UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, ~~2009~~2010

(As filed on September 29, 2014)

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER: 000-1084047

INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

DELAWARE	26-1469061
(State or Other Jurisdiction of Incorporation or Organization	(I.R.S. Employer Identification No.)
1413 S. Howard Avenue, Suite 220 Tampa, Florida	33606-7102
2802 North Howard Avenue, Tampa, Florida 33607	33607-2623
(Address of Principal Executive Offices)	(Zip Code)

(813) ~~387~~920 - ~~3310~~9435

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Name of each exchange on which registered:
Common Stock, par value $0.001 per share		The NASDAQ Capital Market

Title of each class:		Name of each exchange on which registered:
Not Applicable		Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of Class)

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 o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to the Form 10-K. o.

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

~~State~~Indicate ~~issuer's~~by ~~revenues~~check ~~for~~mark whether the registrant has submitted electronically and posted on its ~~most~~corporate ~~recent~~Web ~~fiscal~~site, ~~year:~~if ~~$357~~any,~~746~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

AsIndicate ofby ~~June~~checkmark ~~30,~~whether ~~2009,~~ the registrant ~~had~~is ~~issued~~a ~~and~~large ~~outstanding~~accelerated ~~103~~filer,~~514~~ an accelerated filer,~~199 shares~~ ofa ~~its~~non-accelerated ~~common~~filer ~~stock~~or a smaller reporting company (as defined in Rule 12b-2 of the Act).

Large Accelerated Filer o		Accelerated Filer o

Non-Accelerated Filer o		Smaller reporting company x

State issuer's revenues for its most recent fiscal year: $-0-

As of September 12, 2014, the registrant had issued and outstanding 218,746,392 shares of its common stock.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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Explanatory Note

This Annual Report on Form 10-K for the fiscal year ended March 31, 2010, is being filed by the Company after its due date. We intend to file the Annual Reports on Form 10-K for the fiscal years ending March 31, 2011, March 31, 2012, March 31, 2013 and March 31, 2014 within the next 90 days. Our inability to timely file these reports was due to a lack of a business and revenues to fund compliance, high turnover in management and the lack of full-time, ongoing personnel to perform the compliance.

The Company is not current in its required filings under the Exchange Act. The Company has determined that it can best provide current and accurate information to investors and shareholders by focusing the Company’s efforts on seeking to first file all past due Annual Reports on Form 10-K and then either filing all past due Quarterly Report on Form 10-Q or seeking relief from such compliance from the Commission on the basis of the past due Annual Reports on Form 10-K being filed.

Certain Definitions

The following terms used in this Annual Report on Form 10-K have the following meanings:

“Cloud Based” means a computer network, whether Internet based or an internal, private network, that allows users to remotely, securely access software (especially databases) or other network applications and utilities.

“Company,” ‘we,’ “our,” “us,” “Innovative” and “Registrant” mean Innovative Software Technologies, Inc., a Delaware corporation.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Small and Midsized Enterprise” or “SME”: A small enterprise is a company that typically has less than 100 employees and less than $50 million in annual gross revenues, and a midsized enterprise is typically a company with 100 to 1,000 employees and annual gross revenues in excess of $50 million.

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TABLE OF CONTENTS

PART I
Item 1.	Description of Business	3
Item 2.	Properties	8
Item 1A.	Risk Factors	6
Item 3.	Legal Proceedings	8
Item 1B.	Unresolved Staff Comments	7
Item 4.	Submission of Matters to a Vote of Security Holders	8
Item 2.	Properties	7
Item 3.	Legal Proceedings	7
Item 4.	Mine Safety Disclosures	7
PART II
Item 5.	Market For Registrant’s Common Equity and Related Stockholder Matters	98
Item 6	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 8.	Financial Statements	20
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	14
Item 9	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	42
Item 8.	Financial Statements	15
Item 9A.	Controls and Procedures	42
Item 9	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	35
Item 9B.	Other Information	42
Item 9A.	Controls and Procedures	35
Item 9B.	Other Information	36
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	4337
Item 11.	Executive Compensation	4440
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4643
Item 13.	Certain Relationships and Related Transactions, and Director Independence	4744
Item 14.	Principal Accountant Fees and Services	4846
Item 15.	Exhibits	48
PART IV
	Signatures	50
Item 15.	Exhibits; Financial Statements and Schedules	47
	Signatures	49

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CAUTIONARY STATEMENTS ABOUT FORWARD LOOKING INFORMATION AND STATEMENTS

~~Statements~~This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, which forward looking statements are contained mainly in ~~this~~the ~~annual~~sections ~~report~~entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to be "materially different from any future results, performance and achievements expressed or implied by the forward-looking statements." Forward-looking statements also include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this annual report, including the risks described under "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this annual report and in other filings we make with the ~~SEC.~~Securities ~~Any forward-looking statements speak only as of the date on which they are made,~~ and weExchange doCommission ~~not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this annual report.~~(“Commission”)

You should read this Annual Report on Form 10-K and any documents filed as exhibits thereto completely and with the understanding that our actual future results may be materially different from what we expect.

Forward-looking statements consist of words such as “expect,” “believe,” “anticipate,” “could,” “target,” “project,” “intend,” “plan,” “seek,” “estimate,” “may,” and “continue,” as well as variations of such words and similar expressions, also identify forward-looking statements. The forward-looking statements in this report are subject to additional risks and uncertainties, including those set forth in Item 1A — “Risk Factors” and those detailed from time to time in our other filings with the Commission. These forward-looking statements are made only as of the date hereof and, except as required by law, we undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

~~OVERVIEW~~Overview

WeBusiness. During ~~were~~the ~~incorporated~~fiscal inyear ~~the~~ended ~~State~~on ofMarch ~~California~~31, in2010 ~~May~~(“FY2010”), ~~1998~~we ~~under~~had ~~the~~no ~~name~~business ~~"Innovative~~or ~~Software~~revenue ~~Technologies,~~generating ~~Inc~~operations." OnWe ~~November~~unsuccessfully ~~30,~~sought ~~2007,~~to westart ~~were~~or ~~incorporated~~acquire insoftware ~~the~~and ~~State~~software ofservices ~~Delaware~~based ~~under~~companies. These ~~the~~target ~~name~~companies ~~“Innovative~~would ~~Software~~either ~~Technologies,~~produce ~~Inc.”~~software ~~Immediately~~programs ~~prior~~that torun ~~the~~on ~~acquisition~~desktop ofcomputers, ~~AcXess~~laptop computers, ~~Inc.~~tablets, ~~(“AcXess”)on~~smart ~~June~~cellular ~~26, 2006,~~telephones weand ~~had~~similar ~~nominal~~consumer ~~assets~~devices ~~and~~or ~~revenues~~produce ~~and~~software noprograms ~~business~~used ~~operations~~in Internet or internal computer networks (including Cloud Based applications) for either consumers or businesses.

During FY2010, we did not identify a potential acquisition or business or asset to acquire or start under our current operation plan, which was capable of being amended from time to time in response to circumstances, technological changes, funding prospects and our business and financial condition and status as a reporting company under the Exchange Act. Any potential acquisition candidate had to be able to demonstrate

§ A sustainable competitive advantage in a niche market with growth potential in either SME business software applications market, consumer software applications (whether entertainment, data organization, Social Media or any other mainstream consumer applications), or a Cloud Based database or information management software product;

§ A value proposition that is simple to articulate and present to potential investors and funding sources; and

§ A strong and committed management team.

In FY2010, we sought to acquire any suitable companies by utilizing our common stock and/or by raising additional capital for operating expenses, if required, from banks, financial institutions and investors. Due to the lack of any active market in our common stock, the low price of our common stock and lack of a revenue generating business, we were unable to acquire an operating business as contemplated by our operations plan. We also did not have any funding or financing in place to acquire an operating business and our ability to obtain such funding or financing was and remains s dependent on a number of factors, which are described in Item 1A Risk Factors below.

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Business: Recent Developments.

Prior to FY2010 - History and Development. We were incorporated in the State of California in May 1998 under the name "Innovative Software Technologies, Inc." On November 30, 2007, we were reincorporated in the State of Delaware under the name “Innovative Software Technologies, Inc.” (“Innovative”, the “Company", “we”, “us”, “our”). Immediately prior to the acquisition of AcXess, Inc. (“AcXess”) on June 26, 2006, we had nominal assets and revenues and no business operations.

Innovative commenced business on April 16, 2001, when it acquired 100% of the outstanding common stock of Triad Media, Inc. ("Triad"), formerly known as Hackett Media, Inc. ("Hackett"), in a share exchange transaction. The acquisition resulted in the owners of Hackett holding 90% of our outstanding capital stock and having effective operating control of the combined entity after the acquisition. As a result of this acquisition, our primary business consisted of Internet sales and marketing.

On December 31, 2001, we purchased all of the outstanding shares of Energy Professional Marketing Group, Inc. ("EPMG"), a technology marketing company based in Provo, Utah specializing in product fulfillment for outside vendors and technology and database marketing. In connection with the acquisition, we issued 1,500,000 and 3,529,412 of Series A preferred and common shares, respectively. Following the purchase, EPMG became our wholly owned subsidiary.

On September 26, 2003, the former principals of EPMG alleged in writing that they were entitled to rescind the 2001 acquisition of EPMG. On July 2, 2004, we entered into a Settlement Agreement with the former principals of EPMG under the terms of which the former principals surrendered all of their 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 and liabilities of EPMG. Subsequent to the settlement agreement, the former principals, through "Prosper, Inc.", their new business, filed an action against us for breach of the Settlement Agreement related to certain reserve liabilities. On February 6, 2007, we entered into a Settlement Agreement and Mutual Release with Prosper, Inc. pursuant to which we agreed to pay Prosper, Inc. $10,000 in consideration for our release and dismissal of this action.

In October 2004 we relocated our corporate headquarters from Kansas City, Missouri, to Tampa, Florida.

On April 20, 2005, we entered into a stock purchase agreement with Douglas S. Hackett for the sale to Mr. Hackett of all common shares of our subsidiary, Triad, in exchange for the surrender by Mr. Hackett of 4,935,015 shares of our common stock held by him. Since the transaction ~~involves~~involved receipt of our common stock in exchange for the subsidiary, we recorded this transaction in April 2005 as an equity transaction.

On May 6, 2005, our IST Integrated Solutions, Inc. subsidiary completed an acquisition of the assets and operations of Lietz Development, Inc. and Saphire of Tampa Bay, Inc. (collectively "Data Tech"), a Tampa, Florida based computer equipment reseller, and hosting and network services provider. Subsequent to the closing of the acquisition, the Company identified and/or discovered certain facts that constituted undisclosed liabilities or breaches of representation or warranty by Data Tech. On June 27, 2005, the Company executed a mutual rescission agreement and release with Data Tech the effect of which was to rescind the earlier acquisition agreement between the parties. No portion of the Purchase Price or Performance Consideration (as defined in Section 1.4 of the Asset Purchase Agreement) had been paid by the Company in connection with the transaction.

For the remainder of the 2005 calendar year we had no business operations and sought to engage in a business combination with a company with operations. As a result of the sale of Triad, we were no longer engaged in the development, marketing and delivery of business-type educational programs and also had no continuing involvement with the business of EPMG.

On June 26, 2006, we completed the acquisition of AcXess, Inc., a Florida corporation, in a stock exchange transaction pursuant to a Stock Exchange Agreement by and between us, AcXess, the Shareholders of AcXess, and Anthony F. Zalenski, acting as the Shareholder's Agent (the "Exchange Agreement"). As a result of the Transaction, AcXess became our wholly owned subsidiary. In accordance with the provisions of Statements of Financial Accounting Standards ~~No. 141 (~~“~~SFAS”) “~~Business ~~Combination~~Combinations" (~~“SFAS~~ASC ~~141”~~805)”, AcXess was deemed to be the purchaser in the transaction for financial reporting purposes. For accounting purposes, AcXess iswas treated as the continuing reporting entity and the inception date of AcXess was January 12, 2005.

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AcXess’ strategy was to provide Business Continuity (BC) and application hosting services to the Small and Medium Enterprise (SME) market. After careful review the Company determined that the capital requirements and time to market for the products and services of AcXess were greater than previously expected. As a result of this finding, the Company entered into an agreement on July 24, 2007 to sell approximately 78.1% of the common stock of AcXess to the AcXess management team. In exchange for this sale the Company ~~will receive~~received:

(1)	A promissory note in the amount of $1,000,000. The note ~~will~~had ~~have~~ a term of two years and ~~will~~bore ~~bear~~ interest at a rate of 10% per ~~year~~annum. The note iswas collateralized with all assets of AcXess and ~~has~~had an acceleration clause for any material default.
(2)	A license agreement grant that ~~gives~~gave the Company a non-exclusive worldwide right to license products under Axcess’ patents relating to Business Continuity (BC) solutions.
(3)	The return of 4,477,292 shares of common stock and the cancellation of fully vested options to purchase 5,978,349 shares of the Company’s common stock.

(3) The return of 4,477,292 shares of common stock and the cancellation of fully vested options to purchase 5,978,349 shares of the Company’s common stock.

On June 19, 2009, the Company reached a revised agreement with the AcXess management team. Pursuant to this revised agreement, the Company sold all of its shares of capital stock of AcXess to the management team in exchange for

(1) all 4,477,292 shares of the Company’s common stock held by the AcXess Managers;

(1)	all 4,477,292 shares of the Company’s common stock held by the AcXess Managers;

(2)	the cancellation of options to purchase 5,978,349 shares of the Company’s common stock held by the AcXess Managers;

(3)	Secured Promissory Note (the "Note") in the principal amount of $500,000, with a three year maturity date, an 8% interest rate, a prepayment discount schedule that allowed for gradually decreasing discounts beginning with a maximum prepayment discount of $350,000 if $150,000 was paid within three months of the June 19, 2009 issue date, and a pledge of all of the assets of AcXess as security for the Note, as specified in a separate Security Agreement; and

(4)	a release from AcXess and the AcXess Managers of all claims they may have had against the Company and its officers, directors, employees, shareholders, affiliates and affiliated companies and for all damages that relate to the Initial Agreement, the transactions contemplated thereby, and any matter related to AcXess or its business, operations, assets or liabilities.

(2) the cancellation of options to purchase 5,978,349 shares of the Company’s common stock held by the AcXess Managers;

(3) a Secured Promissory Note (the "Note") in the principal amount of $500,000, with a three year maturity date, an 8% interest rate, a prepayment discount schedule that allows for gradually decreasing discounts beginning with a maximum prepayment discount of $350,000 if $150,000 is paid within three months of the June 19, 2009 issue date, and a pledge of all of the assets of AcXess as security for the Note, as specified in a separate Security Agreement; and

(4) a release from AcXess and the AcXess Managers of all claims they may have against the Company and its officers, directors, employees, shareholders, affiliates and affiliated companies and for all damages that relate to the Initial Agreement, the transactions contemplated thereby, and any matter relating to AcXess or its business, operations, assets or liabilities.

On June 17, 2009, the Company, purchased substantially all of the assets of The WEB Channel Network, LLC., a Florida limited liability company (the “Seller”), and certain other assets of Robert W. Singerman, the manager and sole owner of the Seller. The Company also entered into an Employment Agreement with Mr. Singerman, and Mr. Singerman entered into a Non-Disclosure, Non-Competition, Non-Solicitation and Invention Agreement with the Company.

The purchased assets ~~include~~included substantially all of the assets of the Seller, including all of its intellectual property and its signed and pending production agreements, and all of Mr. Singerman’s equity positions in several limited liability companies and various web channels. The intellectual property acquired ~~includes~~ included all such property intended to be used in: (i) the development and application of standard definition video integrated with Internet protocol television and web design; (ii) the encoding process of FLASH video with Internet protocol television; (iii) audio digital recording for Internet protocol radio and television; (iv) a Content Management System for Internet protocol television; acquiring, formatting, programming, encoding, testing and deploying licensed previously produced broadcast video; and (v) PODCASTS with Internet protocol television. The intellectual property components also ~~include~~included (a) the unencumbered ownership of over 100 strategic web domain names, (b) all inventions (whether patentable or un-patentable and whether or not reduced to practice), all trademarks, service marks, trade dress, logos, trade names, and corporate names, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, and (d) all trade secrets and confidential business information including ideas, research and development, and know-how.

The purchase price consisted of: (i) the Company’s agreement to make cash installment payments of $25,000 within 15 days of the June 17, 2009 sale and $75,000 prior to September 30, 2009; (ii) a promissory note in the amount of $500,000 payable over five years in annual installments of $100,000 in principal plus accrued interest, secured by all of the Purchased Assets pursuant to a Security Agreement; and (iii) stock purchase warrants of the Company for 5,000,000 shares of the Company’s common stock at an exercise price of $0.03 per share.

~~CURRENT OPERATING PLAN~~5

The focus of the Company is on acquiring software and software services based companies. Any potential acquisition candidate must be able to demonstrate

§ A sustainable competitive advantage § A value proposition that is simple to articulate and present

§ A strong and committed management team that values the opportunity to be part of a publicly traded company

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ToSubsequently, ~~assess~~on May 13, 2011, the ~~viability~~Company ofand aMr. ~~potential~~Singerman agreed to rescind the WEB Channel Network acquisition described above (the ~~Company~~“WEB ~~utilizes~~Channel ~~both~~Rescission ~~its~~Agreement”). The ~~management~~principal ~~team~~terms of the WEB Channel Rescission Agreement included the following: The parties agreed to settle any and all claims, both known and unknown, for $70,000 payable to Robert W. Singerman. The consideration was a ~~team~~convertible note with interest at 10% per annum having a maturity date of ~~industry~~November ~~experts.~~13, ~~This~~2011 ~~combined~~and ~~expertise~~an ~~provides~~option ~~significant~~to ~~knowledge~~convert in ~~the~~part ~~area~~or in whole to common shares of ~~software~~Innovative ~~architecture~~Software Technologies, ~~product~~Inc. ~~development,~~at ~~establishment~~a conversion rate of ~~distribution~~$0.035 ~~channels~~per share. The assets of The WEB Channel Network, ~~maximization~~LLC previously conveyed to Innovative Software Technologies, Inc. were returned unencumbered to Robert W. Singerman. The promissory note is currently in default. We are not aware of ~~revenue~~any ~~channels~~legal ~~and~~proceedings to collect on the ~~true~~promissory ~~value~~note. The WEB Channel Rescission Agreement was reflected as a subsequent event in our March 31, 2010 financial statements and ~~nature~~, ofas such, the ~~“competitive~~rescission ~~advantage”~~was not given effect to in such financial statements.

The Company plans on acquiring these companies by utilizing the Company’s stock and by raising additional capital for operating expenses if required.

INSURANCE MATTERS

WeFor FY2010, we carried general casualty liability insurance and we did not carry ~~director’s~~directors and ~~officer’s~~officers liability insurance. As of the filing date of this Report on Form 10-K, we carry casualty liability insurance and we do not carry directors and officers liability insurance. We believe our current casualty insurance coverage is adequate for our current business and financial condition.

EMPLOYEES

As of March 31, ~~2009~~2010, we had one employee, who iswas the Company’s Chief Financial Officer and acting Chief Executive Officer, As of the filing date of this Report on Form 10-K, the Company has 18 full-time employees. None of our employees belong to a union. For FY2010 and as of the filing date of this Annual Report on Form 10-K, we believe that we maintain a satisfactory working relationship with our employees and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations, beyond those issues pertaining to us being a small, start-up company.

ITEM 1A. RISK FACTORS

WEAs ~~ARE~~a ASmaller ~~DEVELOPMENT~~Reporting ~~STAGE~~Company, ~~COMPANY~~we ~~AND~~are WEnot ~~HAVE~~required Ato ~~LIMITED~~include ~~OPERATING~~this ~~HISTORY~~disclosure ~~UPON~~under ~~WHICH~~this ~~YOU~~Item. However, ~~CAN~~in ~~BASE~~light ANof ~~INVESTMENT~~the ~~DECISION~~past due Exchange Act reports that have not been filed by the Company, the Company is including the following Risk Factors.

WeInvesting ~~have~~in our common stock involves a ~~limited~~high ~~operating~~degree ~~history~~of ~~upon~~risk. ~~which~~Investors ~~you~~should ~~can~~carefully ~~make~~consider anthe ~~investment~~risks ~~decision~~described below, orwhich ~~upon~~represent ~~which~~some weof ~~can~~the ~~accurately~~more ~~forecast~~critical ~~future~~risk ~~sales~~factors that affect us. ~~You~~These ~~should,~~factors ~~therefore~~could materially and adversely affect our business, ~~consider~~financial uscondition ~~subject~~or results of operations. Additional risks that are not presently known may also result in such adverse effects. Our history to ~~the~~date has been to acquire or start business ~~risks~~but ~~associated~~we have as yet not been successful in developing the businesses into sustainable, revenue generating businesses with growth potential suitable for the overhead burdens and financial disclosure obligations of a ~~new~~public ~~business~~company. We ~~The~~have ~~likelihood~~had to rescind some of our ~~success~~acquisitions ~~must~~due beto ~~considered~~a inlack ~~light~~of funding and/or strategic differences with the management of the ~~expenses,~~acquisitions. ~~difficulties~~We ~~and~~may ~~delays~~also ~~frequently encountered~~be inunable ~~connection~~to ~~with~~develop our current business into a sustainable, revenue generating business suitable for the ~~formation~~overhead burdens and ~~initial~~financial ~~operations~~disclosure obligations of a ~~new~~public ~~business~~company.

TORISK ~~DATE~~FACTORS WERELATING ~~HAVE HAD SIGNIFICANT OPERATING LOSSES, AND AN ACCUMULATED DEFICIT AND HAVE HAD LIMITED REVENUES AND DO NOT EXPECT~~ TO BEPAST ~~PROFITABLE~~DUE ~~FOR~~EXCHANGE ATACT ~~LEAST THE FORESEEABLE FUTURE, AND CANNOT PREDICT WHEN WE MIGHT BECOME PROFITABLE, IF EVER.~~REPORTS

WeIn ~~have~~light ~~been~~of ~~operating~~the atdelinquent afiling ~~loss~~status ~~since~~of ~~our~~the ~~inception,~~Company ~~and~~under wethe ~~expect~~Exchange toAct, ~~continue to incur losses for~~ the ~~foreseeable~~following ~~future.~~Risk ~~Net~~Factors ~~loss~~address ~~for~~ the ~~year~~delinquent ~~ended~~filing ~~March~~status ~~31, 2009 was $969,131 resulting in an accumulated deficit~~ of ~~$5,867,392. We may not be able to generate significant revenues in~~ the ~~future.~~Company Asunder ~~a result, we expect to continue to experience negative cash flow for at least~~ the ~~foreseeable~~Exchange ~~future and cannot predict when, or even if, we might become profitable~~Act.

