipment are stated at cost, net of accumulated
         depreciation. Depreciation is recognized using the straight-line method
         over the estimated useful lives of the assets, which range from three
         to seven years. Leasehold improvements are amortized using the
         straight-line method over the lesser of the estimated useful lives or
         remaining lease term.

7.       Use of Estimates

         To comply with accounting principles generally accepted in the United
         States, the Company makes estimates and assumptions that effect the
         amounts reported in the financial statements and disclosures made in
         the accompanying notes. Estimates are used for, but not limited to
         reserves for product returns, the collectibility of accounts receivable
         and deferred taxes. The Company also uses estimates to determine the
         remaining economic lives and carrying value of goodwill and fixed
         assets. Despite our intention to establish accurate estimates and
         assumptions, actual results may differ from our estimates.




                                       11
<PAGE>


                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


8.       Software Development Costs

         In accordance with Statement of Financial Accounting Standards, or SFAS
         No. 86, "Accounting for Costs of Computer Software to be Sold, Leased,
         or otherwise Marketed," software development costs are expensed as
         incurred until the product is available for general release to
         customers. To date, the Company's software has been available for
         general release concurrent with the establishment of technological
         feasibility and, accordingly, no developments costs have been
         capitalized.

         The Company capitalizes costs related to the development of computer
         software developed or obtained for internal use in accordance with the
         American Institute of Certified Public Accountants Statement of
         Position 98-1, "Accounting for the Costs of Computer Software Developed
         or Obtained for Internal Use." Costs incurred in the application
         development phase are capitalized and amortized over their useful life,
         not to exceed five years.

9.       Advertising Costs

         Advertising and promotion costs are expensed as incurred. Advertising
         costs charged against income for the three months ended March 31, 2002
         and 2001, were approximately $144,000 and $1,000, respectively.

10.      Impairment and Long-term Assets

         The Company will regularly perform reviews to determine if the carrying
         values of our long-lived assets are impaired. The reviews look for the
         existence of facts or circumstances, either internal or external, which
         indicate that the carrying value of the asset cannot be recovered.
         There have been no events or circumstances indicating the possible
         impairment of our long-lived asset as of March 31, 2002.

NOTE C - MARKETABLE SECURITIES

The Company currently holds two marketable securities, which the Company
acquired in connection with strategic business transactions and relationships.
Our available-for-sale equity securities are carried at fair value and
unrealized gains or losses are included in stockholders' equity. The Company
held the following marketable securities at March 31, 2002 and December 31,
2001. The cost basis of our marketable securities reflects adjustments for other
than temporary impairments in value as well as sales of securities.



                                       12
<PAGE>


<TABLE>
<CAPTION>

                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


   Available-for-sale Equity           Cost                 Gross Unrealized        Estimated
   Securities                          Basis            Gains             Losses    Fair Value

   December 31, 2001
   <S>                             <C>              <C>              <C>            <C>
   EnSurge, Inc. common stock       $   26,250       $         -      $  (25,950)    $     300
   KT Solutions common stock           728,000            10,500        (188,904)      549,596
                                    ----------       -----------      ----------     ---------

                                     $ 754,250       $    10,500       $(214,854)    $ 549,896
                                     =========       ===========      ==========     =========

   March 31, 2002
   EnSurge, Inc. common stock       $   26,250       $         -      $  (26,100)    $     150
   KT Solutions common stock           728,000                 -        (601,650)      126,350
                                    ----------       -----------      ----------     ---------

                                     $ 754,250       $         -       $(627,750)    $ 126,500
                                    ==========       ===========      ==========     =========

</TABLE>


The KT Solutions common stock was received in consideration for the sale of four
software coaching platforms to Ensurge, Inc. These securities were recorded at a
30% discount due to restrictions and limitations contained in Rule 144 of the
Securities and Exchange Commission. The primary restriction relates to the one
year holding period of the securities after the effective date of sale.

These securities we hold are traded on the OTC Bulletin Board. All of our
marketable securities are stocks of high technology companies whose market
prices have been extremely volatile. The market prices of these companies'
stocks have declined substantially the past two years. The market prices of
these stocks could continue to decline. These declines could result in a
material reduction in the carrying value of these assets and have a negative
impact on our operating results and financial condition. If our
available-for-sale securities experience further declines in fair value that are
considered other than temporary, the Company will reflect the additional loss in
our net income in the period when subsequent permanent impairment becomes
apparent.

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, net of accumulated depreciation.
Depreciation is recognized using the straight-line method over the estimated
useful lives of the assets, which range from 3 to 7 years. Leasehold
improvements are amortized using the straight-line method over the lesser of the
estimated useful lives or remaining lease term. Property and equipment consist
of the following:
<TABLE>
<CAPTION>
                                                                       March 31,     December 31,
                                                                        2002            2001
                                                                ----------------   --------------
         <S>                                                   <C>                <C>
         Machinery and Equipment................................$      162,973     $       55,615
         Furniture and Fixtures.................................        37,775             18,740
         Computer Software......................................         5,951              5,667
         Leasehold improvements.................................         2,877              2,877
                                                                --------------     --------------
         .......................................................       209,576             82,899
         Less: Accumulated depreciation.........................       (38,553)           (21,387)
                                                                ---------------    --------------

         Net Property and Equipment.............................$      171,023     $       61,512
                                                                ==============     ==============

</TABLE>

        Depreciation and amortization expense for the three months ended
           March 31, 2002 and 2001 was $17,166 and $630 respectively.