~~OUR~~The ~~AUDITORS~~Company ~~HAVE~~has ~~EXPRESSED~~not ~~SUBSTANTIAL~~filed ~~DOUBT~~its ~~ABOUT~~Annual ~~OUR~~Report ~~ABILITY~~on TOForm ~~CONTINUE~~10-K ASfor Athe ~~GOING~~fiscal ~~CONCERN~~years ended March 31, 2011, March 31, 2012 and March 31, 2013. In addition, the Company has not filed Quarterly Reports on Form 10-Q for the following fiscal periods: June 30, 2010, September 30, 2010, December 31, 2010, June 30, 2011, September 30, 2011, December 31, 2011, June 30, 2012, September 30, 2012, December 31, 2012, June 30, 2013, September 30, 2013 and December 31, 2013. Until these past due reports are filed with the Commission, prospective investors and shareholders do not have complete and current business and financial information about the Company, including audited annual financial information and unaudited quarterly financial information. As such, there is inadequate public information available about the Company to properly evaluate its common stock or the prospects of the Company. Further, the Company is in violation of Section 13(a) of the Exchange Act and could be deregistered by the Commission under the Exchange Act.

WeThe ~~have~~Company ~~experienced~~has ~~significant~~been ~~operating~~delinquent ~~losses~~ in ~~the~~its ~~current~~Exchange ~~and~~Act ~~prior~~filings ~~years.~~because ~~At March 31, 2009, our principal sources~~ of ~~liquidity~~a ~~were~~lack ~~cash and cash equivalents~~ of ~~$627.~~a Werevenue-generating dobusiness ~~not expect~~ that ~~our~~consistently ~~cash~~provided onsufficient ~~hand and~~ cash ~~generated~~flow ~~by operations will be sufficient~~ to fund ~~our~~basic ~~operating~~operational ~~and~~overhead, ~~capital~~including ~~needs~~accounting ~~beyond~~and ~~the~~legal ~~next three months~~compliance. As This alack ~~result~~ of ~~our~~a ~~limited~~business ~~cash~~has ~~resources~~also ~~and~~led ~~history of operating losses, our auditors have expressed in their report on our consolidated financial statements that there is substantial doubt about our ability~~ to ~~continue as~~ a ~~going~~turnover ~~concern.~~in ~~We presently have no commitments for additional financing~~management. ~~If we are unable to obtain financing on terms acceptable to us, or at all, we may not be able to fulfill our customer commitments and/or be forced to cease all operations and liquidate our assets.~~

ADDITIONAL FINANCING IS NECESSARY FOR THE IMPLEMENTATION OF OUR GROWTH STRATEGY.

We will require additional debt and/or equity financing to pursue our growth strategy. Given our limited operating history and existing losses, there can be no assurance that we will be successful in obtaining additional financing. Lack of additional funding could force us to substantially curtail our growth plans or cease operations. Furthermore, the issuance by us of any additional securities pursuant to any future financing activities undertaken by us would dilute the ownership of existing shareholders and may reduce the price of our common stock.

Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. Our failure to successfully obtain additional future funding may jeopardize our ability to continue our business and operations.

WE MAY BE UNABLE TO IMPLEMENT OUR GROWTH STRATEGY.

We may not be successful in finding acquisition candidates that meet our requirements or are interested in our offering. We may not be able to expand our product and service offerings, our client base and markets, or implement the other features of our business strategy at the rate or to the extent presently planned. Our projected growth will place a significant strain on our administrative, operational and financial resources. If we are unable to successfully manage our future growth, establish and continue to upgrade our operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, our financial condition and results of operations could be materially and adversely affected.

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POTENTIAL CLAIMS ALLEGING INFRINGEMENT OF THIRD PARTY'S INTELLECTUAL PROPERTY BY US COULD HARM OUR ABILITY TO COMPETE AND RESULT IN SIGNIFICANT EXPENSE TO US AND LOSS OF SIGNIFICANT RIGHTS.

From time to time, third parties may assert patent, copyright, trademark and other intellectual property rights to technologies that are important to our business. Any claims, with or without merit, could be time-consuming, result in costly litigation, divert the efforts of our technical and management personnel, cause product shipment delays, disrupt our relationships with our customers or require us to enter into royalty or licensing agreements, any of which could have a material adverse effect upon our operating results. Royalty or licensing agreements, if required, may not be available on terms acceptable to us. If a claim against us is successful and we cannot obtain a license to the relevant technology on acceptable terms, license a substitute technology or redesign our products to avoid infringement, our business, financial condition and results of operations would be materially adversely affected.

WE MAY FACE PRODUCT LIABILITY FOR THE SERVICES WE PROVIDE.

Developing, marketing and sale of our products and services may subject us to product liability claims. We currently do not have insurance coverage against product liability risks. Although we intend to purchase such insurance, such insurance coverage may not be adequate to satisfy any liability that may arise. Regardless of merit or eventual outcome, product liability claims may result in decreased demand for a service, injury to our reputation and loss of revenues. As a result, regardless of whether we are insured, a product liability claim or product recall may result in losses that could be material to us.

WE FACE COMPETITION IN OUR MARKETS FROM A NUMBER OF LARGE AND SMALL COMPANIES, SOME OF WHICH HAVE GREATER FINANCIAL, RESEARCH AND DEVELOPMENT, PRODUCTION AND OTHER RESOURCES THAN WE HAVE.

Our services face competition from services which may be used as an alternative or substitute thereof. In addition we compete with several large companies in the business continuity business. To the extent these companies, or new entrants into the market, offer comparable services at lower prices, our business could be adversely affected. Our competitors can be expected to continue to improve the design and performance of their products and services and to introduce new products and services with competitive performance characteristics. There can be no assurance that we will have sufficient resources to maintain our current competitive position.

A DOWNTURN IN ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS.

The software industry historically has been subject to substantial cyclical variations, and our business typically relies upon the expenditure of corporate information technology spending. A significant downturn in the United States or global economy or any other uncertainties regarding future economic prospects could affect corporate information technology spending habits, which would have a material adverse impact on our operations and financial results.

WE ARE DEPENDENT UPON KEY PERSONNEL.

Our success is heavily dependent on the continued active participation of our current executive officers listed under "Management." Loss of the services of one or more of our officers could have a material adverse effect upon our business, financial condition or results of operations. Further, our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the technology industry is intense, and the loss of any of such persons, or an inability to attract, retain and motivate any additional highly skilled employees required for the expansion of our activities, could have a materially adverse effect on us. The inability on our part to attract and retain the necessary personnel and consultants and advisors could have a material adverse effect on our business, financial condition or results of operations.

WE ARE CONTROLLED BY CURRENT OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS.

Our directors, executive officers and principal (5%) stockholders and their affiliates beneficially own approximately 46% of the outstanding shares of Common Stock. Accordingly, our executive officers, directors, principal stockholders and certain of their affiliates will have substantial influence on the ability to control the election of our Board of Directors of the Company and the outcome of issues submitted to our stockholders.

OUR BUSINESS MAY BE AFFECTED BY FACTORS OUTSIDE OF OUR CONTROL.

Our ability to increase sales, and to profitably distribute and sell our products and services, is subject to a number of risks, including changes in our business relationships with our principal distributors, competitive risks such as the entrance of additional competitors into our markets, pricing and technological competition, risks associated with the development and marketing of new products and services in order to remain competitive and risks associated with changing economic conditions and government regulation.

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~~THE~~Although ~~ISSUANCE~~we OFcontinue ~~SHARES~~to ~~UPON~~make ~~CONVERSION~~progress OFtowards ~~THE~~completion ~~CONVERTIBLE~~of ~~NOTES~~its ~~AND~~periodic ~~EXERCISE~~reports, OFif ~~OUTSTANDING~~the ~~WARRANTS~~Commission ~~MAY~~revokes ~~CAUSE~~the ~~IMMEDIATE~~registration ~~AND~~of ~~SUBSTANTIAL~~our ~~DILUTION~~common TOstock, ~~OUR~~brokers, ~~EXISTING~~dealers ~~STOCKHOLDERS~~and other market participants would be prohibited from buying, selling, making market in, publishing quotations of, or otherwise effecting transactions with respect to, such common stock until, in the case of suspension, the lifting of such suspension, or, in the case of a revocation, we file a new registration statement with the Commission under the Exchange Act and that registration statement is declared effective. As a result, public trading of our common stock would cease and investors would find it extraordinarily difficult to acquire or dispose of our common stock or obtain accurate price quotations for our common stock, which could result in a significant decline in the value of our stock. Further, any business that we acquire or start may be adversely impacted, including, without limitation, an adverse impact on our ability to issue stock to raise equity capital, engage in business combinations or provide employee incentives.

~~The~~ITEM issuance of shares upon conversion of the convertible notes and exercise of warrants may result in substantial dilution to the interests of other stockholders since the selling stockholders may ultimately convert and sell the full amount issuable on conversion1B. UNRESOLVED ~~Although~~STAFF the selling stockholders may not convert their convertible notes and/or exercise their warrants if such conversion or exercise would cause them to own more than 4.99% of our outstanding common stock, this restriction does not prevent the selling stockholders from converting and/or exercising some of their holdings and then converting the rest of their holdings. In this way, the selling stockholders could sell more than this limit while never holding more than this limit.COMMENTS

~~OUR~~None. See: ~~COMMON~~Item ~~STOCK~~1A ~~TRADES~~above. We INhave Anotified ~~LIMITED~~the ~~PUBLIC~~Commission ~~MARKET;~~of ~~ACCORDINGLY~~our failure to timely file Exchange Act reports and our schedule for remedying such delinquencies. Although no Commission notice of proceedings to deregister our common stock under the Exchange Act has been received by us, ~~INVESTORS~~due ~~FACE~~to ~~POSSIBLE~~the ~~VOLATILITY~~past OFdue ~~SHARE~~reports ~~PRICE~~under the Exchange Act, we may be subject to deregistration by administrative action by the Commission for violations of Section 13(a) of the Exchange Act.

Our common stock is currently quoted on the OTC.BB under the ticker symbol INIV.OB. As of July 1, 2009, there were 103,514,199 shares of Common Stock outstanding.

There can be no assurance that a trading market will be sustained in the future. Factors such as, but not limited to, technological innovations, new products, acquisitions or strategic alliances entered into by us or our competitors, government regulatory actions, patent or proprietary rights developments and market conditions for penny stocks in general could have a material effect on the liquidity of our common stock and volatility of our stock price.

FLUCTUATIONS IN OUR OPERATING RESULTS AND ANNOUNCEMENTS AND DEVELOPMENTS CONCERNING OUR BUSINESS AFFECT OUR STOCK PRICE.

Our operating results are subject to numerous factors, including purchasing policies and requirements of our customers, our ability to grow through strategic acquisitions and any expenses and capital expenditures which we incur in distributing products. These factors, along with other factors described under "Risk Factors", may affect our operating results and may result in fluctuations in our quarterly results all of which could affect our stock price or could result in volatility in our stock price.

OUR COMMON STOCK WILL BE SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

● that a broker or dealer approve a person's account for transactions in penny stocks; and

● the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

● obtain financial information and investment experience objectives of the person; and

● make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

● sets forth the basis on which the broker or dealer made the suitability determination; and

● that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

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WE HAVE NOT PAID DIVIDENDS IN THE PAST AND DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE. ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON STOCK.

We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates.

ITEM 2. PROPERTIES

Our principal executive offices are located at 1413 South Howard Avenue, Suite 220, Tampa Florida, 33606. This office consists of approximately 200 square feet, which we rent for $~~1,000~~500 per month. The term of the lease is month to month. We own no real property. We deem this office space as adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business (especially in light of the number of rescinded acquisitions and changes in management and staff we have experienced). Because ~~However~~of this, and because, litigation is subject to inherent uncertainties, ~~and~~ an adverse result in these or other matters ~~may arise from time to time that may~~ could harm our business. Except as disclosed below we are ~~currently~~ not aware of any such legal proceedings or claims that ~~will~~we believe could have, individually or in the aggregate, a material adverse ~~affect~~effect on our business, financial condition or operating results.

KANSAS CITY EXPLORERS COMPLAINT

WeThe ~~are~~Company was a defendant in a lawsuit in the Circuit Court of Platte County, Missouri, "Kansas City Explorers vs. Innovative Software" Case no. 04CV82050, in which the claimant issought ~~seeking money for advertising which it alleges is still due, and have alleged~~ damages of $50,028. Judgment ~~The~~was ~~claimant~~entered ~~has~~in ~~been~~favor ~~court~~of ~~ordered~~the toplaintiff ~~produce~~against ~~answers~~the toCompany ~~certain discovery~~in ~~requests~~the amount of ~~ours~~$69,975 ~~which~~on ~~they~~November ~~have~~13, ~~failed~~2009. As toof ~~produce.~~the ~~Management~~date ~~intends~~of tothis ~~aggressively~~filing ~~defend~~there ~~the~~has ~~claim~~been ~~based~~no ~~upon~~effort ~~the~~to ~~lack~~enforce ofjudgment. The ~~contract~~judgment ~~between~~accrues ~~the~~interest ~~parties~~until paid, ~~lack~~if ofthe ~~proof~~plaintiff ofcontinues ~~damages,~~the asdocketing ~~well~~of asthe ~~minimal~~judgment. ~~proof~~We ofwill ~~advertising~~seek ~~services~~to ~~actually~~either ~~performed~~settle ~~for~~the ~~our~~judgment ~~products~~debt ~~and~~or ~~services.~~pay ~~Kansas~~it ~~City~~if ~~Explorers~~and ~~have~~when ~~pursued~~our ~~the~~business ~~court~~operations ~~and~~generate ~~have~~sufficient ~~been~~revenues ~~granted~~to afund ~~court~~any ~~date~~settlement ofor ~~September~~pay ~~23, 2009~~off.

~~ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~WATTERS

~~None~~On June 19th, 2014, we entered into a stipulated settlement agreement with Stephen Watters. We were unable to meet all of the terms of the settlement; as a result a judgment in the amount of $340,000 has been entered against us and other parties. We will seek to either settle the judgment debt or pay it if and when our business operations generate sufficient revenues to fund any settlement or pay off.

8In addition to the above, as reported in Note 9 to the accompanying consolidated financial statements, we have contractual penalty liability of $81,140 in liquidated damages resulting from a failure to honor a registration rights agreement. We intend to settle this claim if and when our business allows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

~~Our~~Since December 2006, our common stock ishas ~~listed~~traded on The OTC Markets Group, Inc. (“OTC”) Pink Tier – Limited Disclosure, the ~~OTCBB~~over-the-counter securities market commonly referred to as the “Pink Sheets,” under the symbol "“INIV.~~OB".~~PK,” ~~The~~with ~~high~~pricing and financial information provided by the ~~low~~OTC. ~~trades~~. Our ~~for~~common ~~our~~stock ~~shares~~was ~~for~~traded ~~each~~on ~~quarter~~OTC ofBulletin ~~actual~~Board under the trading ~~were:~~symbol “INIV.OB” until December 2006, when it was delisted for failing to file required Exchange Act reports in a timely manner.

	High		Low
YEAR ENDING MARCH 31, 2009:
First Quarter	$	0.030	$	0.015
Second Quarter		0.020		0.012
Third Quarter		0.015		0.001
Fourth Quarter		0.009		0.002

The high and the low trades for our shares of common stock for each quarter of actual trading during the fiscal years ended March 31, 2010 and March 31, 2009, were:

The closing price for the common stock on March 31, 2009 was $0.002 per share.

	High		Low
YEAR ENDING MARCH 31, 2010:
First Quarter		0.0750		0.0007
Second Quarter		0.0064		0.0022
Third Quarter		0.0050		0.0010
Fourth Quarter		0.0280		0.0020

	High		Low
YEAR ENDING MARCH 31, 2009:
First Quarter		0.0150		0.0150
Second Quarter		0.0150		0.0150
Third Quarter		0.0010		0.0010
Fourth Quarter		0.0010		0.0010

The closing price for the common stock on March 31, 2010 was $0.014 per share as quoted on www.nasdaq.com. The closing price for the common stock on March 25, 2014, the latest practicable date, was $0.17 per share as quoted on The OTC Markets Group, Inc. Pink Tier – Limited Disclosure.

HOLDERS

As of ~~July~~March 131, ~~2009~~2010, we had approximately 1,~~225~~222 active holders of our common stock. As of September 12, 2014, the latest practical date, we had approximately 1,291 holders of record of our common stock. The number of active record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers and registered clearing agencies. The transfer agent of our common stock is Island Stock Transfer, ~~100~~15500 ~~Second~~Roosevelt ~~Avenue South~~Blvd., Suite ~~104N~~301, ~~St. Petersburg~~Clearwater, Florida ~~33701~~33760.

DIVIDENDS

We have neither declared nor paid any cash dividends on our capital stock and do not anticipate paying cash dividends in the foreseeable future. We have had minimal revenue and losses since inception. Our current policy is that if we were to generate revenue and earnings we would retain any earnings in order to finance our operations. Our Board of Directors will determine future declaration and payment of dividends, if any, in light of the then-current conditions they deem relevant and in accordance with applicable corporate law. It is unlikely that we will pay any dividends on our capital stock for the foreseeable future.

~~EQUITY COMPENSATION PLAN INFORMATION~~8

The following table shows information with respect to each equity compensation plan under which our common stock is authorized for issuance, as of the fiscal year ended March 31, 2009.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A))
Plan category	(A)		(B)		(C)
Equity compensation plans approved by security holders		-		-		-
Equity compensation plans not approved by security holders		5,978,349	$	0.14		14,021,651
Total		5,978,349	$	0.14		14,021,651

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OnEQUITY ~~August~~COMPENSATION ~~24,~~PLAN 2007 our Board of Directors adopted the 2007 Innovative Software Technologies, Inc. Equity Incentive Plan which stipulated 60 million shares of common stock available for option grants. The Table below shows the activity under this plan as of March 31, 2009:INFORMATION

The following table shows information with respect to each equity compensation plan under which our common stock is authorized for issuance, as of the fiscal year ended March 31, 2010.

On August 9, 2006, our Board of Directors adopted the 2006 Innovative Software Technologies, Inc. Equity Incentive Plan, which stipulated 20 million shares of common stock available for option grants. The table below shows the balance under this plan as of March 31, 2010. As we have not timely filed all Exchange Act reports, we are ineligible to register shares of our capital stock on Form S-8 until we are current in such filings.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A))
Plan category	(A)		(B)		(C)
Equity compensation plans approved by security holders		-	$	-		-

Equity compensation plans not approved by security holders		-		-		14,021,651

Total		-	$	-		14,021,651

On August 24, 2007 our Board of Directors adopted the 2007 Innovative Software Technologies, Inc. Equity Incentive Plan which stipulated 60 million shares of common stock available for option grants. The Table below shows the balance under this plan as of March 31, 2010:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A))
Plan category	(A)		(B)		(C)
Equity compensation plans		-	$	-		60,000,000

Total		-	$	-		60,000,000

OPTIONS GRANTS IN LAST FISCAL YEAR

None.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

There have been no options exercised in the last fiscal year.

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RECENT SALES OF UNREGISTERED SECURITIES

~~The~~For ~~shares~~FY2010, ofwe ~~stock~~did ~~issued~~not inhave ~~the~~any ~~following~~unregistered ~~transactions~~sales ~~were~~of ~~valued~~securities. Our atAnnual ~~the~~Reports ~~closing~~on ~~market~~Form ~~price~~10-K onfor ~~the~~subsequent ~~date~~fiscal periods will disclose any unregistered sales of ~~issue~~securities.

On May 30, 2008, the Company issued shares of common stock at a price of $0.05 per share for previously accrued salary in the amount of $31,500 to the Company’s Chief Financial Officer. A total of 630,000 shares of common stock were issued to the officer.

On May 30, 2008, the Company issued shares of common stock at a price of $0.05 per share for previously accrued salary in the amount of $35,000 to the Company’s Chief Executive Officer. A total of 700,000 shares of common stock were issued to the officer.

On July 11, 2008, the Company issued 1,000,000 shares of common stock at a price of $0.02 per share for previously accrued liability in the amount of $20,000 for legal fees.

All of the above offerings and sales were deemed to be exempt under Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of our company or executive officers of our company, and transfer was restricted by our company in accordance with the requirements of the Securities Act of 1933.

ITEM 6. SELECTED FINANCIAL DATA

~~Not~~ As ~~applicable.~~a Smaller Reporting Company, we are not required to include the disclosure under this Item

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR FY2010

~~FORWARD~~The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion includes forward looking statements and should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. Our actual results may differ materially from those anticipated in these forward-~~LOOKING~~looking ~~STATEMENTS~~statements as a result of many factors, including those set forth under Item 1A, “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

~~The information in this report contains forward~~Forward-looking statements. ~~All~~represent ~~statements~~our ~~other~~estimates ~~than~~and ~~statements~~assumptions as of ~~historical fact made in this report are forward looking. In particular,~~ the ~~statements~~date ~~herein regarding industry prospects and future results~~ of ~~operations~~this orAnnual ~~financial~~Report ~~position~~on ~~are~~Form ~~forward~~10-~~looking statements~~K. ~~These~~You ~~forward-looking statements~~should ~~can~~read bethis ~~identified~~annual byreport and the ~~use~~documents ofthat ~~words~~we ~~such~~reference asand ~~"believes,"~~filed ~~"estimates,"~~as ~~"could,"~~exhibits ~~"possibly,"~~to ~~"probably,"~~the ~~anticipates,"~~annual ~~"projects,"~~report ~~"expects,"~~completely ~~"may,"~~and ~~"will,"~~with orthe ~~"should"~~understanding ~~or other variations or similar words. No assurances can be given~~ that ~~the~~our actual future results ~~anticipated~~may ~~by the forward-looking statements will~~ be ~~achieved.~~materially ~~Forward-looking~~different ~~statements~~from ~~reflect~~what ~~management's~~we ~~current expectations and are inherently uncertain~~expect. ~~Our actual results may differ significantly from management's expectations.~~

~~The~~Unless ~~following~~otherwise stated, this discussion and analysis ~~should~~relates beto ~~read in conjunction with our~~ financial ~~statements,~~data ~~included~~for ~~herewith.~~the ~~This~~fiscal ~~discussion~~years ~~should~~ended ~~not~~March be31, ~~construed~~2010 toand ~~imply~~March ~~that~~31, ~~the~~2009, ~~results~~which ~~discussed~~were ~~herein~~derived ~~will~~from ~~necessarily continue into~~ the ~~future,~~consolidated orfinancial ~~that~~statements ~~any~~included ~~conclusion~~in ~~reached~~Item 15 ~~herein~~of ~~will~~this ~~necessarily~~Annual beReport ~~indicative~~on ofForm ~~actual~~10-K. Percentages ~~operating~~and ~~results in~~amounts ~~the~~within ~~future.~~this ~~Such~~section ~~discussion~~may ~~represents~~not ~~only~~calculate ~~the~~precisely ~~best~~due ~~present~~to ~~assessment~~rounding ~~of our management~~differences.

OVERVIEW

The following discussion summarizes information about our accounting policies and practices and information about our operations in a comparative manner for the fiscal years ended March 31, 2010 and 2009. 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.

Acquisition of AcXess

On June 26, 2006, Innovative completed the acquisition of AcXess, Inc., a Florida corporation (“AcXess”), in a stock exchange transaction. As a result of the Transaction, AcXess became a wholly owned subsidiary of Innovative.

AcXess was formed to provide Business Continuity ("BC") products and services to the Small and Medium Enterprise ("SME") market. BC products and services are an advanced form of disaster recovery solutions for electronic data backup wherein the data and/or applications are available upon failure through means of connectivity to remote server locations. The Company planned to deliver its BC service through reseller channels.

On July 24, 2007, the Company entered into a Stock Purchase Agreement (the “AcXess Stock Purchase Agreement”) with AcXess, and its managers (the “Buyers”) wherein (i) AcXess agreed to redeem shares of its common stock owned by the Company in return for the issuance of a promissory note payable to the Company and the signing of a Non-Exclusive License Agreement with the Company, and (ii) the Buyers agreed to exchange their stock in the Company for stock in AcXess. The Buyers also agreed to allow the Company to cancel their stock options in exchange for stock in AcXess. Immediately following the above redemptions and exchanges, the Company continued to own 984,457 shares, or approximately 21.9% of the outstanding common stock, of AcXess. In 2009 the Company reached a revised agreement with the AcXess management team whereby the Company sold all of its shares of stock of AcXess to the AcXess management team, which agreement closed on July 10, 2009. See further details on these transaction under Item 1 – Description of Business.

Acquisition of The WEB Channel Network

On June 17, 2009, the Company purchased substantially all of the assets of The WEB Channel Network, LLC. a Florida limited liability company (the “WEB Channel Network Seller”), and certain other assets of Robert W. Singerman, the manager and sole owner of the WEB Channel Network Seller. The Company also entered into an Employment Agreement with Mr. Singerman, and Mr. Singerman entered into a Non-Disclosure, Non-Competition, Non-Solicitation and Invention Agreement with the Company.

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~~OVERVIEW~~The purchased assets included substantially all of the assets of the Web Channel Network Seller, including all of its intellectual property and its signed and pending production agreements.

The ~~following~~purchase ~~discussion~~price ~~summarizes~~consisted ~~information~~of: ~~about~~(i) ~~our~~the ~~accounting~~Company’s ~~policies~~agreement ~~and~~to ~~practices~~make cash installment payments of $25,000 within 15 days of the June 17, 2009 sale and ~~information~~$75,000 ~~about~~prior ~~our~~to ~~operations~~September in30, 2009; (ii) a promissory ~~comparative~~note in ~~manner~~the ~~for~~amount ~~the~~of ~~fiscal~~$500,000 payable over five years ~~ended~~in ~~March~~annual 31installments of $100,000 ~~2009~~in ~~and~~principal ~~2008.~~plus ~~Our~~accrued ~~management's~~interest, ~~discussion~~secured ~~and~~by ~~analysis~~all of ~~financial~~the ~~condition~~Purchased Assets pursuant to a Security Agreement; and ~~results~~(iii) stock purchase warrants of ~~operations~~the ~~should~~Company befor ~~read~~5,000,000 inshares ~~conjunction~~of ~~with~~the ~~our~~Company’s ~~consolidated financial~~common ~~statements~~stock ~~and~~at ~~related~~an ~~notes~~exercise ~~thereto~~price ~~included~~of ~~elsewhere~~$0.03 ~~herein~~per share (see note 4).

~~ACQUISITION~~Subsequently, OFon ~~ACXESS~~May 13, ~~INC~~2011, the Company and Mr. Singerman agreed to rescind the WEB Channel Network acquisition described above (the “WEB Channel Rescission Agreement”). The principal terms of the WEB Channel Rescission Agreement included the following: The parties agreed to settle any and all claims both known and unknown for $70,000 payable to Robert W. Singerman. The consideration was a convertible note with interest at 10% per annum having a maturity date of November 13, 2011 and an option to convert in part or in whole to common shares of Innovative Software Technologies, Inc. at a conversion rate of $0.035 per share. The assets of The WEB Channel Network, LLC previously conveyed to Innovative Software Technologies, Inc. were returned unencumbered free and clear to Robert W. Singerman. The promissory note is currently in default. We are not aware of any legal proceedings to collect on the promissory note.. The WEB Channel Rescission Agreement was reflected as a subsequent event in our March 31, 2010 financial l statements, and as such, the rescission was not given effect to in such financial statements.

On June 26, 2006, we completed the acquisition of AcXess, Inc., a Florida corporation, in a stock exchange transaction pursuant to a Stock Exchange Agreement by and between us, AcXess, the Shareholders of AcXess, and Anthony F. Zalenski, acting as the Shareholder's Agent (the "Exchange Agreement"). As a result of the Transaction, AcXess became our wholly owned subsidiary. In accordance with the provisions of Statements of Financial Accounting Standards No. 141 (“SFAS”) “Business Combination (“SFAS 141”)”, AcXess was deemed to be the purchaser in the transaction for financial reporting purposes. For accounting purposes, AcXess is treated as the continuing reporting entity and the inception date of AcXess was January 12, 2005.

AcXess’ strategy was to provide Business Continuity (BC) and application hosting services to the Small and Medium Enterprise (SME) market. After careful review the Company determined that the capital requirements and time to market for the products and services of AcXess were greater than previously expected. As a result of this finding the Company entered into an agreement on July 24, 2007 to sell approximately 78.1% of the common stock of AcXess to the AcXess management team. In exchange for this sale the Company will receive:

(1)	A promissory note in the amount of $1,000,000. The note will have a term of two years and will bear interest at a rate of 10% per year. The note is collateralized with all assets of AcXess and has an acceleration clause for any material default.
(2)	A license agreement grant that gives the Company a non-exclusive worldwide right to license products under AcXess’ patents relating to Business Continuity (BC) solutions.

(3) The return of 4,477,292 shares of common stock and the cancellation of fully vested options to purchase 5,978,349 shares of the Company’s common stock.

(1) all 4,477,292 shares of the Company’s common stock held by the AcXess Managers;

(2) the cancellation of options to purchase 5,978,349 shares of the Company’s common stock held by the AcXess Managers;

(3) a Secured Promissory Note (the “Note”) in the principal amount of $500,000, with a three year maturity date, an 8% interest rate, a prepayment discount schedule that allows for gradually decreasing discounts beginning with a maximum prepayment discount of $350,000 if $150,000 is paid within three months of the June 19, 2009 issue date, and a pledge of all of the assets of AcXess as security for the Note, as specified in a separate Security Agreement; and

The purchased assets include substantially all of the assets of the Seller, including all of its intellectual property and its signed and pending production agreements, and all of Mr. Singerman’s equity positions in several limited liability companies and various web channels. The intellectual property acquired includes all such property intended to be used in: (i) the development and application of standard definition video integrated with Internet protocol television and web design; (ii) the encoding process of FLASH video with Internet protocol television; (iii) audio digital recording for Internet protocol radio and television; (iv) a Content Management System for Internet protocol television; acquiring, formatting, programming, encoding, testing and deploying licensed previously produced broadcast video; and (v) PODCASTS with Internet protocol television. The intellectual property components also include (a) the unencumbered ownership of over 100 strategic web domain names, (b) all inventions (whether patentable or un-patentable and whether or not reduced to practice), all trademarks, service marks, trade dress, logos, trade names, and corporate names, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, and (d) all trade secrets and confidential business information including ideas, research and development, and know-how.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our 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 us 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.

Revenue Recognition

The Company recognizes revenues from contracts in which the Company provides website hosting and consulting services as the services are performed. The contractual terms of the agreements dictate the recognition of revenue by the Company. Payments received in advance are deferred until the service is provided.

Contract costs include all direct equipment, material, and labor costs and those indirect costs related to contract performance, such as indirect labor. Selling, general and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in contract performance, contract conditions, and estimated profitability that may result in revisions to costs and income are recognized in the period in which the revisions are determined.

For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition,” which superseded SAB No. 101, “Revenue Recognition in Financial Statements.” SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. SAB No. 104 incorporates Emerging Issues Task Force (“EITF”) No. 00-21, “Multiple-Deliverable Revenue Arrangements.” EITF No. 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. This issue addresses determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting. Through March 31, 2008, all of the Company’s revenue has been service revenue.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2009. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, accounts payable and notes payable. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values.

Offering Costs

We defer costs associated with the raising of capital until such time as the offering is completed, at which time the costs are charged against the capital raised. Should the offering be terminated the costs are charged to operations during the period when the offering is terminated.

Net Income (Loss) Per Common Share

We calculate net income (loss) per share as required by SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti dilutive.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

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Property and Equipment

Property and equipment is recorded at cost. Expenditures for major improvements and additions are added to the property and equipment accounts while replacements, maintenance and repairs, which do not extend the life of the assets, are expensed.

Depreciation and amortization are computed by using the straight-line method over the estimated useful lives of the assets.

Long-Lived Assets

The carrying value of long-lived assets is reviewed on a regular basis for the existence of facts and circumstances that suggest impairment. Should there be an impairment, the Company measures the amount of the impairment based on the amount that the carrying value of the impaired asset exceeds the discounted cash flows expected to result from the use and eventual disposal of the impaired assets.

Segment Information

We follow SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")." Certain information is disclosed, per SFAS 131, based on the way management organizes financial information for making operating decisions and assessing performance. We currently operate in a single segment and will evaluate additional segment disclosure requirements as the Company expands its operations.

Income Taxes

We follow SFAS No. 109, "Accounting for Income Taxes" for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Stock-Based Compensation

Compensation expense related to the grant of equity instruments and stock-based awards to employees are accounted for using the fair value of such equity instruments recognizing expenses as services are performed following SFAS No. 123(R), "Accounting for Stock-Based Compensation", issued in December 2004 and effective as of the beginning of the first interim or annual reporting period that begins after December 15, 2005.

Impairment of Long-Lived Assets

We account for long-lived assets and goodwill in accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144")" and SFAS No. 142, "Goodwill and Other Intangible Assets ("SFAS 142")." SFAS 144 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. SFAS 142 requires annual tests for impairment of goodwill and intangible assets that have indefinite useful lives and interim tests when an event has occurred that more likely than not has reduced the fair value of such assets.

Recent Pronouncements

Effective at the beginning of the first quarter of 2009, the Company adopted the provision of FIN 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109, “Accounting for Income Taxes.” The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

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As a result of the implementation of FIN 48, the Company has not changed any of its tax accrual estimates. The Company files U.S. federal and U.S. state tax returns. For state tax returns the Company is generally no longer subject to tax examinations for years prior to 1996.

Effective April 1, 2008, the Company partially adopted SFAS 157, which provides a framework for measuring fair value. Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The partial adoption of this standard only resulted in additional disclosure requirements and had no financial statement impact. Delayed application of this statement is permitted for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Company has not applied the provisions of SFAS 157 for intangible assets and long-lived assets measured for fair value for impairment assessment under Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Effective April 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities — Including an Amendment of SFAS No. 115 (SFAS 159). This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS No. 159 are elective; however, the amendment to SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. The fair value option established by SFAS 159 permits the Company to choose to measure eligible items at fair value at specified election dates. The Company will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. In connection with the adoption of this standard, the Company did not elect any additional financial instruments to be recorded at fair value.

Effective December 31, 2008, the Company adopted the Emerging Issues Task Force (“EITF”) Issue No. 08-4: Transition Guidance for Conforming Changes to Issue No. 98-5 (EITF 08-4), which was ratified by the consensus of the FASB in June 2008. The objective of EITF 08-4 is to provide transition guidance for conforming changes made to Issue No. 98-5 “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” that resulted from Issue No. 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments,” and FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This transition guidance is unique in that the current changes reflect matters that should have been addressed in the past, but were missed. Issue No. 08-4 concludes that conforming changes made to Issue No. 98-5 that result from Issue No. 00-27 and Statement No. 150 are effective for financial statements issued for fiscal years ending after December 15, 2008. The effect of these changes is to be applied retrospectively with the cumulative effect of the change being reported in retained earnings. If a company must make a change in its accounting to implement these changes, then the disclosure requirements in FAS 154 should be followed. The adoption of EITF 08-4 did not impact the Company's consolidated financial statements.

SFAS No. 160 — In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. Its intention is to eliminate the diversity in practice regarding the accounting for transactions between an entity and noncontrolling interests. SFAS No. 160 will apply to fiscal years and interim periods beginning on or after December 15, 2008. We adopted SFAS No. 160 on January 1, 2009 and it had no material impact on our consolidated financial statements.

SFAS No. 161 — In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133. SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 to provide a better understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and their effect on an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. We adopted SFAS No. 161 on January 1, 2009 and it had no material impact on our consolidated financial statements.

SFAS No. 165 - We adopted SFAS No. 165, Subsequent Events for the Quarterly Report for the period ending June 30, 2009. SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, which are referred to as subsequent events. The statement clarifies existing guidance on subsequent events, including a requirement that a public entity should evaluate subsequent events through the issue date of the financial statements, the determination of when the effects of subsequent events should be recognized in the financial statement and disclosures regarding all subsequent events. Adoption of SFAS 165 did not have a material affect on our condensed consolidated financial statements. We have updated subsequent events through August 14, 2009, which is the date of this filing.

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SFAS No. 141(R) — In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) requires the acquirer of a business to recognize and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at fair value. SFAS No. 141(R) also requires transaction costs related to the business combination to be expensed as incurred. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted SFAS No. 141(R) on April 1, 2009 and it had no material impact on our consolidated financial statements.

In April 2009, the Company adopted several new pronouncements issued by the FASB related to fair value measurement, recording and disclosure. FASB Staff Position, or FSP, No. 107-1, “Interim Disclosures about Fair Value of Financial Instruments,” requires disclosures relating to fair value of financial instruments for both interim and annual reporting periods. FSP No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” provides additional guidance on estimating the fair value of a financial instrument when the volume and level of activity for the asset or liability has significantly decreased in relation to normal market activity for the asset or liability. FSP No. 115-2 and FSP No. 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” provide additional guidance for recording impairment losses on securities. All of these fair value measurement pronouncements were effective for interim and annual reporting periods ending after June 15, 2009. The adoption of these pronouncements did not have a material impact on the Company’s condensed consolidated financial statements.

SFAS No. 167 — In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), which amends FASB Interpretation (FIN) No. 46(R), Consolidation of Variable Interest Entities, for variable interest entities to determine whether a variable interest entity must be consolidated. SFAS No. 167 requires an entity to perform an analysis to determine whether an entity’s variable interest or interests give it a controlling financial interest in a variable interest entity. This statement requires ongoing reassessments of whether an entity is the primary beneficiary of a variable interest entity and enhanced disclosures that provide more transparent information about an entity’s involvement with a variable interest entity. The new standard will become effective for us on January 1, 2010. We are currently evaluating the impact of adopting SFAS No. 167 on the consolidated financial statements.

In May 2008, the FASB issued Staff Position (FSP) EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. This staff position addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the allocation in computing earnings per share under the two-class method described in SFAS 128, Earnings Per Share. The FASB concluded that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. If awards are considered participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. Early adoption is prohibited. The implementation of EIFT 03-6-1 did not impact the Company’s consolidated financial statements.

In November 2007, FASB issued EITF 07-1, “Accounting for Collaborative Arrangements" (“EITF 07-1”).” EITF 07-1 requires additional disclosures related to collaborative arrangements. EITF 07-1 is effective for fiscal years beginning after December 15, 2008. The implementation of EIFT 07-1 did not impact the Company’s consolidated financial statements.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162.” The FASB Accounting Standards Codification, or Codification, will become the single official source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP, with the exception of guidance issued by the SEC and its staff. The Codification did not change GAAP, but reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays all topics using a consistent structure. SFAS No. 168 is effective for financial statements issued for interim and annual reporting periods ending after September 15, 2009. The Company does not expect the adoption of SFAS No. 168 to have a material impact on its condensed consolidated financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force ("EITF"), the American Institute of Certified Public Accountants ("AICPA"), and the SEC did not or are not believed by management to have a material impact on our present condensed consolidated financial statements.

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RESULTS OF OPERATIONS

Fiscal year ended March 31, ~~2009~~2010 compared to the fiscal year ended March 31, ~~2008~~2009.

The ~~revenues~~Company ~~and~~sold ~~costs~~its ofAcXess ~~sales~~subsidiary ~~are~~in ~~wholly~~July, ~~attributed~~2009 toand ~~AcXess. An agreement~~ has ~~been~~accounted ~~entered~~for ~~into~~the tooperations, ~~sell~~assets ~~the~~and ~~Company’s~~liabilities ~~interest~~of in AcXess~~. The~~ ~~General~~during ~~and~~the ~~Administrative~~fiscal ~~expenses~~period ~~are~~ending ~~attributable~~March to31, ~~both~~2010 ~~AcXess~~as ~~and~~discontinued ~~Innovative Software~~operations.

Revenues

Revenues from continuing operations for the fiscal years ended March 31, ~~2009~~2010 and ~~2008~~2009 were $~~357,746~~ -0- and $~~216,583, respectively, an increase of $141,163 or approximately 65%~~-0-. ~~Revenue was derived primarily from the contracts that AcXess has with Microsoft, Citri, and SAP, and we experienced an increase in activity from these customers during the year ended March 31, 2009.~~

In June 2009, we entered into an agreement to sell our interest in AcXess, and do not expect to receive a significant revenue stream from this entity in the coming twelve months.

Cost of Sales and Margins

Cost of sales from continuing operations for the fiscal years ended March 31, ~~2009~~2010 and ~~2008~~2009 were $~~169,711~~-0- and $~~67,502, respectively, an increase of $102,209 or approximately 151%~~-0-. Cost of sales primarily consisted of network charges that AcXess incurred at its data site, and we experienced significant cost increases from our hosting company during the year ended March 31, 2009. Gross profit of $188,035 and $149,081 resulted in a gross profit margin of 53% and 69% for the years ended March 31, 2009 and 2008, respectively. Gross margin percentage decreased due to increases in costs associated with hosting facilities during the fiscal year ended March 31, 2009.

Sales, ~~general and administrative expenses for the years ended March 31~~General, ~~2009~~ and ~~2008 were~~Administrative $747,963 and $1,440,271, respectively, a decrease of $692,308 or approximately 48%. Sales, general and administrative expenses consisted primarily of payroll and related costs of $273,547 (including $165,150 of non-cash compensation related to stock options vested by officers); legal and accounting fees in the amount of $148,654; consulting fees in the amount of $114,000; depreciation and amortization expense in the amount of $84,163; insurance expense in the amount of $37,236; bad debt expense of $29,320; facilities and related expense in the amount of $23,101; travel and entertainment expenses of $11,563; and professional fees in the amount of $6,210.Expenses

~~Of our total sales~~Sales, general and administrative ~~costs~~expenses for the ~~year~~years ended March 31, 2010 and 2009, were $~~266~~509,~~385~~968 orand ~~approximately~~$481,578, ~~39% is directly attributable to AcXess. In June 2009~~respectively, ~~we entered into~~ an ~~agreement~~increase toof ~~sell~~$28,390 ~~our~~or ~~interest~~approximately ~~in AcXess~~6%. ~~However,~~For asboth weyears, ~~plan~~sales, togeneral ~~acquire~~and ~~additional~~administrative ~~operating~~expenses ~~companies,~~consisted weprimarily doof ~~not~~professional ~~expect~~fees ~~our~~and ~~operating expenses~~bad todebt ~~significantly~~expense as ~~decrease~~our inpayroll ~~the~~and ~~coming~~other ~~twelve~~costs ~~months~~were minimal.

Other Income (Expense), net

Other income (expense), net for the year ended March 31, ~~2009~~2010, was an expense of $~~409~~279,~~203~~ 638 compared to expense of $~~195~~388,~~819~~936 for the year ended March 31, ~~2008~~2009, a net ~~increase~~decrease in expense of $~~213~~109,~~384~~ 298 or approximately ~~109~~ 28%. During the ~~prior~~ year, ~~the~~ended ~~Company~~March ~~recognized~~31, ~~a gain of $270~~2010,~~919~~ ~~from~~ the ~~change in~~Company ~~the~~incurred ~~fair~~interest ~~value~~expense of ~~derivative~~$800,408 ~~liabilities;~~compared ~~these derivatives were reclassified~~ to ~~equity~~$381,516 during the year ended March 31, ~~2008,~~2009. ~~and~~The ~~there~~increase was nodue ~~such~~to ~~gain~~the orincrease ~~loss~~in notes payable during the ~~current~~ year. ~~During~~In addition, during the year ended March 31, ~~2009~~2010, the Company ~~incurred~~recorded ~~interest~~failed acquisition expense of $~~406~~30,~~657~~027, ~~compared~~a toloss of settlement of $~~469~~35,~~109~~000 ~~during~~related to the ~~year~~acquisition ~~ended~~of ~~March~~The ~~31,~~Web ~~2008.~~Channel ~~The~~and ~~reason~~it's ~~for~~subsequent ~~the~~rescission ~~decrease~~and ina ~~interest~~$69,975 ~~expense~~judgment ~~was~~related ~~decrease~~to inlitigation. ~~debt~~The ~~due~~2010 toexpenses were significantly offset by the ~~conversion~~recognition of ~~notes~~income ~~payable.~~arising ~~During~~from ~~the~~de-recognition ~~years~~of ~~ended~~accrued ~~March~~expenses 31of $569,031. The ~~2009~~reversal ~~and~~of ~~2008,~~these ~~the~~expenses ~~Company had~~resulted afrom ~~gain~~management's ondetermination that the ~~sale~~accruals of(which ~~fixed~~represented ~~assets~~then management's estimate of ~~$2,205~~potential ~~and~~returns ~~$2,518,~~from ~~respectively. In~~products ~~addition,~~sold ~~during~~from ~~the~~its ~~year~~EPMG ~~ended~~subsidiary ~~March~~through 312004), ~~2009, the~~were ~~Company~~no ~~recorded~~longer ~~other~~necessary ~~expense~~as the statute of ~~$4,571~~limitations ~~related~~had toexpired ~~the~~for ~~amortization~~any ofclaim ~~the~~on ~~discount~~these ~~due~~accruals. Also toduring the ~~conversion~~period, ~~feature~~the ~~associated~~Company ~~with~~recognized ~~the~~other ~~liability~~income ~~for~~of ~~preferred~~$85,491 ~~stock;~~comprised ~~there~~principally ~~was~~of nothe ~~such~~write-down ~~charge~~of ~~during~~an ~~the~~accrual ~~comparable~~of ~~period~~legal ofexpenses ~~the~~pursuant ~~prior~~to ~~year~~an agreement with a law firm.