                                       13
<PAGE>

                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

NOTE E - NOTES PAYABLE
                                                                                      March 31,      December 31,
                                                                                        2002             2001
                                                                                   --------------  ---------------
      Notes payable, financial institution, principal and accrued interest at
      7.78% payable in monthly installments of principal and interest of $217 to
      $655 maturing from
      <S>                                                                               <C>                     <C>
      November 2006 to February 2007                                                    48,960                   -
                                                                                     ---------           ---------
                                                                                        48,960                   -
      Less Current Portion                                                               8,003                   -
                                                                                     ---------           ---------

      Notes Payable - Long-Term                                                       $ 40,957             $     -
                                                                                     =========           =========
</TABLE>

The Company has an unsecured line of credit facility with a financial
institution for borrowings up to $50,000. Borrowings under the line bear
interest at Prime plus 2% (the Prime rate of interest as of March 31, 2002 was
4.75%). As of March 31, 2002, there was no available credit on the facility.

NOTE F - Capital Transactions

Stock-split - Innovative's Board of Directors authorized a three-for-one stock
split on July 11, 2001. This was affected by distributing a 200% stock dividend
on August 10, 2001 to stockholders of record on July 31, 2001. All share and per
share amounts referred to in the financial statements and notes have been
restated to reflect this stock split.

Stock issued for services - The Company issued 4,000 shares of its common stock
at a fair market value of $3.55 per share on February 12, 2002. Shares were
issued as compensation expense for the quarter ended March 31, 2002.

Finance Agreement - The Company has financed its operation to date primarily
through a Finance Agreement of convertible debt and securities. The Finance
agreement calls for financing of up to $2.5 million of which $1 million would be
received in increments in 2001, if necessary, and the remaining $1.5 million
would be received based upon the Company's performance. As of March 31, 2002,
$700,000 of the initial $1 million investment was received by the Company. These
proceeds were converted to equity securities during 2001.

During the fourth quarter 2001, all of the common shares issued in connection
with the conversion of debt in connection with the Finance Agreement above were
reissued as Series A preferred shares and common shares as follows: Of the
initial $700,000 invested in 2001, $350,000 was converted to Series A preferred
shares at a stated value of $1 per share. The remaining $350,000 was reissued as
700,000 shares of common stock at $0.50 per share.

NOTE G - Related Party Transactions

On December 31, 2001, a company executive and shareholder converted a note
payable amounting to $248,491 to Series B preferred stock at a conversion rate
of a $1 per share stated value. There was no formal maturity date and there was
no interest associated with the note.



                                       14
<PAGE>

                     Innovative Software Technologies, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

During 2001,  the Company sold four software  platforms to  NowSeven.com,  Inc.,
Ziabon,  Inc., SF Acquisition Corp., Inc., and Ishopper Internet Services,  Inc.
in exchange for investment securities amounting to $308,000,  133,000,  147,000,
and 140,000,  respectively.  The  President and Chief  Executive  Officer of the
Company is the former  President and Chief Executive  Officer of Ensurge,  Inc.,
which is the parent company of the above wholly-owned subsidiaries listed above.

NOTE H - COMMITMENTS AND CONTINGENCIES

In March and May 2002, the Company entered into operating leases for certain
office space. Future minimum lease payments under these operating leases as of
March 31, 2002 are as follows:
<TABLE>
<CAPTION>
                  Year Ending December 31:
                  <S>                                                           <C>    <C>    <C>    <C>    <C>    <C>
                  2002...........................................................$   91,167
                  2003...........................................................   140,600
                  2004...........................................................   140,600
                  2005...........................................................    49,433
                  2006...........................................................         -
                                                                                 ----------

                  Total.......................................................... $ 421,800
                                                                                  =========
</TABLE>

Rent expense for the three months ended March 31, 2002 and 2001 was
approximately $21,000 and $0, respectively.

NOTE I - PENDING ACQUISITION

On March 12, 2002, the Company signed a definitive agreement to acquire iCrypt,
Inc., a Torrance, California, technology company that has developed a suite of
email encryption software products for both corporate and consumer markets, for
$10,000,000 in restricted preferred stock and the Company's common stock. The
closing of this acquisition is contingent upon due diligence findings and the
ability of the companies to meet certain terms and conditions precedent to
close. There is no assurance that this transaction will be consummated.


                                       15
<PAGE>





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

     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, which could cause actual results to differ
materially from those projected. 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.