Net Loss

~~For~~Our ~~the reasons stated above, our~~ net loss for the year ended March 31, ~~2009~~2010, amounted to $~~969~~375,~~131~~ 992 compared to a net loss of $1969,~~487,009~~131 during the prior period, a net decrease in loss of $~~517~~593,~~878~~ 139, or approximately 35 61%. Net loss for the year ended March 31, 2010 comprised $789,606 loss from continuing operations and a gain on the sale of discontinued operations of $413,614. Net loss for the year ended March 31, 2009 comprised $870,514 loss from continuing operations and $98,617 loss from discontinued operations.

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LIQUIDITY AND CAPITAL RESOURCES

The March 31, ~~2009~~2010 financial statements have been prepared assuming that we will continue as a going concern. However, we have incurred asignificant ~~loss of $5~~losses,~~867,392 from~~ ~~inception (January 12, 2005) through March 31, 2009,~~ and have working capital and stockholder deficits of $2,~~041~~304,~~278 and~~395 ~~$2,004,819 , respectively,~~ at March 31, ~~2009~~2010. In addition, the Company currently has ~~minimal~~no revenue generating operations and ~~expects~~has minimal cash or other current assets available to pay its liabilities. . Finally, we expect to incur substantial operating expenses in order to expand ~~its~~our business. As a result, we expect to incur operating losses for the foreseeable future. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.

~~Management~~On ~~intends~~December 22, 2006, the Company entered into a securities purchase agreement (the "Agreement") with an accredited investor (the "Investor") for the sale of $1,000,000 Convertible Debentures (the "Debentures"). In connection with the Agreement, the Investor received (i) a warrant to ~~continue~~purchase 8,928,571 shares of common stock ("Long-Term Warrants") exercisable at $0.30 per share and (ii) a warrant to ~~fund~~purchase ~~operations~~1,785,714 ~~through~~shares ~~additional financings~~of common stock ("Short-Term Warrants") exercisable at $0. ~~However~~143 ~~there~~per ~~can~~share. beThe noWarrants ~~assurance~~are exercisable for a period of ~~successful~~four ~~financing~~years orfrom ~~acquisition~~the ~~activity~~date inof issuance and the ~~future. As~~earlier of ~~March~~(i) ~~31,~~December ~~2009~~22, 2007; (ii) the ~~Company~~date ~~had~~a ~~cash~~registration statement(s) covering the resale of all Registrable Securities (as defined in the Registration Rights Agreement between the parties) is declared effective by the Commission (the "Initial Exercise Date") and ~~cash~~on ~~equivalents~~or prior to the close of ~~$627~~ business on the four month anniversary of the Initial Exercise Date, respectively. All warrants have expired as of the date of this filing.

OnThe ~~December~~Debentures ~~22,~~bore ~~2006,~~interest ~~the~~at ~~Company~~4% ~~entered~~through ~~into~~l aJune ~~securities purchase agreement (the "Agreement") with an accredited investor (the "Investor") for the sale of $1~~22,~~000,000~~ ~~Convertible Debentures (the "Debentures"). In connection with the Agreement~~2007, ~~the~~and ~~Investor~~9% ~~received (i) a warrant to purchase 8~~thereafter,~~928,571~~ ~~shares~~payable ofin ~~common~~arrears ~~stock ("Long-Term Warrants") exercisable at $0.30~~ and ~~(ii)~~were ascheduled ~~warrant~~ to ~~purchase~~mature ~~1,785,714~~three ~~shares of common stock ("Short-Term Warrants") exercisable at $0.143 per share. The Long-Term Warrants and the Short-Term Warrants are exercisable for a period four~~ years from the date of issuance. ~~and~~Accrued ~~the~~interest ~~earlier~~will ofbe ~~(i)~~payable ~~December 22, 2007 and (ii) the date a registration statement(s) covering the resale of all Registrable Securities (as defined~~ in ~~the~~cash ~~Registration~~semi-annually, ~~Rights~~beginning ~~Agreement) is declared effective by the Commission (the "Initial Exercise Date") and~~ on orJuly ~~prior~~1, to2007. The ~~the~~Company ~~close~~is ofin ~~business~~default on the ~~four~~Debentures ~~month~~and ~~anniversary~~has ofnot ~~the~~paid ~~Initial~~any ~~Exercise Date, respectively~~interest.

~~The~~At ~~Debentures~~March ~~bear interest at 4% until June 22~~31, ~~2007~~2010, ~~and~~we 9%had ~~thereafter,~~current ~~payable~~liabilities ~~in arrears and mature three years from the date~~ of ~~issuance. Accrued interest will be payable in cash semi-annually~~$2, ~~beginning on July 1~~304, ~~2007~~653.

InCapital ~~February~~expenditures ~~2007~~for wethe ~~entered~~fiscal ~~into~~years aended ~~master~~March ~~leasing~~31, ~~arrangement~~2010 ~~with~~and ~~Gulf~~2009, ~~Pointe~~amounted ~~Capital,~~to ~~LLC~~$-0- ~~for~~and ~~equipment~~$-0 ~~purchases~~and upwe todo anot ~~total~~currently ofhave ~~$500,000~~any ~~(see~~material ~~Contractual~~commitments ~~Obligations~~for ~~below)~~such expenditures.

~~During~~We ~~the~~do ~~year~~not ~~ended~~currently ~~March~~have ~~31,~~adequate ~~2009, the Company received~~ cash ~~advances~~to inmeet ~~the~~our ~~aggregate~~operating ~~amount~~commitments offor ~~$89,742 from a shareholder. These advances bear interest at~~ the ~~rate~~next ~~of 10% per annum~~year.

At March 31, 2009, we had current liabilities of $2,041,905.

We have no material commitments for capital expenditures. Capital expenditures for the fiscal years ended March 31, 2009 and 2008, amounted to $8,985 and $59,771, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

WeFor ~~have~~FY2010 noand ~~material~~as of the date of the filing of this Annual Report on Form 10-K, we did not have any off-balance sheet arrangements asthat have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of ~~March~~operations, 31liquidity, ~~2009~~capital expenditures or capital resources that are material to our stockholders.

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CONTRACTUAL OBLIGATIONS

InDuring ~~February 2007~~FY2010, the Company ~~entered~~did ~~into~~not aenter ~~$500,000~~into ~~Master~~any ~~Lease Line for Equipment Purchases (the “Master Lease Agreement”). At that time~~transaction, ~~the~~agreement ~~Company~~or ~~sold~~other ~~property~~contractual ~~and~~arrangement ~~equipment~~with ~~for~~an ~~$125,000~~entity ~~and~~unconsolidated ~~leased~~with ~~them~~us ~~back~~ under ~~the Master Lease Agreement. The Company recognized a gain on the sale of those assets of $10,633,~~ which ~~was~~we ~~deferred~~would ~~and~~have ~~will be recognized over the 24-month term of the lease. At March 31, 2009, the balance of this deferred gain was $0.~~had:

~~The~~· ~~Master~~An ~~Lease~~obligation ~~Agreement~~under ~~calls for draws of~~ a ~~minimum~~guarantee ~~of $100~~contract,~~000,~~ aalthough ~~minimum~~we ~~term~~do ofhave 18obligations ~~months~~under ~~and~~certain asales ~~maximum~~arrangements ~~term~~including ofpurchase 36obligations ~~months.~~to ~~The lease entered into in February 2007 has monthly payments of $6,363. The Company accounted for this lease as a capital lease.~~vendors;

In· ~~connection~~A ~~with~~retained ~~the~~or ~~Master~~contingent ~~Lease~~interest ~~Agreement,~~in ~~the~~assets ~~Company~~transferred ~~agreed~~ to ~~issue five year warrants to~~ the ~~lender~~unconsolidated toentity ~~purchase~~or ~~1,350,000~~similar ~~shares~~arrangement ofthat ~~the~~serves Company’s common stock at an exercise price of $0.18 per share. Ten percent (135,000) of the warrants vested upon execution of the Master Lease Agreement. The remaining 90% of the warrants vest on a pro rata basis as ~~the lender provides funding under the Master Lease Agreement. As such~~credit, ~~303,750~~liquidity ~~warrants~~or ~~vested~~market ~~upon~~risk ~~execution~~support ~~of the sale lease-back described above. The total number of warrants, 438,750, was valued using the Black-Scholes method and applied~~ to ~~the~~such ~~capital~~entity ~~lease~~for ~~obligation~~such ~~in accordance with Accounting Principles Board (“APB”) No. 14. This resulted in a decrease in capital lease obligation of $37,726 and a corresponding increase in additional paid-in capital.~~assets;

On· ~~April~~Any 16obligation, ~~2008,~~including ~~the~~a ~~Company~~contingent ~~announced~~obligation, ~~that~~under ita ~~had~~contract ~~terminated its planned acquisition of Xalles Limited~~ that ~~had~~would ~~been~~be ~~announced~~accounted ~~on October 5, 2007. In conjunction with this planned acquisition, Xalles had advanced to the Company the amount of $158,079 to provide working capital~~ for ~~the~~as ~~Company. On April 14, 2008 (the “Effective Date”), Innovative Software Technologies, Inc., (the “Company”), Xalles Limited, an Irish corporation (“Xalles”), and Meridian Bay Limited,~~ a ~~Hong~~derivative ~~Kong~~instrument; ~~corporation (“Meridian”) terminated an agreement to purchase all of the outstanding shares of Xalles~~or, which had been entered into by the parties on October 1, 2007 (the “Agreement”). Continued due diligence by the Company resulted in the Company’s decision to not pursue the acquisition under the terms specified by the Agreement.

As· aAny ~~result of the termination of the Agreement and the signing of the Release, and in order to recognize the~~ obligation ~~of the Company due to a series of advancements made to it by Xalles~~, ~~the~~including ~~Company issued~~ a ~~promissory~~contingent ~~note to the benefit of Xalles in the amount of $158~~obligation,~~079~~ onarising ~~April~~out ~~14, 2008, repayable on or before December 18, 2008 (the “Note”). The outstanding principal amount~~ of ~~the Note bears interest beginning on April 14, 2008, calculated on the basis of~~ a ~~360-day~~variable ~~year for the actual number of days elapsed through the actual payment date at the following rates of~~ interest: ~~eight~~in ~~percent~~an ~~(8%)~~unconsolidated ~~per~~entity ~~annum~~that ~~through~~is ~~June~~held ~~15,~~by ~~2008;~~us ~~ten~~and ~~percent~~material ~~(10%)~~to ~~per~~us ~~annum~~where ~~through~~such ~~August~~entity ~~16,~~provides ~~2008~~financing, ~~twelve percent (12%) per annum through October 17~~liquidity, ~~2008;~~market ~~and~~risk ~~fourteen~~or ~~percent~~credit ~~(14%)~~risk ~~per annum~~support ~~through December 18~~to, ~~2008. This~~or ~~Note~~engages ~~may~~in ~~be prepaid~~leasing, ~~either~~hedging ~~in whole~~ or inresearch ~~part, at any time without penalty. The outstanding principal balance of this Note, plus accrued but unpaid interest, was due~~ and ~~payable~~development onservices ~~December 18, 2008 and is in default at March 31, 2009. As of March 31, 2009, the Company is in negotiations~~ with ~~Xalles regarding a restructuring or renegotiation of the Note; however, there is no assurance that such a restructuring will be achieved at terms beneficial to the Company if at all~~us.

18RECENT ACCOUNTING PRONOUNCEMENTS

The Company does not believe that recently issued accounting pronouncements will have a material impact on its financial statements.

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PRINCIPAL FACTORS AFFECTING OUR FINANCIAL PERFORMANCE

We believe that the following factors will continue to affect our financial performance as of the date of the filing of this Annual Report on Form 10-K:

Protection of Intellectual Property – We believe that the success of our business is dependent on any commercially viable intellectual property rights that we acquire or develop. We believe that a loss of these rights would harm or cause a material disruption to our business and, our corporate strategy is to aggressively take legal action against any violators of our intellectual property rights, regardless of where they may be. From time to time, we may have to litigate to enforce our intellectual property rights through litigation and we may be required to do so in the future. We do not have intellectual property insurance to assist us in covering the costs of expensive litigation, such litigation may result in substantial costs and could divert resources and management attention from the operations of our business. We may be unable to pay the cost of either litigating against or defending against lawsuits involving our intellectual property rights. The inability to effectively litigate could undermine our business or force a ruinous settlement on us.

·	Funding. We need affordable, timely funding to grow any business we acquire or develop. In light of our financial condition, we may be unable to obtain such funding which failure would undermine our efforts to establish a growing business.

Compliance Issues. As we have had disruptions in business, changes in management, changes in business lines and rescissions of acquisition agreements, we may face compliance costs and issues in terms of compliance with all applicable laws and regulations. Such costs and issues may not be known or apparent until we complete audits for past due Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Until known, any such compliance issues may have a material impact on our business and company.

Early Stage Development Company. We are a small, start up concern as of the date of the filing of this Annual Report on Form 10-K. We lack the resources of competitors and may be unable, either due to lack of adequate funding or competition from others or a lack of consumer acceptance of our products or services or a combination of any of the foregoing factors, to establish a sustainable business and, as such, we would fail.

With respect to our business as of the filing date of this Annual Report on Form 10-K, expansion of our business may put added pressure on our management, financial resources and operational infrastructure impeding our ability to meet any increased demand for our products and possibly hurting our operating results. Our business plan is to significantly grow our operations to meet anticipated growth in demand for our products, and by the introduction of new product offerings. Our planned growth includes the construction of several new production lines to be put into operation over the next five years. Growth in our business may place a significant strain on our personnel, management, financial systems and other resources. We may be unable to successfully and rapidly expand sales to potential customers in response to potentially increasing demand or control costs associated with our growth. To accommodate any such growth and compete effectively, we may need to obtain additional funding to improve information systems, procedures and controls and expand, train, motivate and manage our employees, and such funding may not be available in sufficient quantities, if at all.

We depend on key personnel, and turnover of key employees and senior management could harm our business. Our future business and results of operations depend in significant part upon the continued contributions of our key technical and senior management personnel, including specifically, Jack Wand, President, and Paul Mazzapica, Executive Vice President. If we lose a key employee or if a key employee fails to perform in his or her current position, or if we are unable to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management would undermine our business as we anticipate we will need their skills and abilities to manage and grow the development, manufacturing, technical, marketing and sales aspects of our business, any part of which could be harmed by further turnover.

We are subject to penny stock regulations and restrictions that may affect our ability to sell our securities on the secondary market. The SEC has adopted regulations that generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and therefore is a “penny stock.” Brokers or dealers effecting transactions in “penny stock” must disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect your ability to sell shares. Our common stock is quoted on the Pink Tier – Limited Disclosure. We may be unable to meet requirements to quote our common stock on a more active stock quotation system and establish a viable, active public market for our common stock. Such failure would leave our common stock as it is – not liquid or actively traded and subject to manipulation by day traders and others. Further, until we are current in all Exchange Act filings and reports, there is not sufficient information for investors to base any trading decision on our common stock and our common stock is a highly risky investment with a substantial likelihood of an investor losing his or her or its entire investment.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting estimates are those that management deems to be most important to the portrayal of our financial condition and results of operations, and that require management’s most difficult, subjective or complex judgments, due to the need to make estimates about the effects of matters that are inherently uncertain. We have identified our critical accounting estimates which are discussed below.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements. The reported amounts of revenue and expenses may be affected by the estimates we are required to make. . Actual results could differ from those estimates. The Company’s significant estimates include the valuation of stock based charges and the valuation of inventory reserves.

Going Concern

Our consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred losses from operations and have significant working capital and stockholder deficits at March 31, 2010 and as of the date of this filing. These factors, among other things, raise substantial doubt about our ability to continue as a going concern. Our plans include raising debt or equity capital to meet our commitments until such time we are able to meet such commitments with revenues from an operating business. However, there can be no guarantee that we will be successful securing funding or generating cash flow from an operating business. In the event we are unable to fund our operations by positive operating cash flows or additional funding, we may be forced to reduce our expenses and modify our business plan. These factors indicate that we may be unable to continue as a going concern. Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

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ITEM 8. FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Innovative Software Technologies, Inc.

(A Development Stage Company)

We have audited the accompanying consolidated balance sheet of Innovative Software Technologies, Inc. (a development stage company) (the “Company”) as of March 31, 2010, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year then ended, and for the period from January 12, 2005 (date of inception) through March 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

The financial statements of the Company for the period January 12, 2005 (date of inception) to March 31, 2009, were audited by the Company’s predecessor auditor, PMB Helin Donovan, LLP (the “Former Auditors”). The cumulative statements of operations, changes in stockholders’ deficit and cash flows for the period from January 12, 2005 (date of inception) to March 31, 2010, include amounts for the period January 12, 2005 (date of inception) to March 31, 2010. Our opinion, insofar as it relates to the amounts included for the period January 12, 2005 (date of inception) to March 31, 2009, is based solely on the report of the Former Auditors. The Former Auditors’ report, dated August 14, 2009, expressed an unqualified opinion and included an explanatory paragraph describing conditions that raised substantial doubt about the Company’s ability to continue as a going concern. The Former Auditors report has been furnished to us, and our opinion, insofar as it related to the amounts included for such prior periods, is based solely on the reports of Former Auditors.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2010, and the results of its operations and its cash flows for the year then ended and for the period from January 12, 2005 (date of inception) through March 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred significant losses from operations and has no revenue generating operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Kingery & Crouse PA

Certified Public Accountants

Tampa, Florida

September 25, 2014

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Innovative Software Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of Innovative Software Technologies, Inc. (the Company) (a development stage company) as of March 31, 2009 ~~and 2008~~, and the related consolidated statements of operations, shareholders’ ~~equity (~~deficit), and cash flows for the ~~years~~year ~~ended~~then ~~March 31~~ended, ~~2009~~ and ~~2008, and~~ the period from January 12, 2005 (Inception) through March 31, 2009 (not presented separately herein). The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our ~~audits~~audit.

We conducted our ~~audits~~audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our ~~audits~~audit ~~provide~~provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Innovative Software Technologies, Inc. as of March 31, 2009 ~~and 2008~~, and the results of its operations and its cash flows for the ~~years~~year ended March 31, 2009 ~~and~~(not ~~2008~~presented separately herein), and the period from Inception through March 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustained losses and negative cash flows from operations for the period from Inception through March 31, 2009, whereby its accumulated deficit during the development stage is approximately $5.9 million. The Company’s ability to meet its obligations in the ordinary course of business is dependent upon its ability to establish profitable operations, raise additional financing through public or private equity financings, enter into collaborative or other arrangements with corporate sources, or secure other sources of financing to fund operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

PMB Helin Donovan, LLP

/s/ PMB Helin Donovan, LLP

August 14, 2009
Austin, Texas

1916

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INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

(A Development Stage Company)

	March 31,			March 31,
	2009			2008
	2010			2009
Assets
Current assets
Cash and cash equivalents	$	~~627~~258		$	~~29,126~~348
Accounts receivable, net		-			8,450
Total current assets		258			348
Prepaid services and other current assets		-			839
Assets of discontinued operations		-			36,738
Total current assets		627			38,415
Total assets	$	258		$	37,086
Property and equipment, net (note 4)		36,459			114,487
Deposits and other assets		-			2,400
Total assets	$	37,086		$	155,302
Liabilities and stockholders' deficit
Current liabilities
Accounts payable and accrued liabilities	$	~~906~~255,~~049~~698		$	~~729~~683,~~875~~607
Accrued interest		~~203~~327,~~664~~298			89199,~~727~~094
Accrued officer salary and expenses		~~116~~175,~~500~~750			58116,500
Deferred revenue (note 5)		30,301			112,781
Penalty for late registration		81,140			81,140
Penalty for late registration of common stock offering		81,140			81,140
Preferred stock liability		-			86,850
Preferred stock liability		86,850			-
Advances payable		-			89,742
Deferred gain on sale of fixed assets		-			4,874
Payable to related party		181,688			94,312
Current portion of capital lease obligation		34,175			57,559
Notes payable		283,079			68,337
Advances payable (note 6)		89,742			155,511
Convertible debentures		1,000,000			335,405
Note payable (note 7)		158,079			-
Current liabilities from discontinued operations		-			286,918
Convertible debentures (note 8)		335,405			70,394
Total current liabilities		2,304,653			2,041,905
Total current liabilities		2,041,905			1,360,361
Commitments and contingencies		-			-
Stockholders' deficit
Preferred stock, 25,000,000 shares authorized, no par value:
Series A, 1,500,000 shares authorized, 450,000 shares outstanding		~~363~~450,~~150~~000			~~450~~363,~~000~~150
Common stock, $0.001 par value; 300,000,000 shares authorized;
103,514,199 and 101,148,199 shares issued and outstanding at March 31, 2009 and 2008, respectively (note 9)		103,515			101,185
99,036,851 and 103,514,199 shares issued and outstanding at		99,037			103,515
Additional paid-in capital		3,395,908			3,142,017
and March 31, 2010 and March 31, 2009, respectively
Deficit accumulated during the development stage		(5,867,392	)		(4,898,261	)
Additional paid-in capital		3,389,952			3,395,908
Total stockholders' deficit		(2,004,819	)		(1,205,059	)
Deficit Accumulated during the Development Stage		(6,243,384	)		(5,867,392	)
Total liabilities and stockholders' deficit	$	37,086		$	155,302
Total stockholder's deficit		(2,304,395	)		(2,004,819	)
Total liabilities and stockholders' deficit	$	258		$	37,086

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

20consolidated financial statements.

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INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Year Ended			For the Year Ended			Cumulative fromInception(January 12, 2005) to
	March 31,			March 31,			March 31,
	2009			2008			2009
Revenue	$	357,746		$	216,583		$	698,904
Total revenue		357,746			216,583			698,904
Cost of revenue		169,711			67,502			322,969
Total cost of revenue, excluding depreciation below		169,711			67,502			322,969
Gross profit		188,035			149,061			375,935
Operating expenses:
Sales, general and administrative expenses		747,963			1,440,271			4,674,694
Total operating expenses		747,963			1,440,271			4,674,694
Operating loss		(559,928	)		(1,291,190	)		(4,298,759	)
Other income (expense):
Income from change in fair value of derivative liabilities		-			270,919			169,241
Interest expense		(406,657	)		(471,925	)		(1,795,614	)
Interest income		-			2,816			7,978
Gain on sale of equipment, net		2,025			2,518			4,543
Other income (expense)		(4,571	)		(147	)		45,219
Total other expense, net		(409,203	)		(195,819	)		(1,568,633	)
Loss before taxes		(969,131	)		(1,487,009	)		(5,867,392	)
Provision for taxes		-			-			-
Net loss	$	(969,131	)	$	(1,487,009	)	$	(5,867,392	)
Undeclared preferred stock dividends		(18,000	)		(18,000	)		(49,500	)
Loss applicable to common stockholders	$	(987,131	)	$	(1,505,009	)	$	(5,916,892	)
Net loss per share - basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.07	)
Weighted average shares outstanding - basic and diluted		103,016,117			86,717,092			83,807,309

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

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INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT)

	Year			Year			Inception
	Ended			Ended			(January 12, 2005)
	March 31,			March 31,			to March 31,
	2010			2009			2010


Revenue	$	-		$	-		$	-

Operating expenses:
Selling, general and administrative expenses		509,968			481,578			2,775,195
Total operating expenses		509,968			481,578			2,775,195

Operating (loss)		(509,968	)		(481,578	)		(2,775,195	)

Other expense:
Income (expense) from change in fair value of derivative liabilities		-			-			169,241
Interest (expense)		(800,408	)		(381,516	)		(2,523,623	)
Interest income		1,250						8,963
Expense of failed acquisition		(30,027	)		-			(30,027	)
Gain (loss) on sale of fixed assets		-			(2,849	)		(2,849	)
Loss on settlements		(104,975	)		-			(104,975	)
Derecognition of accrued liabilities		569,031			-			569,031
Other income (expense)		85,491			(4,571	)		147,781
Total other income (expense)		(279,638	)		(388,936	)		(1,766,458	)

(Loss) from continuing operations before provision for income taxes		(789,606	)		(870,514	)		(4,541,653	)

Provision for taxes		-			-			-

Net income (loss) from continuing operations		(789,606	)		(870,514	)		(4,541,653	)
Net income (loss)from discontinued operations		-			(98,617	)		(2,115,345	)
Gain on disposition of discountined operations		413,614			-			413,614

Net (loss)		(375,992	)		(969,131	)		(6,243,384	)

Undeclared preferred stock dividends		(18,000	)		(18,000	)		(67,500	)

(Loss) applicable to common stockholders	$	(393,992	)	$	(987,131	)	$	(6,310,884	)

Net (loss) per share from continuing operations - basic and diluted	$	(0.01	)	$	(0.01	)
Net income (loss) per share from discontinued operations-basic and diluted	$	0.00		$	(0.00	)


Weighted average shares outstanding -
basic		100,018,188			103,016,117
diluted		100,018,188			103,016,117

~~FOR~~The ~~THE~~accompanying ~~YEARS~~notes ~~ENDED~~are ~~MARCH~~an ~~31,~~integral ~~2009~~part ~~and~~of ~~2008~~these

~~AND~~consolidated ~~THE~~financial ~~PERIOD FROM INCEPTION (JANUARY 12, 2005) THROUGH MARCH 31, 2009~~statements.

	Common Stock							Preferred Stock A			Accumulated
	Shares	Amount			APIC			Shares	Amount		Deficit			Total
Balance at inception	-	$	-		$	-		-	$	-	$	-		$	-
Founder's shares issued for cash at inception at $0.33 per share	3,000,000		10,000			-		-		-		-			10,000
Common stock issued to extinguish debt and interst at $0.05 per share	220,000		11,000			-		-		-		-			11,000
Common stock issued to extinguish debt and interest at $0.05 per share	670,123		33,506			-		-		-		-			33,506
Common stock issued as compensation at $0.05 per share	3,829,882		191,494			-		-		-		-			191,494
Adjustments to reflect reverse acquisition	59,735,374		(178,546	)		(962,102	)	-		450,000		-			(690,648	)
Issuance for retirement of debt at $0.04 per share	4,377,872		4,378			170,737		-		-		-			175,115
Issuance for consulting services at $0.11 per shares	523,811		524			57,095									57,619
Issuance of options for employees and consultants	-		-			370,418									370,418
Issuance for legal services at $0.13 per share	174,519		175			22,512									22,687
Issuance of warrant with equipment leasing line	-		-			37,726									37,726
Issuance for legal services at $0.09 per share	183,620		184			16,342									16,526
Issuance of options for employee	-		-			82,802									82,802
Net loss												(3,411,252	)		(3,411,252	)
Balance as of March 31, 2007	72,715,201	$	72,715		$	(204,470	)	450,000	$	450,000	$	(3,411,252	)	$	(3,093,007	)

Table of Contents

	Common Stock					Preferred Stock A				Accumulated
	Shares	Amount		APIC		Shares	Amount			Deficit			Total
Issuance of common stock for legal services	459,778		460		22,529	-		-			-			22,989
Issuance of common stock for cash	2,000,000		2,000		90,000	-		-			-			92,000
Issuance of common stock for legal services	336,862		337		6,400	-		-			-			6,737
Exchange of debt and embedded derivative liabilities for common stock	5,672,655		5,673		1,946,778	-		-			-			1,952,451
Conversion of notes payable to common stock	18,789,703		18,790		920,696	-		-			-			939,486
Issuance of common stock for accrued compensation	1,210,000		1,210		59,290	-		-			-			60,500
Stock-based compensation	-		-		300,794	-		-			-			300,794
Net loss	-		-		-	-		-			(1,487,009	)		(1,487,009	)
Balance as of March 31, 2008	101,184,199	$	101,185	$	3,142,017	450,000	$	450,000		$	(4,898,261	)	$	(1,205,059	)
Issuance of common stock to officers for accrued compensation	1,330,000		1,330		65,170	-		-			-			66,500
Stock based compensation	-		-		165,510	-		-			-			165,510
Issuance of common stock for legal services	1,000,000		1,000		19,000	-		-			-			20,000
Reclassification of preferred stock to liability								(86,850	)					(86,850	)
Beneficial conversion feature of preferred stock liability					4,571									4,571
Net loss	-		-		-	-		-			(969,131	)		(969,131	)
Balance as of March 31, 2009	103,514,199	$	103,516	$	3,395,908	450,000	$	363,150		$	(5,867,392	)	$	(2,004,819	)

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

Table of Contents

INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the YearEnded March 31,			For the YearEnded March 31,			Cumulativefrom Inception(January 12, 2005) to
	2009			2008			March 31, 2009
Cash flows from operating activities:
Net loss	$	(969,131	)	$	(1,487,009	)	$	(5,867,392	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization		84,162			87,291			217,296
Loss on disposal of fixed asset		2,851			-			2,851
Stock-based compensation		165,150			300,794			1,121,827
Issuance of common stock to officers for accrued compensation		66,500			-			127,000
Notes payable issued for expenses paid by affiliates and third parties		-			-			258,605
Amortization of deferred gain on sale of assets		(4,874	)		4,002			(872	)
Services paid for with common stock		20,000			29,728			146,560
Amortization of convertible debt discount		265,011			252,323			1,253,689
Change in fair value of derivative liabilities		-			(270,919	)		(169,241	)
Amortization of discount on preferred stock liability		4,571			-			4,571
Amortization of deferred financing costs		-			136,222			232,199
Net change in operating assets and liabilities:
Accounts receivable		8,450			545			-
Prepaid expenses and other current assets		839			6,306			10,800
Deposits		2,400			32,857			1,000
Accounts payable and accrued expenses		350,679			230,592			497,275
Customer deposits		(82,480	)		112,781			30,301
Net cash used in operating activities		(85,872	)		(564,487	)		(2,133,531	)
Cash flows from investing activities:
Purchases of fixed assets		(8,985	)		(51,771	)		(234,083	)
Proceeds from sale-leaseback of property and equipment		-			-			125,000
Increase in deferred financing costs		-			-			(156,200	)
Net cash used in investing activities		(8,985	)		(51,771	)		(265,283	)
Cash flows from financing activities:
Stock issued for cash		-			92,000			113,000
Proceeds from notes payable		-			-			427,969
Principal payments on notes payable		-			-			(30,000	)
Proceeds from advances payable, net of repayments		89,742			155,511			245,253
Proceeds from convertible debentures		-			-			1,663,500
Principal payments under capital lease		(23,384	)		(42,775	)		(71,430	)
Cash acquired in the reverse acquisition of Innovative		-			-			51,149
Net cash provided by financing activities		66,358			204,736			2,399,441
Net increase (decrease) in cash and cash equivalents		(28,499	)		(411,522	)		627
Cash and cash equivalents at beginning of period		29,126			440,648			-
Cash and cash equivalents at end of period	$	627		$	29,126		$	627

(A Development Stage Company)

							Inception
	Year Ended			Year Ended			(January 12, 2005) to
	March 31,			March 31,			March 31,
	2010			2009			2010


Cash flows from operating activities:
Net (loss)	$	(375,992	)	$	(969,131	)	$	(6,243,384	)
Net income (loss) from discontinued operations		413,614			(98,617	)		(1,701,731	)
Net (loss) from continuing operations		(789,606	)		(870,514	)		(4,541,653	)

Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
Depreciation and amortization		-			-			31,587
Loss on disposal of fixed assets		-			2,851			2,851
Common stock and stock option based compensation		2,999			251,650			878,826
Issuance of shares to officer for accrued payroll		-			-			127,000
Impairment of note receivable		150,000			-			150,000
Notes payable issued for expenses paid by affilates and third parties		-			-			258,605
Amortization of deferred gain on sale of assets		-			-			(872	)
Services paid in common stock		-			-			146,560
Amortization of convertible debt discount		664,595			265,011			1,918,284
Change in fair value of derivative liabilities		-			-			(169,241	)
Amortization of deferred financing costs		-			-			232,199
Amortization of the discount on preferred stock liability		-			4,571			4,571
Net change in operating assets and liabilities:
Prepaid expenses and other current assets		-			3,239			10,800
Deposits		-			-			1,000
Accrued expenses related parties		91,945			-			91,945
Accounts payable and accrued expenses		(244,903	)		301,113			(398,743	)
Cutomer deposits		-			-			30,301
					.
Cash (used in) continuing operations		(124,970	)		(42,079	)		(1,225,980	)
Cash (used in) discontinued operations		(120	)		(43,793	)		(1,032,920	)
Net cash (used in) operating activities		(125,090	)		(85,872	)		(2,258,900	)

Cash flows from investing activities:
Purchase of fixed assets		-			-			(126,599	)
Sale of AcXess		-			-			125,000
Increase in deferred financing costs		-			-			(156,200	)

Cash provided by ( used in) continuing operations		-			-			(157,799	)
Cash (used in) discontinued operations		-			(8,985	)		(107,484	)
Net cash provided by (used in) investing activities		-			(8,985	)		(265,283	)

Cash flows from financing activities:
Cash from common stock subscribed		-			-			113,000
Proceeds from notes payable		125,000			-			552,969
Principal payments on notes payable		-			-			(30,000	)
Principal payments on cash advances, net of proceeds		-			-			245,253
Proceeds from cash advances, net or principal payments		-			89,742			1,663,500
Cash acquired in the reverse acquisition of Innovative		-			-			51,149

Cash provided by continuing operations		125,000			89,742			2,595,871
Cash (used in) discontinued operations		-			(23,384	)		(71,430	)
Net cash provided by financing activities		125,000			66,358			2,524,441

Net increase (decrease) in cash and cash equivalents		(90	)		(28,499	)		258

Cash and cash equivalents at beginning of period		348			28,847			-

Cash and cash equivalents at end of period	$	258		$	348		$	258

Cash paid during the period for:
Interest	$	-		$	12,416		$	46,516

Income Taxes	$	-		$	-		$	-

Non cash investing and financing activities:

Issuance of common stock for acquisition	$	-		$	-		$	440,000

Issuance of common stock in exchange for debt	$	-		$	-		$	1,114,602

Assets acquired under capital lease	$	-		$	-		$	136,512

Fixed assets exchanged for lease payment	$	-		$	-		$	2,490

Issuance of common stock to retire notes payable - affiliate	$	-		$	-		$	22,337

Charge warrants and embedded derivative liabilities
to additional paid-in capital	$	-		$	-		$	1,952,451

Convertible debt issued for financing costs	$	-		$	-		$	44,000

Issuance of shares to officers for accrued payroll	$	-		$	66,500		$	127,000

Issuance of shares for accrued legal payable	$	-		$	-		$	20,000

Reclassification of preferred stock to liability	$	-		$	86,850		$	86,850

The accompanying notes are an integral part of these

consolidated financial statements.

Table of Contents

INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

(ASTATEMENT ~~Development~~OF ~~Stage~~STOCKHOLDERS' ~~Company~~(EQUITY) DEFICIT

~~CONSOLIDATED~~INCEPTION ~~STATEMENTS~~(JANUARY OF12, ~~CASH~~2005) ~~FLOWS~~TO MARCH 31, 2010

(Continued)

													Deficit
													Accumulated
													During the
	Common Stock									Preferred Stock			Development
	Shares			Amount			APIC			Amount			Stage			Total


Balance at inception		-		$	-		$	-		$	-		$	-		$	-

Founder's shares issued for cash at inception at $0.33 per share		3,000,000			10,000			-			-			-			10,000
Common stock issued for cash at $0.05 per share		220,000			11,000			-			-			-			11,000
Balance as of March 31, 2005		3,220,000			21,000			-			-			-			21,000

Common stock issued to extinguish debt																	-
and interest at $0.05 per share		670,123			33,506			-			-			-			33,506
Common stock issued as compensation
at $0.05 per share		3,829,882			191,494			-			-			-			191,494
Net loss		-			-			-			-			(487,351	)		(487,351	)
Balance as of March 31, 2006		7,720,005			246,000			-			-			(487,351	)		(241,351	)

Adjustments to reflect reverse acquisition		59,735,374			(178,546	)		(962,102	)		450,000			-			(690,648	)
Issuance for retirement of debt at $0.04 per share		4,377,872			4,378			170,737			-			-			175,115
Issuance for consulting services at $0.11 per share		523,811			524			57,095			-			-			57,619
Issuance of options for employees and consultants		-			-			370,418			-			-			370,418
Issuance for legal services at $0.13 per share		174,519			174			22,512			-			-			22,687
Issuance of warrant with equipment leasing line		-			-			37,726			-			-			37,726
Issuance for legal services at $0.09 per share		183,620			184			16,342			-			-			16,526
Issuance of options for employee		-			-			82,802			-			-			82,802
Net loss		-			-			-			-			(2,923,901	)		(2,923,901	)
Balance as of March 31, 2007		72,715,201			72,715			(204,470	)		450,000			(3,411,252	)		(3,093,007	)

Issuance for legal services at $0.05 per share		459,778			460			22,529			-			-			22,989
Issuance of stock for cash at $0.05 per share		2,000,000			2,000			90,000			-			-			92,000
Issuance for legal services at $0.02 per share		336,862			336			6,400			-			-			6,736
Conversion of notes payable and interest in August 2007		5,672,655			5,673			1,946,778			-			-			1,952,451
Conversion of notes payable		18,789,703			18,789			920,696			-						939,485
Issuance of shares to officer accrued in prior period		1,210,000			1,212			59,290			-			-			60,502
Officer options vested during the year ended March 31, 2008		-			-			300,794			-			-			300,794
Net Loss		-			-			-			-			(1,487,009	)		(1,487,009	)
Balance as of March 31, 2008		101,184,199			101,185			3,142,017			450,000			(4,898,261	)		(1,205,059	)

Issuance of shares to officers for accrued salary		1,330,000			1,330			65,170			-			-			66,500
Officer options vested during the year ended March 31, 2009		-			-			165,150			-			-			165,150
Issuance of shares for legal services at $0.02 oer share		1,000,000			1,000			19,000			-			-			20,000
Reclassification of preferred stock to liability		-			-			-			(86,850	)		-			(86,850	)
Beneficial conversion feature of preferred stock liability		-			-			4,571			-			-			4,571
Net loss		-			-			-			-			(969,131	)		(969,131	)
Balance as of March 31, 2009		103,514,199			103,515			3,395,908			363,150			(5,867,392	)		(2,004,819	)

Employee options vested		-			-			2,999			-			-			2,999
Adjustments to reflect the sale of Acxess		(4,477,348	)		(4,478	)		(8,955	)		-			-			(13,433	)
Reclassification of preferred stock to equity		-			-						86,850			-			86,850
Net loss		-			-			-			-			(375,992	)		(375,992	)
Balance as of March 31, 2010		99,036,851		$	99,037		$	3,389,952		$	450,000		$	(6,243,384	)	$	(2,304,395	)

	For the YearEnded		For the YearEnded			Cumulativefrom Inception(January 12, 2005) to
	March 31, 2009		March 31, 2008			March 31, 2009
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	12,416		$	17,050		$	46,516
Taxes	$	-		$	-		$	-
Issuance of common stock for acquisition	$	-		$	-		$	440,000
Issuance of common stock in exchange for debt	$	-		$	929,487		$	1,114,602
Assets acquired under capital lease	$	-		$	-		$	136,512
Fixed assets exchanged for lease payment	$	-		$	2,490		$	2,490
Issuance of common stock to retire notes payable - affiliate	$	-		$	-		$	22,337
Exchange of debt and embedded derivative
liabilities for common stock	$	-		$	1,952,451		$	1,952,451
Convertible debt issued for financing costs	$	-		$	-		$	44,000
Issuance of shares to officer for accrued payroll	$	66,500		$	60,500		$	127,000
Conversion of advances payable and accrued interest to note payable	$	158,079			--			--
Reclassification of preferred stock to liability	$	86,850					$	86,850

The accompanying notes are an integral part of these

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

2520

Table of Contents

INNOVATIVE SOFTWARE TECHNOLOGIES, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2009~~2010 AND ~~2008~~2009

(1) . DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~(a)~~ Organization and Description of Business:

Innovative Software Technologies, Inc. (~~the "Company"~~“Innovative”) was incorporated in the State of ~~Delaware~~California in ~~November~~May ~~2007~~1998. ~~Prior to the acquisition of AcXess, Inc. ("AcXess"), a Florida corporation, discussed in Note 3, the Company had no operations.~~ The ~~Company~~accompanying isconsolidated infinancial ~~the~~statements ~~development stage and has not commenced significant operations as of March 31, 2009. Therefore the Company'~~s ~~activities~~ are reported in accordance with ~~Statement~~the ofFASB ~~Financial~~Codification ~~Accounting Standards~~ (~~"SFAS"~~Section 915) ~~No.~~for ~~7, "~~Development Stage Enterprises". As such, ~~which~~its ~~requires the Company's~~ statements of operations, stockholders' deficit and cash flows to include activity from the date of ~~the~~its ~~Company'~~inception. Furthermore, many of Innovative’s ~~inception~~accounting ~~(January~~policies ~~12,~~have ~~2005)~~not yet been established.

On June 26, 2006, Innovative ~~Software Technologies, Inc., (“Innovative”),~~ completed the acquisition of AcXess, Inc., a Florida corporation (“AcXess”), in a stock exchange transaction. As a result ~~of the Transaction~~, AcXess became a wholly owned subsidiary of Innovative. AcXess was formed to provide Business Continuity ("BC") products and services to the Small and Medium Enterprise ("SME") market. BC products and services are an advanced form of disaster recovery solutions for electronic data backup wherein the data and/or applications are available upon failure through means of connectivity to remote server locations. Innovative planned to deliver its BC service through reseller channels.

~~AcXess~~However, ~~was~~on ~~formed~~July to24, ~~provide~~2007, ~~Business~~Innovative ~~Continuity~~entered into a Stock Purchase Agreement (~~"BC"~~the “AcXess Stock Purchase Agreement”) ~~products~~with AcXess and ~~services~~the following officers of AcXess (such officers are hereinafter referred to collectively as the ~~Small~~“Buyers” ~~and~~- ~~Medium~~Thomas ~~Enterprise~~Elowson (~~"SME"~~its President), ~~market.~~Raymond BCLeitz, ~~products~~(its Chief Technical Officer), and ~~services~~Helge ~~are~~Solberg an(its ~~advanced~~Chief ~~form~~Architect) wherein (i) AcXess redeemed shares of ~~disaster~~its ~~recovery~~common ~~solutions~~stock from Innovative in return for ~~electronic~~the ~~data~~issuance ~~backup~~of ~~wherein~~a promissory note to the ~~data~~benefit of Innovative and~~/or~~ ~~applications~~the ~~are~~signing ~~available~~of ~~upon~~a ~~failure~~Non-Exclusive ~~through~~License ~~means~~Agreement ofwith ~~connectivity~~Innovative, toand ~~remote~~(ii) ~~server locations.~~the ~~The~~Buyers ~~Company~~exchanged ~~intends~~their tostock ~~deliver~~in ~~its~~Innovative BCin ~~service~~exchange ~~through~~for ~~reseller~~stock ~~channels~~in ~~including~~AcXess, ~~but~~and ~~not~~Elowson ~~limited~~canceled toInnovative ~~Citrix~~Stock ~~Systems~~options him in exchange for stock in AcXess. Immediately following the above redemptions and exchanges, ~~Inc~~Innovative owned 984,457 shares of AcXess, or approximately 21.9% ~~("Citrix")~~of ~~resellers~~its outstanding common stock). ~~Management~~On ~~has~~June ~~identified~~19, ~~Citrix~~2009, ~~mid-market~~Innovative ~~client~~reached ~~companies~~a asrevised agreement with the AcXess management team whereby it sold all of its ~~initial~~shares ~~target~~of ~~market~~stock inof ~~North~~AcXess ~~America.~~to Wethe ~~currently~~AcXess ~~have~~management ~~one~~team BC(see ~~customer~~Note 5).

On ~~November~~June 2817, ~~2007~~2009, the ~~(“Effective~~ ~~Date”)~~Company ~~Innovative~~purchased ~~Software~~substantially ~~Technologies,~~all ~~Inc., (“Innovative Software–CA”), entered into an Agreement and Plan~~ of ~~Merger (~~the ~~“Merger~~assets ~~Agreement”)~~of ~~with Innovative~~The ~~Software~~WEB ~~Technologies~~Channel Network, ~~Inc~~LLC., a ~~Delaware~~Florida ~~entity~~limited ~~(“Innovative~~liability ~~Software-DE”).~~company ~~Pursuant to~~ (the ~~Merger~~“WEB ~~Agreement,~~Channel ~~Innovative~~Network ~~Software-CA~~Seller”), and ~~Innovative~~certain ~~Software-DE~~other ~~were~~assets ~~merged~~of ~~with~~Robert ~~and~~W. ~~into~~Singerman, the ~~surviving~~manager ~~corporation,~~and ~~Innovative~~sole ~~Software-DE,~~owner ~~(“Innovative”, or the “Company.”). As~~ of the ~~Effective~~WEB ~~Date,~~Channel ~~the~~Network ~~certificate~~Seller. The ofCompany ~~incorporation~~also ~~and~~entered ~~bylaws~~into ofan ~~the~~Employment ~~surviving~~Agreement ~~corporation~~with ~~became~~Mr. ~~the~~Singerman, ~~certificate~~and ofMr. ~~incorporation~~Singerman ~~and~~entered ~~bylaws~~into ofa ~~the~~Non-Disclosure, ~~Company~~Non-Competition, ~~and~~Non-Solicitation ~~the directors~~ and ~~officers~~Invention inAgreement ~~office~~with of the ~~surviving~~Company. The purchased ~~corporation~~assets ~~became~~include ~~the~~substantially ~~members~~all of the ~~Board~~assets of ~~Directors and officers of~~ the ~~Company.~~Web ~~Following~~Channel ~~the~~Network ~~execution of the Merger Agreement~~Seller, onincluding ~~July~~all ~~9, 2007, the Company filed with the Secretary~~ of ~~State~~its ofintellectual ~~Delaware~~property aand ~~Certificate~~its ofsigned ~~Merger with respect to the Innovative Software-CA~~ and ~~Innovative~~pending ~~Software-DE~~production ~~merger~~agreements.