Results of Operations for the Three Months Ended March 31, 2002 compared to
Three Months Ended March 31, 2001

Revenues

Sales for the three months ended March 31, 2002 and 2001 were $2,794,696 and $0,
respectively, which represents a significant increase from the prior period. The
company's principal source of revenue for the three months ended March 31, 2002
consisted of product sales. The main reason for the increase in product sales
can be attributed to the acquisition of EPMG as of December 31, 2001. This
wholly-owned subsidiary of the Company accounted for $2,007,230 in sales of
existing products and services for the three months ended March 31, 2002.


Cost of Sales

Cost of sales for the three months ended March 31, 2002 and 2001 was $1,122,455
and $0, respectively. Cost of sales for the three months ended 2002 represented
costs associated with the generation of sales leads and the providing of
coaching services to customers that purchase our products. The main reason for
the increase in cost of sales can be attributed to the acquisition of EPMG as of
December 31, 2001. This wholly-owned subsidiary accounted for $997,243 in cost
of sales of existing products and services for the three months ended March 31,
2002.


Selling

     Selling expenses for the three months ended March 31, 2002 and 2001 were
$600,891 and $1,000, respectively. These costs consisted primarily of marketing
and advertising expenses associated with key products and commissions. The
advertising and marketing expenses within the current period consisted primarily
of expenses related to internet marketing and sales commissions. The main reason
for the increase in selling costs can be attributed to the acquisition of EPMG
as of December 31, 2001. This wholly-owned subsidiary accounted for $364,352 in
sales commissions and advertising for the three months ended March 31, 2002.


General and Administrative

     General and administrative expenses for the three months ended March 31,
2002 and 2001 were $742,070 and $17,831, respectively. The Company's general and
administration expenses during 2002 and 2001 consisted primarily of salaries and
wages, professional fees, rent, travel expenses, payroll taxes, telephone
expenses and other general and administrative expenses necessary to support the
operations of EPMG in the current period.


                                       16
<PAGE>

Depreciation and Amortization

     Depreciation and amortization expense for the three months ended March 31,
2002 and 2001 was $17,166 and $630, respectively. Depreciation and amortization
expense increased primarily as a result of the additions of computer equipment
and furniture and fixtures.


Income Tax Expense

     The Company recorded a tax expense from continued operations of $134,674
and $0 for the three months ended March 31, 2002 and 2001, respectively. The tax
expense in the current period reflects the recording of federal and state taxes
at an effective annual rate of 41%.

Liquidity and Capital Resources

     At March 31, 2002, cash was $148,240, a decrease of $134,067 from December
31, 2001. Cash flow used in operations was $106,350 for the three months ended
March 31, 2002. The primary reason for the negative operating cash flow for the
three months ended March 31, 2002, can be attributed to the increase in the
account receivable balance during the current quarter. This was primarily due to
temporary delays in credit card processing. Other assets increased approximately
$280,940 for the quarter ended March 31, 2002. This was primarily due to credit
card processors, utilized by the Company, holding additional funds as a reserve
for the significant volume increase in credit card transactions. In addition,
the Company received proceeds from a line of credit facility during the current
quarter amounting to $50,000. Also, the Company entered into three term loans
during the quarter amounting to $50,878 to purchase vehicles. Stockholders'
equity amounts to $14,065,272 as of March 31, 2002.

     The Company was financed, during 2001, primarily through a Finance
Agreement of convertible debt and securities. The Finance agreement called for
financing of up to $2.5 million of which $1 million would be received in
increments in 2001, if necessary, and the remaining $1.5 million would be
received based upon the Company's performance, as defined in the agreement. As
of December 31, 2002, $700,000 of the initial $1 million investment was received
by the Company. These proceeds were converted to equity securities during 2001.
No amounts were advanced to the Company in the current quarter.

     In addition, during 2001, all of the common shares issued in connection
with the Finance Agreement above were reissued as Series A preferred shares and
common shares as follows: Of the initial $700,000 invested in 2001, $350,000 was
converted to Series A preferred shares at a stated value of $1 per share. The
remaining $350,000 was reissued as 700,000 shares of common stock at $0.50 per
share.

     The Company also issued 4,000 shares of its common stock for various
services provided during the current quarter ended 2002.

     The company expects that its existing cash resources, cash flow generated
from operations, and available financing will be sufficient to meet its
operating requirements and ordinary capital spending needs going forward.
However, the Company will continue to seek additional sources of capital for
expansion and possible acquisitions either through its existing Finance
Agreement or through private placements of equity securities.



                                       17
<PAGE>



PART II -     OTHER INFORMATION

Item 1.  Legal Proceedings

                None

Item 2.  Changes in Securities

       The company in the current quarter issued 4,000 shares of common stock as
compensation expense. These securities were issued under the exemption provided
by Section 4(2) of the Securities Act of 1933.


Item 4.  Submission of Matters to a Vote of Security Holders

              None

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

              None


OTHER ITEMS

     There were no other items to be reported under Part II of this report.


                                   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:        May 7, 2002         /s/ Douglas S. Hackett
                                 --------------------------
                                 Douglas S. Hackett
                                 President, Chief Executive Officer and Director



                                       18
<PAGE>