OnThe ~~July~~purchase ~~24,~~price ~~2007,~~consisted ~~the~~of: ~~Company entered into a Stock Purchase Agreement~~ (~~the “Agreement”~~i) ~~with~~the ~~AcXess,~~Company’s ~~Inc.,~~agreement ~~its~~to ~~wholly~~make ~~owned~~cash ~~subsidiary, Thomas~~installment ~~Elowson,~~payments ~~President~~ of ~~AcXess~~$25,000 ~~Raymond~~within ~~Leitz,~~15 ~~Chief~~days ~~Technical Officer~~ of ~~AcXess,~~the ~~and~~June ~~Helge Solberg~~17, ~~Chief~~2009 ~~Architect~~sale ofand ~~AcXess~~$75, ~~(collectively,~~000 ~~Elowson,~~prior ~~Leitz, and Solberg referred~~ to ~~herein~~September as30, ~~the~~2009; ~~“Buyers”) wherein~~ (iii) a promissory ~~AcXess~~note in ~~redeemed~~the ~~shares~~amount of ~~its~~$500,000 ~~common~~payable ~~stock~~over ~~from~~five ~~the~~years ~~Company~~ in ~~return~~annual ~~for~~installments ~~the~~of ~~issuance~~$100,000 ofin aprincipal ~~promissory~~plus ~~note~~accrued tointerest, ~~the~~secured ~~benefit~~by all of the ~~Company~~Purchased ~~and~~Assets ~~the~~pursuant ~~signing~~to of a ~~Non-Exclusive~~Security ~~License~~ Agreement; ~~with the Company,~~ and (iiiii) ~~the~~stock ~~Buyers~~purchase ~~exchanged~~warrants ~~stock~~ of the Company ~~held by them in exchange~~ for ~~stock in AcXess and Elowson canceled options for stock in the Company held by him in exchange for stock in AcXess. Immediately following the above redemptions and exchanges~~5, ~~the Company will continue to own 984~~000,~~457~~000 shares, ~~or approximately 21.9%~~ of the ~~outstanding common stock, of AcXess. The transactions contemplated by the Agreement are expected to close upon approval of the transactions by the~~ Company’s ~~shareholders. AcXess has 4,500,000 shares of~~ common stock ~~outstanding. The~~at Company has determined that it is in its best interests to close this transaction after acquiring another operating entity; however, there can be no assurance that the Company will be successful in negotiating an ~~agreement~~exercise toprice ~~acquire~~of another operating entity nor can there be any assurance that the Company, should it successfully negotiate an agreement to acquire another operating entity, will be successful in closing such a transaction$0.03 ~~Please~~per ~~refer~~share to(see ~~the~~note ~~Company’s current report on Form 8-K as filed with the Securities and Exchange Commission on July 30, 2007~~4).

~~The Company~~Organization ~~also provides High Availability ("HA") service to large companies. HA is an advanced form~~ and Description of Business ~~hosting service that provides application access to multiple concurrent users and includes specialized scheduling and tracking features. HA services are sold using in~~-~~house~~ ~~business~~Subsequent ~~development personnel. The Company currently has three customers~~Events: ~~Microsoft, Inc., Citrix and SAP, Inc.~~

26On May 13, 2011, the Company and Mr. Singerman agreed to rescind the WEB Channel Network acquisition described above (the “WEB Channel Rescission Agreement”). The principal terms of the WEB Channel Rescission Agreement included the following: The parties agreed to settle any and all claims, both known and unknown, for the total amount of $70,000 (seventy thousand dollars) payable to Robert W. Singerman. The consideration was a convertible note with interest at 10% per annum, a maturity date of November 13, 2011 and an option to convert in part or in whole to the Company’s common shares. based on a conversion rate of $0.035 per share. The assets of The WEB Channel Network, LLC previously conveyed to the Company . were returned unencumbered free and clear to Robert W. Singerman. The promissory note was cancelled. The WEB Channel Rescission Agreement has been reflected as a subsequent event and, as such, no entries are presented for this transaction in the Company’s 2010 financial statements .

Following the completion of the WEB Channel Rescission Agreement, the Company focused on healthcare solutions, forming IST Global Healthcare Solutions, Inc. ("IST Global Healthcare"), a wholly owned subsidiary, on December 21, 2011. On January 10, 2012, the Company, through IST Global Healthcare, entered into a letter of agreement to acquire Galaxy Meds, Inc., a Lake Worth, Florida based pharmaceutical services company. Following due diligence the Company terminated the proposed acquisition.

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~~The number~~On ofFebruary ~~customers~~20, 2012, the Company formed its wholly owned subsidiary Znergy, Inc. to ~~date~~market isenergy ~~limited~~saving solutions to the Municipal, University, School and ~~all~~Hospital of("MUSH") ~~our~~markets. While ~~revenue~~the ~~for~~Company believes the ~~past~~Znergy ~~year~~business plan has potential and intends to execute it upon raising additional resources and, furthermore, has entered into discussions with a number of energy related manufacturers, distributors and consultants, Znergy has not been ~~generated~~the ~~through~~ primary focus of the HACompany's ~~business~~efforts to date.

On May 31, 2012, the Company formed its wholly owned Intech Ventures, Inc. subsidiary to develop and market its Opt-in SMART (b"Opt-in") ~~Principles~~small business online marketing solution. Opt-in SMART consists of ~~Consolidation:~~proprietary technology systems and services that help local businesses maximize the return on investment of their marketing and advertising efforts. The founder of Opt-In, joined the Company on May 31, 2012 as the president of Intech Ventures and as the Chief Technology Officer of the Company. Opt-in has been the primary focus of the Company since its formation.

On September 11, 2013, the Company announced the acquisition of all of the outstanding shares of Live Riot Inc., a Delaware corporation (the “LR Acquisition Agreement”, “Live Riot”). Under the agreement, Live Riot became a wholly owned subsidiary of the Company. The ~~consolidated~~terms ~~financial~~of ~~statements~~the ~~include~~agreement called for the ~~accounts~~delivery of 3,000,000 shares of the Company’s common stock to three stockholders of Live Riot (the “LR Shareholders”) for all the issued and ~~its~~outstanding ~~wholly~~shares of Live Riot in a tax-~~owned~~free ~~subsidiaries~~reorganization pursuant to Section 368(b) of the Internal Revenue Code. In addition, ~~AcXess~~the Live Riot Shareholders were granted 1,500,000 options to purchase shares of the Company's common stock. These options have a term of seven years and ~~its~~a ~~inactive~~strike ~~subsidiaries~~price ~~EPMG~~of $0.13 per share, ~~Inc~~which was the closing trading price of shares of the Company's common stock on September 11, 2013. Upon ~~and~~the ~~SoftSale~~launch of the LiveRiot(TM) app integrated with certain of the Company's technology, ~~Inc~~the Live Riot Shareholders will be granted an additional 750,000 options to purchase shares of the Company's common stock at a strike price equal to the closing price of the Company's stock on the trading day prior to the date of the launch. The ~~All~~agreement ~~significant~~also ~~intercompany~~called ~~balances~~for the execution of employment agreements between the LR Shareholders and ~~transactions~~the ~~have~~Company ~~been~~having ~~eliminated~~terms inof ~~consolidation~~three years and specifying annual compensation of not less than $100,000 per year per employee.

Subsequent to the acquisition of Live Riot, the LR Shareholders were to deliver the assignment to the Company of a certain provisional patent that had been filed under their individual names (cthe "LR Patent Assignment"). The ~~Cash~~LR Shareholders failed to perform under the terms of the LR Patent Assignment. Pending such performance, the Company had withheld delivery to the LR Shareholders the equity specified in the LR Acquisition Agreement. The Company terminated the acquisition of Live Riot, and ~~Cash~~the ~~Equivalents:~~respective employment agreements, on December 20, 2013.

~~For~~On ~~purposes~~January of30, 2014, the ~~statement~~Company offormed ~~cash~~its ~~flows,~~wholly ~~cash~~owned ~~equivalents~~subsidiary ~~include~~PayUp, ~~all~~Inc. ~~highly~~to ~~liquid~~develop ~~debt~~and ~~instruments~~market ~~with~~its ~~original~~mobile ~~maturities~~payments ofsolutions. The ~~three~~PayUp ~~months~~technologies orand ~~less~~solutions ~~which~~integrate ~~are~~with ~~not~~our ~~securing~~Opt-in ~~any~~SMART ~~corporate~~technologies ~~obligations~~and solutions.

~~(d)~~Principles ~~Accounts~~of ~~Receivable:~~Consolidation

~~Trade~~The ~~accounts~~consolidated ~~receivable~~financial ~~consist~~statements ofinclude ~~outstanding~~the ~~billings~~accounts toof ~~customers~~the ~~for~~Company, ~~both HA~~ and BCits ~~services.~~wholly-owned ~~Both~~subsidiaries ~~types~~(AcXess, ofwhich ~~services~~was ~~are~~discontinued ~~provided~~in ~~under~~June ~~contracts~~of ~~ranging~~2009), ~~from~~and ~~three~~EPMG, ~~to twenty-four months in duration~~Inc. ~~Past~~and ~~due~~SoftSale, ~~balances over 90 days are reviewed individually for collectibility~~Inc. An(which ~~allowance~~were ~~for~~inactive ~~doubtful~~at ~~accounts is established based on the Company's best estimate of the amount of probable credit losses in its existing accounts receivable. At~~ March 311, ~~2009~~2010 and ~~2008,~~remain ~~the Company had an allowance for doubtful accounts~~so). inAll ~~the~~significant ~~amount~~intercompany ofbalances ~~$3,345~~ and ~~$6,310,~~transactions ~~respectively.~~have ~~Interest~~been iseliminated ~~not~~in ~~charged on past due accounts~~consolidation.

~~(e)~~Cash ~~Deferred~~and ~~Financing~~Cash ~~Costs:~~Equivalents

~~The~~For ~~Company~~purposes ~~capitalizes~~of ~~financing costs as incurred and amortizes these costs to interest expense over~~ the ~~life~~statement of ~~the~~cash ~~underlying instruments. During the year ended March 31~~flows, ~~2009~~cash ~~and~~equivalents ~~2008,~~include ~~the~~all ~~Company~~highly ~~charged~~liquid ~~deferred~~debt ~~financing~~instruments ~~costs~~with inoriginal ~~the~~maturities ~~amount~~ of $0three ~~and~~months ~~$136,222~~or ~~to interest expense as the notes payable related to these financing costs were converted to equity~~less.

~~(f)~~Income ~~Offering~~Taxes ~~Costs:~~(Benefits)

~~Direct~~We ~~costs~~compute income taxes in accordance with FASB ASC Topic 740, Income Taxes. Under ASC 740, provisions for income taxes are based on taxes payable or refundable during each reporting period and changes in deferred taxes. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. Also, the effect on deferred taxes of ana ~~equity~~change ~~offering~~in tax rates is recognized in income in the period that included the enactment date. Deferred taxes are ~~charged~~classified as current or non-current depending on the classifications of the assets and liabilities to ~~additional~~which ~~paid~~they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in ~~capital~~which ~~upon~~the ~~closing~~temporary differences are expected to reverse. If available evidence suggests that it is more likely than not that some portion or all of the ~~offering~~deferred ~~and~~tax ~~receipt~~assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of ~~funds~~change.

~~(g) Property and Equipment:~~22

Property and equipment are stated at cost. Property and equipment acquired under capital leases are stated at the present value of the minimum lease payments.

Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets, generally 5 years for office equipment, 5 years for furniture and fixtures, and 3 years for computers and software. Equipment acquired pursuant to capital leases is amortized over the term of the lease.

(h) Long-Lived Assets

The Company accounts for its long-lived assets under the provision of Statements of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets”. The Company's long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should an impairment in value be indicated, the carrying value of intangible assets will be adjusted based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset.

(i) Income Taxes:

The Company has implemented the provisions on Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires that income tax accounts be computed using the liability method. Deferred taxes are determined based upon the estimated future tax effects of differences between the financial reporting and tax reporting bases of assets and liabilities given the provisions of currently enacted tax laws.

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~~(j)~~We follow the guidance in FASB ASC Topic 740-10, Accounting for Uncertainty in Income Taxes, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Management does not believe it has taken any uncertain tax positions on any of its open income tax returns that would have materially distorted the Company’s financial statements. The Company uses methods of accounting which are based on established income tax principles approved in the Internal Revenue ~~Recognition:~~Code and are properly calculated and reflected within its income tax returns. In addition, the Company has filed income tax returns in all applicable jurisdictions in which it had material nexus warranting an income tax return filing.

~~The~~Management ~~Company recognizes revenues~~evaluates ~~from contracts,~~the invalidity ~~which~~of ~~the~~its ~~Company provides website~~conclusions ~~hosting~~regarding ~~and~~uncertain ~~consulting~~income ~~services,~~tax aspositions ~~the~~on ~~services~~an ~~are~~annual ~~performed.~~basis ~~The~~to ~~contractual~~determine ~~terms~~if offacts ~~the agreements dictate~~or ~~the recognition of~~circumstances ~~revenue~~have byarisen ~~the Company. Payments~~that ~~received~~might incause ~~advance~~them ~~are~~to ~~deferred until~~change their judgment regarding the ~~service~~likelihood isof ~~provided~~a tax position’s sustainability under examination.

~~Contract~~At ~~costs~~March ~~include~~31, ~~all~~2010, ~~direct~~the ~~equipment,~~Company’s ~~material,~~federal and ~~labor~~state ~~costs~~income ~~and~~tax ~~those~~returns ~~indirect~~would ~~costs~~normally ~~related~~only tobe ~~contract~~subject ~~performance,~~to ~~such~~audit asunder ~~indirect~~the ~~labor.~~statute ~~Selling,~~of ~~general~~limitations ~~and~~by ~~administrative~~the ~~costs~~Internal ~~are~~Revenue ~~charged~~Service toand/or ~~expense~~various asstate ~~incurred.~~taxing ~~Provisions~~authorities for ~~estimated~~years ~~losses~~ending onafter ~~uncompleted~~after ~~contracts~~March ~~are~~31, ~~made~~2007. However, incertain ~~the~~other ~~period~~years in which ~~such~~the ~~losses~~Company ~~are~~used ~~determined. Changes~~net inoperating ~~contract~~loss ~~performance~~carryforwards, ~~contract conditions,~~ and/or ~~estimated~~generated ~~profitability~~net ~~that~~operating ~~may~~losses ~~result~~which instill ~~revisions~~are available to ~~costs~~offset ~~and~~future taxable income ~~are~~remain ~~recognized~~subject into ~~the~~audit ~~period~~by insuch ~~which~~regulatory ~~the revisions are determined~~bodies.

~~For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “~~Revenue Recognition,” which superseded SAB No. 101, “Revenue Recognition in Financial Statements.” SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. SAB No. 104 incorporates Emerging Issues Task Force (“EITF”) No. 00-21, “Multiple-Deliverable Revenue Arrangements.” EITF No. 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. This issue addresses determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting. Through March 31, 2009, all of the Company’s revenue has been service revenue.

The Company recognizes revenue when the following criteria is met : (k1) ~~Customer~~persuasive ~~Concentration~~evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.

~~During~~Provisions ~~the~~for ~~years~~discounts ~~ended~~and ~~March~~rebates 31to customers, ~~2009~~estimated returns and ~~2008~~allowances, ~~three~~and ~~customers~~other ~~accounted~~adjustments are provided for ~~approximately 97%~~in ~~and 77%~~the ofsame ~~revenues~~period the related sales are recorded. The ~~loss~~Company ofdefers ~~these~~any ~~customers~~revenue ~~would~~for ~~have~~which athe ~~material~~product ~~adverse~~has ~~effect~~not onbeen ~~financial~~delivered ~~results~~or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

~~(l)~~ Earnings ~~Per~~per Common Share:

~~The~~Loss ~~Company calculates net income (loss)~~ per share asis ~~required~~computed byusing ~~Statement~~the ofbasic ~~Financial~~and ~~Accounting~~diluted ~~Standards~~calculations ~~(SFAS)~~on ~~128,~~the ~~"Earnings~~statement ~~per~~of ~~Share~~operations." Basic ~~earnings (~~loss) per share is calculated by dividing net ~~income (~~loss) available to common stockholders by the weighted average number of shares of common ~~shares~~stock outstanding for the period. Weighted ~~Diluted~~average ~~earnings~~number (of shares is adjusted for stock splits and reverse stock splits. Diluted loss) per share is calculated by dividing net ~~income (~~loss) by the weighted average number of ~~common~~ shares ~~and~~of ~~dilutive~~ common stock ~~equivalents~~ outstanding ~~during~~for ~~periods~~the ~~when~~period, ~~anti-~~adjusted for the dilutive effect of common stock equivalents, ~~are~~using ~~not~~the ~~considered~~treasury instock ~~the computation~~method.

~~Basic~~At ~~loss~~March ~~per~~31, ~~share~~2010 isand ~~based~~2009, onoptions ~~the~~and ~~weighted~~warrants ~~effect~~to ofpurchase ~~common~~12,064,285 and 22,488,869 shares ~~issued~~of ~~and~~common ~~outstanding~~stock, ~~and~~respectively, isat ~~calculated~~exercise byprices ~~dividing~~ranging ~~net~~from ~~loss~~$0.05 byto ~~the~~$0.30 ~~weighted~~per ~~average~~share ~~shares~~were outstanding, ~~during~~but were not included in the ~~period.~~computation ~~Diluted~~of ~~loss~~diluted earnings per share isas ~~calculated~~their byeffect ~~dividing~~would ~~net~~be ~~loss~~antidilutive. Further, byat ~~the~~March ~~weighted~~31, ~~average~~2010 ~~number~~and 2009, 85,812,357 and 204,545,455 shares of common ~~shares~~stock, ~~used~~respectively, inconvertible ~~the~~from ~~basic~~Preferred ~~loss~~Stock ~~per~~and ~~share~~associated ~~calculation plus~~dividends, were not included in the ~~number~~computation of ~~common~~diluted ~~shares~~earnings ~~that~~per ~~would~~share beas ~~issued~~their effect ~~assuming~~would ~~exercise~~be orantidilutive. Also, ~~conversion~~at ofMarch ~~all~~31, ~~potentially~~2010 ~~dilutive~~and ~~common~~2009, 8,928,571 shares ~~outstanding~~of (common stock ~~options,~~from ~~common~~convertible ~~stock~~debentures ~~warrants~~were ~~and~~not ~~preferred~~included ~~stock~~in the computation of diluted earnings per shares as their effect would be antidilutive.

At March 31, 2009 and 2008, options and warrants to purchase 22,488,869 and 57,397,869 shares of common stock, respectively, at exercise prices ranging from $0.05 to $0.30 per share were outstanding, but were not included in the computation of diluted earnings per share as their effect would be antidilutive. Further, at March 31, 2009 and 2008, 204,545,455 and 16,071,429 shares of common stock, respectively, convertible from Preferred Stock-Based and associated dividends, were not included in the computation of diluted earnings per share as their effect would be antidilutive. Also, at March 31, 2009 and 2008, 8,928,571 shares of common stock from convertible debentures were not included in the computation of diluted earnings per shares as their effect would be antidilutive.Compensation

~~(m)~~The ~~Stock~~Company recognizes the cost of stock options and restricted stock in accordance with the FASB Codification Section 718. which requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-~~Based~~date ~~Compensation:~~fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the reward—known as the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments.

The ~~company~~Company ~~recognizes~~may, ~~the~~from ~~cost~~time ofto time, issue common stock, stock options ~~and~~or ~~restricted~~common stock inwarrants ~~accordance~~to ~~with~~acquire ~~SFAS~~services Noor goods from non-employees. ~~123~~Common ~~(Revised~~stock, ~~2004)~~stock ~~(“SFAS~~options ~~No.~~and ~~123(R)”),~~common ~~“Share~~stock ~~Based~~warrants ~~Payment.” SFAS~~issued ~~No.~~to ~~123(R)~~persons ~~requires~~other ~~measurement~~than ofemployees or directors are recorded on the ~~cost~~basis of ~~employee~~their ~~services~~fair ~~received~~value. inThe ~~exchange~~stock ~~for~~options anor ~~award~~common ofstock ~~equity~~warrants ~~instruments~~are ~~based~~valued onusing the ~~grant~~ Black-~~date~~Scholes ~~fair~~model ~~value~~on the basis of the ~~award. That~~market ~~cost~~price ~~will~~of bethe ~~recognized~~underlying ~~over~~common stock on the ~~period~~“valuation ~~during~~date,” which anfor ~~employee~~options isand ~~required~~warrants related to ~~provide~~contracts ~~service~~that inhave ~~exchange~~substantial ~~for~~disincentives to non-performance, is the ~~reward—known~~date asof the ~~requisite~~contract, ~~service~~and ~~period~~for all other contracts is the vesting date. NoExpense ~~compensation~~related ~~cost~~to the options and warrants is recognized ~~for~~on ~~equity~~a ~~instruments~~straight-line ~~for~~basis over the shorter of the period over which ~~employees~~services doare ~~not~~to ~~render~~be received or the ~~requisite~~vesting ~~service~~period. ~~The~~Where ~~grant-~~expense must be recognized prior to a valuation date, ~~fair~~the ~~value~~expense is computed under the Black-Scholes model on the basis of ~~employee~~the ~~share~~market ~~options~~price ~~and~~of ~~similar~~the ~~instruments~~underlying ~~will~~common bestock ~~estimated~~at ~~using~~the ~~option-pricing~~end ~~models~~of ~~adjusted~~the ~~for~~period, and any subsequent changes in the ~~unique~~market ~~characteristics~~price of ~~those~~the ~~instruments~~underlying common stock through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs.

The company may, from time to time, issue common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock, stock options and common stock warrants issued to persons other than employees or directors are recorded on the basis of their fair value, as required by SFAS No. 123 (“SFAS No. 123”), “Accounting for Stock Based Compensation”, which is measured as of the date required by EITF Issue 96-18 (“EITF 96-18”), “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” In accordance with EITF 96-18, the stock options or common stock warrants are valued using the Black-Scholes model on the basis of the market price of the underlying common stock on the “valuation date,” which for options and warrants related to contracts that have substantial disincentives to non-performance, is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs.23

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~~(n)~~ Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could materially differ from those estimates.

~~(o)~~ Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with accounting principles generally accepted in the United States of America. The estimated fair values approximate their carrying value because of the short-term maturity of these instruments or the stated interest rates are indicative of market interest rates.

~~(p) Recent Accounting Standards:~~Reclassifications

~~Recently~~Certain ~~adopted~~amounts ~~accounting~~included ~~pronouncements~~in the accompanying 2009 financial statements have been reclassified to conform to current year presentation. These reclassifications had no effect on the Company’s net assets or net loss.

~~Effective~~Recent ~~at the beginning of the first quarter of 2009, the Company adopted the provision of FIN 48, “~~Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109, “Accounting for Income Taxes.” The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.Standards

AsThe ~~a result of the implementation of FIN 48, the~~ Company ~~has~~does not ~~changed~~believe that any ofrecently ~~its~~issued ~~tax~~accounting ~~accrual~~pronouncements ~~estimates. The~~will ~~Company~~have ~~files~~a ~~U.S.~~material ~~federal~~affect ~~and~~on ~~U.S.~~its ~~state~~financial ~~tax returns~~statements. ~~For state tax returns the Company is generally no longer subject to tax examinations for years prior to 1996.~~

~~Effective April 1, 2008, the Company partially adopted SFAS 157, which provides a framework for measuring fair value~~2. ~~Fair~~LIQUIDITY ~~value~~AND isMANAGEMENT'S defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The partial adoption of this standard only resulted in additional disclosure requirements and had no financial statement impact. Delayed application of this statement is permitted for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Company has not applied the provisions of SFAS 157 for intangible assets and long-lived assets measured for fair value for impairment assessment under Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets.PLANS

~~Effective April 1, 2008, the Company adopted SFAS No. 159,~~ The ~~Fair~~accompanying ~~Value~~financial ~~Option~~statements ~~for~~have ~~Financial~~been ~~Assets~~prepared ~~and~~assuming ~~Liabilities~~that —the ~~Including~~Company anwill ~~Amendment~~continue ofas ~~SFAS~~a ~~No. 115~~going ~~(SFAS 159)~~concern. ~~This~~However, ~~standard~~the ~~permits~~Company anhas ~~entity~~incurred toa ~~choose~~loss ~~to measure many financial instruments and certain other items at fair value. Most~~ of ~~the~~$6,243,384 ~~provisions~~from ininception ~~SFAS No. 159~~(January ~~are elective; however~~12, ~~the~~2005) ~~amendment~~through toMarch ~~SFAS~~31, ~~No. 115~~2010, ~~Accounting for Certain Investments in Debt~~ and ~~Equity~~has ~~Securities,~~working ~~applies~~capital ~~to all entities with available-for-sale~~ and ~~trading~~stockholder ~~securities.~~deficits ~~The~~of ~~fair~~$2,304,395 ~~value option established by SFAS 159 permits the Company to choose to measure eligible items~~ at ~~fair~~March ~~value~~31, ~~at specified election dates~~2010. The Company ~~will~~currently ~~report~~has ~~unrealized~~no ~~gains~~revenue ~~and~~generating ~~losses~~operations onand ~~items~~expects ~~for~~to ~~which~~incur ~~the~~substantial ~~fair~~operating ~~value~~expenses ~~option has been elected~~ in ~~earnings~~order atto ~~each~~expand ~~subsequent~~its ~~reporting date~~business. ~~The fair~~As ~~value option: (~~a~~) may~~ ~~be applied instrument by instrument~~result, ~~with~~the aCompany ~~few~~expects ~~exceptions,~~to ~~such~~incur asoperating ~~investments otherwise~~losses ~~accounted~~ for by the ~~equity~~foreseeable ~~method;~~future. ~~(b) is~~The ~~irrevocable~~accompanying ~~(unless~~financial astatements ~~new~~do ~~election date occurs); and (c) is applied only to entire instruments and~~ not toinclude ~~portions~~any ofadjustments ~~instruments.~~that Inmight ~~connection~~become ~~with~~necessary ~~the~~should ~~adoption of this standard,~~ the Company ~~did~~be ~~not~~unable ~~elect any additional financial instruments~~ to becontinue ~~recorded~~as ata ~~fair~~going ~~value~~concern.

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(2) LIQUIDITY AND MANAGEMENT'S PLANS

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, the Company has incurred a loss of $5,867,392 from inception (January 12, 2005) through March 31, 2009, and has a working capital deficiency and stockholder deficit of $2,041,278 and $2,004,819 respectively, at March 31, 2009. The Company currently has minimal revenue generating operations and expects to incur substantial operating expenses in order to expand its business. As a result, the Company expects to incur operating losses for the foreseeable future. The accompanying financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.

Management intends to continue to finance operations through financing activities as well as to seek potential acquisitions that have positive cash flows; however, there can be no assurance of successful financing or acquisition activity in the future.

(3). ~~PROPERTY~~NOTE ~~AND EQUIPMENT~~RECEIVABLE

~~Property~~On June 19, 2009, the Company sold AcXess to the AcXess management team. The Company issued a Secured Promissory Note in the principal amount of $500,000, with an 8% interest rate, interest and ~~equipment~~principal ~~consist~~are due on June 19, 2012. The note contains a prepayment discount schedule that allows for gradually decreasing discounts beginning with a maximum prepayment discount of $350,000 if $150,000 is paid within three months of the ~~following~~June as19, 2009 issue date. The Company has secured the note with all of the assets of AcXess pursuant to a separate Security Agreement. The Company considered it probable that the maximum discount will be taken and recorded the note at the amount of $150,000 on its balance sheet at June 30, 2009. The Company ceased recognizing interest income on this note in July 2009; a total of $1,205 in interest income was accrued during the three months ended June 30, 2009. At March 31, ~~2009~~2010, the Company considered it unlikely that this note will be collectable, and ~~2008:~~a reserve in the amount of $150,000 was recorded during the year ended March 31, 2010.

	March 31, 2009			March 31, 2008
Equipment	$	75,479		$	68,583
Computer software		2,330			4,930
Furniture and fixtures		1,258			1,258
Property and equipment under capital lease		134,022			134,022
		213,089			208,793
Accumulated depreciation and amortization		(176,630	)		(94,306	)
	$	36,459		$	114,487

Note Receivable - Subsequent Events

~~Depreciation~~On ~~expense~~January ~~was~~31, ~~$84~~2011,~~162~~ ~~and~~the ~~$87,291~~Company ~~for~~and the ~~years~~AcXess ~~ended~~management ~~March~~team ~~31,~~executed ~~2009~~an agreement termed "Satisfaction and ~~2008,~~Discharge ~~respectively. During~~of ~~the~~Promissory ~~year~~Note ~~ended~~- ~~March~~Release ~~31,~~of ~~2009,~~Security Interest/Final Settlement" wherein the ~~Company~~Secured ~~purchased~~Note ~~assets~~was cancelled in ~~the~~return ~~amount~~for a payment of $814,~~985~~000 to the Company and the release by both parties of all claims.

(4). ~~DEFERRED~~ACQUISITION ~~REVENUE~~ACTIVITY

The ~~Company’s~~WEB ~~wholly-owned~~Channel ~~subsidiary~~Network, AcXess, Inc., receives payment in advance for certain of its services, primarily website hosting. These payments are recognized as revenue over the period for which the services are provided. As of March 31, 2009 and 2008, these advance payments aggregated a total of $30,301 and $112,781, respectively; these amounts will be taken into revenue over the respective subsequent twelve month periods.LLC

31On June 17, 2009, the Company purchased substantially all of the assets of The WEB Channel Network, LLC a Florida limited liability company (the “WEB Channel Acquisition”), and certain other assets of Robert W. Singerman, the manager and sole owner of Seller. The Company also entered into an Employment Agreement with Mr. Singerman, Mr. Singerman also entered into a Non-Disclosure, Non-Competition, Non-Solicitation and Invention Agreement with the Company.

The Purchased Assets include substantially all of the assets of The Web Channel Network, including all of its intellectual property and its signed and pending production agreements.

The purchase price consisted of: (i) the Company’s agreement to make cash installment payments of $25,000 within 15 days of the June 17, 2009 sale and $75,000 prior to September 30, 2009; (ii) a promissory note in the amount of $500,000 payable over five years in annual installments of $100,000 in principal plus accrued interest, secured by all of the Purchased Assets pursuant to a Security Agreement (see Note 7); and (iii) stock purchase warrants of the Company for 5,000,000 shares of the Company’s common stock at an exercise price of $0.035 per share. The warrants were valued at an aggregate of $15,000 using the Black-Scholes valuation model using the following variables: Term of 5 years, risk-free interest rate of 0.5%, volatility of 461%.

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~~(5)~~The ~~ADVANCES~~Merger ~~PAYABLE~~has been accounted for under the acquisition method of accounting. After considering all the relevant factors in determining the acquiring enterprise, including, but not limited to, relative voting rights, composition of the board of directors and senior management, and the relative size of the companies, the merger was deemed an acquisition and the Company was treated as the acquiring entity for accounting and financial reporting purposes.

~~Advances~~A ~~payable~~summary of ~~$89,742 at March 31, 2009, consists of cash advances to~~ the ~~Company~~components ~~by Aspen Capital and a shareholder, Peter Peterson. These cash advances will accrue interest at a rate~~ of ~~10% per annum. During~~ the ~~year~~estimated ~~ended~~purchase ~~March~~price ~~31,~~for ~~2009, we accrued interest in~~ the ~~amount of $3~~acquisition,~~715~~ ~~and~~is ~~$855,~~as ~~respectively, for these cash advances.~~follows:

During the year ended March 31, 2009, the Company converted a cash advance of $155,511 and accrued interest in the amount of $2,568, into a promissory note payable in the amount of $158,079 to Xalles, an Irish corporation (“Xalles”). The Company had been involved in negotiations to purchase Xalles. These funds were advanced to the Company by Xalles for the purpose of general working capital and trade payables of both Xalles and the Company. See note 7.

Cash payments due within ninety days of the acquisition date	$	100,000
Note payable		500,000
Warrants		15,000
Total	$	615,000

~~(6) NOTE~~Acquisition ~~PAYABLE~~Activity - Subsequent Events

On ~~April~~May 1413, ~~2008~~2011, the Company ~~issued~~and aMr. ~~promissory~~Singerman ~~note~~agreed ~~(the “Note”)~~ to ~~the~~rescind ~~benefit of Xalles in~~ the ~~amount~~WEB ofChannel ~~$158,079~~Network ~~pursuant~~acquisition todescribed ~~the~~above ~~conversion of an advance made to~~ (the ~~Company~~“WEB byChannel ~~Xalles~~Rescission ~~(see note 6~~Agreement”). The ~~outstanding~~ principal ~~amount~~terms of the ~~Note~~WEB ~~bears~~Channel ~~interest~~Rescission ~~beginning~~Agreement oninclude ~~April 14, 2008, calculated on~~ the ~~basis of~~following: The aparties ~~360-day~~agreed ~~year~~to ~~for~~settle ~~the~~any ~~actual~~and ~~number~~all ofclaims ~~days~~both ~~elapsed~~known ~~through~~and ~~the~~unknown ~~actual~~for ~~payment date at~~ the ~~following~~total ~~rates~~amount of ~~interest:~~$70,000 payable ~~eight~~to ~~percent~~Robert ~~(8%)~~W. ~~per~~Singerman. The ~~annum~~consideration ~~through~~was ~~June~~a ~~15,~~convertible ~~2008;~~note ~~ten~~with ~~percent~~interest (at 10%) per annum ~~through August 16~~, ~~2008,~~a ~~twelve~~maturity ~~percent~~date ~~(12%)~~of ~~per~~November ~~annum~~13, ~~through~~2011 ~~October~~and ~~17,~~an ~~2008;~~option ~~and~~to ~~fourteen~~convert ~~percent~~in ~~(14%)~~part ~~per~~or ~~annum~~in ~~through~~whole ~~December~~to ~~18,~~common ~~2008. This~~shares ~~Note~~of ~~may~~Innovative beSoftware ~~prepaid~~Technologies, ~~either~~Inc. inbased ~~whole~~on ora inconversion ~~part,~~rate atof ~~any~~$0.035 ~~time~~per ~~without penalty~~share. The ~~outstanding~~assets ~~principal~~of ~~balance~~The ofWEB ~~this~~Channel ~~Note~~Network, ~~plus~~LLC ~~accrued but~~previously ~~unpaid~~conveyed ~~interest,~~to ~~was~~Innovative ~~due~~Software ~~and~~Technologies, ~~payable~~Inc. onwere ~~December~~returned ~~18,~~unencumbered ~~2008~~free and isclear into ~~default~~Robert atW. ~~March 31, 2009~~Singerman. The ~~Company~~promissory note is currently in ~~negotiations~~default. The ~~with~~WEB ~~Xalles~~Channel ~~regarding~~Rescission Agreement was treated for accounting purposes as a ~~restructuring~~recognized orsubsequent ~~renegotiation~~event ofpursuant to the ~~Note.~~FASB ~~However~~Codification section 855 and, ~~there~~as issuch, no ~~assurance~~entries ~~that~~are ~~such~~presented afor ~~restructuring~~this ~~will~~transaction bein ~~achieved~~the atCompany’s ~~terms~~financial ~~beneficial~~statements tofor the ~~Company~~period ifended atMarch ~~all~~31, 2010.

On September 11, 2013, the Company announced the acquisition of all of the outstanding shares of Live Riot Inc., a Delaware corporation (“Live Riot”). Under the agreement, Live Riot became a wholly owned subsidiary of the Company. The terms of the agreement called for the delivery of 3,000,000 shares of the Company’s common stock to three stockholders of Live Riot for all the issued and outstanding shares of Live Riot in a tax-free reorganization pursuant to Section 368(b) of the Internal Revenue Code. In addition, the Stockholders were granted 1,500,000 options to purchase shares of the Company's common stock. These options have a term of seven (7) ~~CONVERTIBLE~~years ~~NOTES~~and ~~AND~~a ~~DERIVATIVE~~strike ~~INSTRUMENT~~price ~~LIABILITIES~~of $0.13 per share, that being the closing trading price of shares of the Company's common stock on September 10, 2013. Upon the launch of the LiveRiot(TM) app integrated with certain of the Company's technology, the Stockholders will be granted a further 750,000 options to purchase shares of the Company's common stock at a strike price equal to the closing price of the Company's stock on the trading day prior to the date of the launch. The agreement also called for the execution of employment agreements between the Stockholders and the Company having a term of three (3) years and specifying annual compensation of not less than $100,000 per year per employee.

~~Derivative~~Subsequent ~~Financial~~to ~~Instruments~~the acquisition of Live Riot, the former shareholders of Live Riot (the "LR Shareholders") were to deliver the assignment to the Company of a certain provisional patent that had been filed under their individual names (the "Assignment"). The LR Shareholders failed to deliver the Assignment. Pending the delivery of the Assignment, the Company had withheld delivery to the LR Shareholders the equity specified in the Agreement. The Company has terminated the acquisition of Live Riot.

On July 22, 2014, the Company signed a non-binding letter of intent with SLM (“LOI”). The proposed transaction contemplated by the LOI, which is subject to certain conditions precedent set forth in the LOI, is that SLM will acquire all of the issued and outstanding capital stock (“Shares”) or all of the operating assets and intellectual property rights (“Assets”) of INtech Ventures, Inc., a Florida corporation and wholly owned subsidiary of the Company, ~~does~~(“INtech”), ~~not~~which ~~use~~acquisition ~~derivative~~(“Acquisition”) ~~instruments~~shall be subject to ~~hedge~~the ~~exposures~~terms and conditions in the letter of intent attached as an exhibit to ~~cash~~the ~~flow~~Company's filing on Form 8-K dated July 23, ~~market~~2014, orand ~~foreign~~the ~~currency~~terms ~~risks~~contained in a written definitive purchase agreement to be negotiated by the Company and SLM (the “Definitive Purchase Agreement”). The Company is obligated under the LOI to complete the audit of INTech within 45 days of the Effective Date of the LOI (“Audit”). As of the date of this filing the audit has not been completed. After the completion of the Audit, and subject to the conditions in the LOI, the parties shall conclude an appropriate due diligence review for the Acquisition and the parties shall in good faith diligently seek to negotiate the terms and conditions of the Definitive Purchase Agreement based on the results of the Audit and a mutually acceptable fair valuation of the Shares and Assets of INtech (“Valuation”). The consummation of the Acquisition depends on whether the Company and SLM can reach agreement on the terms of the Definitive Purchase Agreement.

The Company reviews the terms of convertible debt and equity instruments issued to determine whether there are embedded derivative instruments, including the embedded conversion option, that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. The Company may also issue options or warrants to non-employees in connection with consulting or other services they provide.25

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Certain instruments, including convertible debt and equity instruments and the freestanding options and warrants issued in connection with those convertible instruments, may be subject to registration rights agreements which impose penalties for failure to register the underlying common stock by a defined date. These penalties are measured and accrued in accordance with Statement of Financial Accounting Standards No. 5~~, “Accounting for Contingencies”~~. ~~When~~ ~~the~~SALE ~~ability~~OF to physical or net-share settle the conversion option or the exercise of the freestanding options or warrants is deemed to be not within the control of the Company, the embedded conversion option or freestanding options or warrants may be required to be accounted for as a derivative instrument liability.ACXESS

~~Derivative~~On ~~financial~~June ~~instruments~~19, ~~are~~2009, ~~initially~~the ~~measured~~Company atreached ~~their~~a ~~fair~~revised ~~value.~~agreement ~~For~~with ~~derivative~~the ~~financial~~AcXess ~~instruments~~management ~~that~~team. Pursuant ~~are~~to ~~accounted~~this ~~for~~revised ~~as liabilities~~agreement, the ~~derivative~~Company ~~instrument~~sold isall ~~initially~~of ~~recorded at~~ its ~~fair~~shares ~~value~~of ~~and~~capital isstock ~~then~~of ~~re-valued~~AcXess ~~at each reporting date, with changes in the fair value reported as charges or credits~~ to ~~income. For option-based derivative financial instruments,~~ the ~~Company~~AcXess ~~uses~~management ~~the~~team ~~Black-Scholes~~in ~~option~~exchange ~~pricing model to value the derivative instruments.~~for:

When freestanding options or warrants are issued in connection with the issuance of convertible debt or equity instruments and will be accounted for as derivative instrument liabilities (rather than as equity), the total proceeds received are first allocated to the fair value of those freestanding instruments. When the freestanding options or warrants are to be accounted for as equity instruments, the proceeds are allocated between the convertible instrument and those derivative equity instruments, based on their relative fair values. When the convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount.

(1)	all 4,477,292 shares of the Company’s common stock held by the AcXess Managers;
(2)	the cancellation of options to purchase 5,978,349 shares of the Company’s common stock held by the AcXess Managers;
(3)	a Secured Promissory Note in the principal amount of $500,000, with an 8% interest rate, interest and principal are due on June 19, 2012. The note contains a prepayment discount schedule that allows for gradually decreasing discounts beginning with a maximum prepayment discount of $350,000 if $150,000 is paid within three months of the June 19, 2009 issue date. The Company has secured the note with all of the assets of AcXess with a separate Security Agreement. The Company considers it probable that the maximum discount will be taken and has recorded the note at the amount of $150,000 on its balance sheet at June 30, 2009. Interest in the amount of $1,205 was accrued during the three months ended June 30, 2009.
(4)	a release from AcXess and the AcXess Managers of all claims they may have against the Company and its officers, directors, employees, shareholders, affiliates and affiliated companies and for all damages that relate to the Initial Agreement, the transactions contemplated thereby, and any matter relating to AcXess or its business, operations, assets or liabilities.

ToThe ~~the~~follow ~~extent~~table ~~that~~illustrates the ~~fair~~components ~~values~~ of the ~~freestanding~~sale ~~and/or~~of bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value.AcXess:

The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, usually using the effective interest method. When the instrument is convertible preferred stock, the dividends payable are recognized as they accrue and, together with the periodic amortization of the discount, are charged directly to retained earnings.

Assets sold	$	(27,540	)
Liabilities assumed		271,277
Net liabilities assumed by AcXess managers		243,737
Common stock returned for cancellation		13,433
Other		6,444
Note receivable issued to the Company		150,000
Gain on the sale of AcXess	$	413,614

~~The~~At ~~classification~~March ~~of derivative instruments~~31, ~~including whether such instruments should be recorded as liabilities or as equity~~2010, ~~is re-assessed periodically, including at~~ the ~~end~~Company ofconsidered ~~each~~it ~~reporting~~unlikely ~~period.~~that Ifthis ~~re-classification~~note iswill ~~required,~~be ~~the fair value of the derivative instrument~~collectable, asand ofa ~~the~~reserve ~~determination date, is re-classified. Any previous charges or credits to income for changes~~ in the ~~fair~~amount ~~value~~ of ~~the~~$150,000 ~~derivative~~was ~~instrument~~recorded ~~are~~during ~~not reversed. Derivative instrument liabilities are classified in~~ the ~~balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. During the~~ year ended March 31, ~~2008, due to the conversion of the Convertible Notes Payable to common stock (see below), the Company reclassified derivative liabilities in the amount of $993,015 from liability to equity~~2010.

InSale ~~January 2006 the Board~~ of ~~Directors~~AcXess of the Company approved the raising of up to $1,000,000 via the issuance of promissory notes (the “Notes”) to accredited investors. These notes have a term of six months, an interest rate of 12% per annum, and are convertible into shares of common stock of the Company at a 30% discount to a future Qualified Financing (as therein described). As a result of this, the Company could ultimately issue an unlimited number of shares of common stock. This resulted in liability treatment for all of the related derivatives. In addition, each of the Notes is issued with warrants to purchase Company common stock at a strike price of $0.05 per share. The number of warrants granted is determined by multiplying the face value of each note issued by four. In October the Board of Directors of the Company approved an increase in the amount to be raised under this financing to $1,500,000. A total of $1,107,500 had been raised as of November 10, 2006, when the Company closed the round. During the three and nine months ended December 31, 2007, the Company was in default on all Notes totaling a principal amount of $1,107,500. In the event of a default resulting from the Company's non-~~payment~~ ofSubsequent principal or interest when due, a holder of the Notes may declare all unpaid principal and accrued interest due and payable immediately. The Company was served a complaint from one investor demanding repayment of $55,000 under one of the Notes. The Company reached a settlement agreement with this investor, and executed a mutual release and the complaint was dismissed on October 25, 2007. No notice has been received from any other holder of the Notes and the Company is currently in the process of renegotiating the terms of the Notes (as noted below); however there can be no assurance that such negotiations will be successful.Events

On ~~December~~January 2231, ~~2006~~2011, the Company ~~entered~~and ~~into~~the aAcXess ~~securities~~management ~~purchase~~team ~~agreement~~executed ~~with~~ an ~~accredited~~agreement ~~investor~~termed ~~(the~~"Satisfaction ~~“Investor”)~~and ~~for~~Discharge ~~the sale~~ of ~~$1,000,000~~Promissory ~~Convertible~~Note ~~Debentures (the “Debentures”). In connection with the Agreement, the Investor received (i) a warrant to purchase 8,928,571 shares of common stock (“Long~~-~~Term~~ ~~Warrants”)~~Release ~~exercisable at $0.30 and (ii) a warrant to purchase 1,785,714 shares~~ of ~~common~~Security ~~stock~~Interest/Final ~~(“Short~~Settlement" ~~Term~~wherein ~~Warrants”) exercisable at $0.143 per share. The Long Term Warrants and~~ the ~~Short~~Secured ~~Term~~Note ~~Warrants~~was ~~are~~cancelled exercisable for a period four years from the date of issuance and the earlier of (i) December 22, 2007 and (ii) the date a registration statement(s) covering the resale of all Registrable Securities (as defined in ~~the~~return ~~Registration~~for Rights Agreement) is declared effective by the SEC (the “Initial Exercise Date”) and on or prior to the close of business on the four month anniversary of the Initial Exercise Date, respectively. The Debentures are convertible at the option of the holder into shares of common stock at a ~~price~~payment of $~~0.112 per share. The Company incurred approximately $81~~14,~~140~~000 ~~in interest expense relating~~ to the ~~Debentures~~Company ~~due~~and to the ~~“Liquidating~~release ~~Damages” clause specified in the Purchase Agreement as a registration statement covering the Registrable Securities was declared effective~~ by ~~the~~both ~~SEC~~parties on July 23, 2007, 123 days after the agreed upon date in the Purchase Agreement, March 23, 2007. The penalty is calculated as 2% per 30 day period or partial 30 day period beyond the dates stipulated above. The maximum aggregate liquidated damages payable to a Holder under this Agreement is 10.5% of ~~the~~all ~~aggregate subscription amount paid by such Holder pursuant to the Purchase Agreement~~claims. Pursuant to Emerging Issues Task Force issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, there are no gains or losses associated with this penalty, as it is not indexed to or settled in the stock of the Company.

336. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following:

	March 31,
	2010		2009

Trade payables	$	155,696	$	44,601
Accrued for legal settlement		69,975		69,975
Estimated reserve for product returns		-		569,031
Payable related to acquisition		30,027		-
Total	$	255,698	$	683,607

During the year ended March 31, 2010, the Company made the determination that the estimated reserve for product returns was over-accrued in the amount of $569,031 and that the statute of limitations for these accruals had expired. The reserve was adjusted to $0 during the year ended March 31, 2010 and the amount of $569,031 was recorded as a gain on the de-recognition of accrued expenses.

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~~The~~7. ~~default~~ACCRUED on the Notes discussed above is an “Event of Default” in accordance with the terms of the Debenture and, therefore, the Debenture holder may declare all principal and interest due and payable immediately; however, the Company has received no notice from the Debenture holder demanding such repayment.INTEREST

~~The~~Accrued ~~Debentures bear~~ interest at 4%March ~~until June 22~~31, ~~2007~~2010 and 9%2009 ~~thereafter,~~consisted ~~payable in arrears and mature three years from the date~~ of ~~issuance. Accrued interest is payable in cash semi-annually, beginning on July 1, 2007. The Company has not made~~ the ~~interest payment of $21,271 due on July 1, 2007 and intends to negotiate a settlement with the Debenture holder; however there can be no assurance that such negotiation will be successful.~~following:

Warrants were initially accounted for as derivative instrument liabilities (see below) in accordance with EITF 00-19, "Accounting for Derivative Financial Instruments Indexed To, and Potentially Settled In, a Company's Own Common Stock" (“EITF 00-19”) primarily as a result of the possible conversion of other debt into a possible unlimited number of shares. Accordingly, the initial fair values of the warrants, amounting to an aggregate of $82,239 relating to the issuance of the Notes, and $964,286 relating to the issuance of the Debentures, were recorded as a derivative instrument liability. The fair value of the warrants was determined using the Black-Scholes valuation model, based on the market price of the common stock on the dates the warrants were issued, an expected dividend yield of 0%, a risk-free interest rate based on constant maturity rates published by the U.S. Federal Reserve, applicable to the life of the warrants, expected volatility of 114% (based on analysis of historical stock prices of the Company and its selected peers), and the five year and four year life of the warrants relating to the Notes and Debentures, respectively. The Company is required to re-measure the fair value of the warrants at each reporting period.

	March 31,
	2010		2009
Convertible Debenture	$	269,726	$	180,466
Xalles Note		44,310		18,628
Other Notes		13,262		-
Total	$	327,298	$	199,094

Because the conversion price of the Notes is not fixed, they are not “conventional convertible debt” as that term is used in EITF 00-19 primarily as a result of the possible conversion of other debt into a possible unlimited number of shares8. ~~Accordingly,~~ACCRUED ~~the~~OFFICER Company is required to bifurcate and account separately for the embedded conversion options, together with any other derivative instruments embedded in the Notes. The Debentures are a hybrid instrument that embodies several derivative features. The instrument is not afforded the “conventional” convertible exemption because of certain full-ratchet anti-dilution protections afforded the investors. Further, certain derivative features did not meet the conditions for equity classification set forth in EITF 00-19. As a result, the Company has combined all embedded derivatives into one compound derivative financial instrument for financial accounting and reporting.SALARIES

The ~~freestanding~~amounts ~~warrants issued with the Debentures are also hybrid instruments that embody derivative features. While bifurcation~~ of ~~the~~accrued ~~embedded~~salaries ~~derivatives~~due ~~was~~to ~~not~~officers ~~required,~~is ~~the~~summarized ~~warrants did not otherwise meet all of the conditions for equity classification set forth in EITF 00-19. As a result, the Company has recorded the warrants as derivative liabilities at fair value.~~below:

The conversion option related to each of the Notes was bifurcated from the Note and accounted for separately as a derivative instrument liability (see below). The bifurcated embedded derivative instruments, including the embedded conversion options which were valued using the Flexible Monte Carlo Simulation methodology, were recorded at their initial fair value of an aggregate of $801,911.

	March 31,
	2010		2009

Mr. Ellett	$	59,500	$	59,500
Mr. Floyd		-		7,000
Mr. Rudman		110,000		50,000
Mr. Singerman		6,250		-
Total	$	175,750	$	116,500

~~The~~Accrued ~~discount~~Officer ~~from~~Salaries ~~the~~- ~~face~~Subsequent amount of the Notes represented by the value assigned to the warrants and bifurcated derivative instruments is being amortized over the period to the due date of each of the Notes, using the effective interest method. Amortization related to the Notes for the years ended March 31, 2009 and 2008 was $265,011 and $252,323.Events

On ~~August~~September 2314, ~~2007~~2011, ~~the~~Mr. ~~Company~~Rudman's ~~issued~~then anaccrued ~~aggregate~~salary of 5$165,~~672,655~~000 ~~shares~~was ofassumed ~~common~~by ~~stock~~Aspen inCapital ~~exchange for the conversion of the Notes with the principal amount of $263~~Partners,~~315~~ ~~and accrued interest of $20~~LLC,~~318~~ ~~totaling~~an ~~$283,633,~~entity ~~based~~controlled onby aPeter ~~conversion~~Peterson ~~price~~(see ofNote ~~$0.05~~11, ~~per~~Payable ~~share. This transaction was exempt from registration pursuant~~ to ~~Section~~Related ~~4(2~~Party) of ~~the~~and ~~Securities~~mutual ~~Act~~releases ofwere ~~1933~~executed. This ~~The~~increased ~~balance~~Payable ofto ~~the~~Related ~~Notes~~Party atby ~~September 30, 2007 was~~ $~~902~~165,~~722~~000. ~~During the three months ended December 31, 2007, the Company also converted the following Notes:~~ onMr. ~~October~~Singerman's ~~12, 2007, the Company issued 14,633,759 shares of its common stock in exchange for the conversion of convertible promissory notes and~~ accrued ~~interest~~salary ~~therein~~was inwritten ~~the~~off ~~aggregate~~as ~~amount~~part of ~~$731,688, based on a conversion price of $0.05 per share; On October 19, 2007,~~ the ~~Company~~"Offer ~~issued 574,630 shares~~ of ~~its common~~Rescission ~~stock in exchange for the conversion of convertible promissory notes~~ and ~~accrued~~Compromise ~~interest~~Settlement" ~~therein~~agreement inexecuted ~~the aggregate amount of $28,732, based~~ on aMay ~~conversion price of $0.05 per share; and on December 17~~13, ~~2007,~~2011 ~~the~~(see ~~Company~~Note issued 3,581,314 shares of its common stock in exchange for the conversion of convertible promissory notes and accrued interest therein in the aggregate amount of $179,066, based on a conversion price of $0.05 per share. These transactions were exempt from registration pursuant to Section 4~~(2)~~ ofAcquisition ~~the~~Activity ~~Securities~~- ~~Act~~Subsequent ~~of 1933~~Events). AtThe ~~December~~accrued ~~31,~~salary ~~2007,~~for ~~all of the Notes had been converted and none remain outstanding~~Mr. At ~~the~~Floyd ~~time~~was of the conversions, the Company reclassified the outstanding derivative liabilities at the time of the conversions in the aggregate amount of $993,015 related to the Convertible Promissory Notes to additional paidwritten-inoff ~~capital~~on ~~during the year ended~~ March 31, ~~2008~~2010.

As9. aPENALTY ~~result~~FOR ofLATE ~~this~~REGISTRATION ~~conversion,~~OF ~~all outstanding warrants and embedded derivative liabilities were recharacterized as equity and reclassified to additional paid-in capital.~~SHARES

~~The~~Pursuant ~~conversion~~to ~~option~~a ~~related~~convertible tonote agreement, the ~~Debentures~~Company was ~~bifurcated~~obligated ~~from~~to file a registration statement covering the ~~Debentures~~shares ~~and~~of ~~accounted~~stock ~~for~~underlying ~~separately~~the asnote under a ~~derivative~~registration ~~instrument~~rights ~~liability~~agreement, dated December 22, 2006. The ~~bifurcated~~deadline ~~embedded~~for ~~derivative~~filing ~~instruments~~the registration statement under the Securities Act was April 22, ~~including~~2007. We were unable to file the ~~embedded~~registration ~~conversion~~statement ~~option~~due ~~which~~to ~~was~~a ~~valued~~lack ~~using~~of adequate funds. This registration agreement contains a liquidated damages clause should the ~~Flexible~~Company ~~Monte~~fail ~~Carlo~~to ~~Simulation~~achieve ~~methodology~~this registration by certain deadlines. The deadlines were not met, ~~was~~and ~~recorded~~the atCompany ~~its~~became ~~initial fair~~liable ~~value~~for ofliquidated andamages ~~aggregate~~in the amount of $~~553~~81,~~466~~140. This liability is outstanding as March 31, 2010 and 2009.

The discount from the face amount of the Debentures represented by the value assigned to the warrants and bifurcated derivative instruments is being amortized over the period to the due date of the Debentures, using the effective interest method10. ~~Amortization~~PREFERRED ~~related~~STOCK ~~to the Debentures for the year ended March 31, 2009 and 2008, was $265,011 and $60,395, respectively.~~LIABILITY

34At March 31, 2009, the number of shares of common stock issuable for the conversion of preferred stock exceeded the number of shares of common stock authorized. The Company reclassified of 19.3% the total value of its preferred shares, or $86,850, to current liabilities on its balance sheet at March 31, 2009. The Company also calculated the value of the beneficial conversion feature associated with this liability at $4,571, and charged this amount to operations and to additional paid-in capital at March 31, 2009. There was no such liability at March 31, 2010.

11.	PAYABLE TO RELATED PARTY

Peter Peterson, personally and through entities controlled by him, Aspen Capital, Pointe Capital and B2 Opportunity Fund (collectively, “Peterson”), controls a significant number of shares of the Company and therefore is considered a related party. The Company has liabilities to Peterson for (a) consulting fees for services performed by Peterson and (b) advances made to the Company by Peterson. Advances accrue interest at the rate of 10% per annum. During the years ended March 31, 2010 and 2009, we accrued interest in the amount of $7,607 and $3,715, respectively, for these cash advances.

Table of Contents

AThe ~~summary~~amounts ofowed ~~the~~to ~~Debentures~~Peterson ~~and unamortized discount~~ at March 31, ~~2009~~2010 and ~~2008,~~2009 isare assummarized ~~follows:~~in the table below.

	March 31, 2009			March 31, 2008
	March 31,
Debenture; 4% per annum (increasing to 9% per annum in July 2007); Due December 22, 2009	$	1,000,000		$	1,000,000
	2010			2009
Less: Unamortized discount		(664,595	)		(929,606	)
Accrued Consulting - Aspen Capital	$	75,000		$	-
Net carrying value	$	335,405		$	70,394
Accrued Consulting Fees - Pointe Capital		18,700			-
Note Payable - Aspen Capital		65,809			79,742
Advances from Peterson		10,000			10,000
Accrued interest - related party		12,179			4,570
Total	$	181,688		$	94,312

~~The~~Payable ~~Company~~to ~~uses~~Related ~~the~~Party ~~Black~~-~~Scholes~~ ~~valuation~~Subsequent ~~model to value the warrants and the embedded conversion option components of any bifurcated embedded derivative instruments that are recorded as derivative liabilities.~~Events

InOn ~~valuing~~September ~~the~~14, ~~warrants and the embedded conversion option components of the bifurcated embedded derivative instruments at the reclassification date~~2011, ~~the~~ ~~Company~~Peterson ~~used~~assumed ~~the~~accrued ~~market~~payroll ~~price~~due ofto ~~our~~Mr. ~~common~~Rudman ~~stock~~in on the ~~date~~amount of ~~valuation~~$165,000 ~~an expected dividend yield of 0%~~ and ~~the remaining period to the expiration date of the warrants or repayment date of the Notes~~Mr. ~~All~~Rudman ~~warrants~~released ~~and conversion options can be exercised by~~ the ~~holder~~Company atfrom any ~~time~~liability.

~~Because~~On ofDecember ~~the~~10, ~~limited~~2010, ~~historical~~Peterson ~~trading~~and ~~period~~Xalles, ofLtd., ~~the~~reached ~~Company’s~~an ~~common~~agreement ~~stock,~~whereby ~~the~~Peterson ~~expected~~assumed ~~volatility of~~ the Company’s ~~common~~liability ~~stock~~to ~~over~~Xalles ~~the~~in ~~remaining life of~~ the ~~conversion~~amount ~~options and warrants has been estimated at 114% (based on analysis~~ of ~~historical stock prices of the Company and its selected peers). The risk-free rates of return used were based on constant maturity rates published by the U.S. Federal Reserve~~$221, ~~applicable to the remaining life of the conversion options or warrants~~133.

~~The~~On ~~Registration~~September ~~Rights~~28, ~~Agreement~~2011 ~~contains~~the aamount ~~“Liquidating~~owed ~~Damages”~~by ~~provision, whereby~~ the Company ~~is obligated~~ to ~~file~~Peterson awas ~~registration~~$238,581. The ~~statement~~board ~~covering~~approved the ~~Registrable~~conversion ~~Securities within 60 days~~ of ~~the~~that ~~Purchase~~debt ~~Agreement, and cause such registration statement~~ to ~~become~~restricted ~~effective~~shares ~~within 90 days~~ of the ~~Purchase Agreement. If~~Company's ~~either~~common ofstock ~~these~~at ~~deadlines is not met, the Company incurs~~ a ~~penalty~~conversion inprice ~~the amount~~ of 2%$0.003 per ~~month~~share, of the ~~aggregate~~closing ~~purchase~~trading price of the ~~securities. The~~ Company's ~~filed~~common ~~such~~stock registration statement within the 60 day period, but the registration statement did not become effective until 123 days after the Purchase Agreement, and the Company incurred liquidated damages in the amount of $81,140. The Purchase Agreement became effective on ~~July~~that ~~23, 2007, 123 days after the agreed upon~~ date ~~in the Purchase Agreement~~, ~~March~~resulting ~~22, 2007. This penalty is payable~~ in ~~cash, and accordingly~~ the ~~provisions~~issuance of ~~and the amount of $81~~79,~~140 was carried as a current liability on the Company’s balance sheet at March 31~~527,000 ~~2009 and 2008~~shares.

~~(8)~~12. ~~STOCKHOLDERS'~~NOTES ~~EQUITY~~PAYABLE

~~(a)~~Xalles ~~Recent issuances of common stock:~~Note

~~The~~On ~~shares~~April of14, ~~stock~~2008, the Company issued a promissory note (the “Xalles Note”) to the benefit of Xalles in the ~~following~~amount ~~transactions~~of ~~were~~$158,079 ~~valued~~pursuant atto the ~~closing~~conversion ~~market~~of ~~price~~an advance made to the Company by Xalles. The outstanding principal amount of the Note bears interest beginning on April 14, 2008, calculated on the basis of a 360-day year for the actual number of days elapsed through the actual payment date at the following rates of ~~issue~~interest: eight percent (8%) per annum through June 15, 2008; ten percent (10%) per annum through August 16, 2008, twelve percent (12%) per annum through October 17, 2008; and fourteen percent (14%) per annum through December 18, 2008. This Note may be prepaid, either in whole or in part, at any time without penalty. The outstanding principal balance of this Note, plus accrued but unpaid interest, was due and payable on December 18, 2008 and is in default at March 31, 2010 and 2009.

On2009 ~~May~~Short ~~30,~~Term 2008, the Company issued shares of common stock at a price of $0.05 per shares for previously accrued salary in the amount of $31,500 to the Company’s Chief Financial Officer. A total of 630,000 shares of common stock were issued to the officer.Notes

OnIn ~~May~~July ~~30,~~and ~~2008~~August 2009, the Company ~~issued~~was ~~shares~~loaned the amounts of ~~common~~$50,000 ~~stock~~and at$25,000, respectively, pursuant to a ~~price~~ninety ofday $0note payable agreement (“Short Term Note Payable A”).05 Interest accrued at the base rate of 12% per ~~shares~~annum ~~for~~and ~~previously~~at ~~accrued~~a ~~salary~~default inrate of 18%. This note was not repaid on the ~~amount~~due date of ~~$35~~October 15,~~000~~ 2009 on that date the note entered default status and began to accrue interest at the ~~Company’s~~rate ~~Executive~~of ~~Officer~~18%. AAs ~~total~~of March 31, 2010 this note is in default. Principal in the amount of ~~700~~ $75,000 ~~shares~~and ofaccrued ~~common~~interest ~~stock~~in ~~were~~the ~~issued~~amount toof $8,281 are carried on the ~~officer~~Company’s balance sheet at March 31, 2010.

OnIn ~~July~~August 112009, ~~2008~~ the Company ~~issued~~was 1loaned the amount of $50,000~~,000~~ ~~shares~~pursuant to a sixty-day note payable agreement (“Short Term Note Payable B”). Interest accrued at the base rate of ~~common~~12% ~~stock~~per asannum and at a ~~price~~default rate of $018%.02 ~~per~~This ~~share~~note ~~for~~was anot ~~previously~~repaid ~~accrued~~on ~~liability~~the due date of October 10, 2009 on that date the note entered default status and began to accrue interest at the rate of 18%. As of March 31, 2010 this note is in default. Principal in the amount of $2050,000 ~~for~~and ~~legal~~accrued ~~fees~~interest in the amount of $4,981 are carried on the Company’s balance sheet at March 31, 2010.

~~(b)~~Notes ~~Convertible~~Payable ~~Preferred~~- ~~Stock:~~Subsequent Events

~~The~~On ~~Company~~December ~~has 25~~10,~~000,000~~ ~~shares of preferred stock authorized and has designated 1~~2010,~~500,000~~ ~~shares~~Peterson ~~as $1.00 stated value Series A Preferred~~ and 3Xalles,~~000,000~~ ~~shares as $1~~Ltd.~~00 stated value Series B Preferred~~, ofreached ~~which~~an ~~450,000~~agreement ~~and~~whereby ~~-0- shares, respectively, are issued and outstanding as of March 31, 2007. Series A and Series B Preferred Stock (collectively "Preferred Stock") have~~ the ~~same~~Company's ~~terms~~liability ~~and conditions. The Preferred Stock is (i) entitled~~ to ~~cumulative~~Xalles ~~dividends~~in atthe aamount ~~rate~~ of ~~4.0% of the liquidation value (~~$~~1.00 per share)~~221,133 ~~(ii)~~was ~~convertible~~assumed atby ~~any~~Peterson ~~time into common stock at a rate of 95% of the average closing market price of the common stock for five days preceding conversion,~~ (~~iii)~~see ~~redeemable~~Note ~~at any time by the Company for $1.00 per share~~11, ~~and~~Payable ~~(iv) entitled~~ to ~~one~~Related ~~vote~~Party ~~per~~- ~~share~~Subsequent Events).

35Short Term Note Payable A was paid by Peterson in December 2012. Short Term Note Payable B is outstanding.

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During the ~~year~~period ~~ended~~from April 1, 2010, to March 31, ~~2009~~2011, the Company ~~had~~raised ~~450~~$651,~~000~~500 ~~shares~~in ofa ~~preferred~~convertible ~~stock~~notes ~~outstanding~~offering with seven accredited investors. The ~~Company~~notes ~~has~~have ~~accrued~~an 4interest rate of 20% orper $4annum,~~500~~ ~~per~~a ~~quarter~~term of ~~undeclared~~three ~~preferred~~months ~~stock~~and ~~dividends~~a conversion rate of $0.05 Asper share. All notes were in default at maturity and the Company negotiated an extension in return for increasing the principal of the notes to a total of $696,650. During the fiscal year ending March 31, ~~2009~~2014, B2 Opportunity Fund, LLC, a related party (see Note 11 Related Party Payable) paid $200,000 in principal to two investors and the Company ~~has~~issued 2,000,000 restricted shares of its common stock to settle outstanding debt of $18210,000 in principal and $49132,~~500~~528 in ~~undeclared~~accrued ~~preferred~~interest. The five remaining notes remain outstanding and in default. Warrants to purchase common stock ~~dividends~~were ~~for~~issued in conjunction with the ~~year~~note ~~ended~~issuances ~~March~~having ~~31,~~a ~~2009~~ strike price of $0.025 per share with 50% warrant coverage and ~~from~~a ~~inception~~term ~~(January~~of ~~12,~~one ~~2005)~~year. All ~~through~~warrants ~~March~~have ~~31,~~expired ~~2009,~~as ~~respectively~~of the date of this filing.

~~Total~~During ~~preferred stock on~~ the ~~Company’s~~period ~~balance~~from ~~sheet at~~ March 3115, ~~2009 was $450~~2013,~~000. The~~ ~~number~~to ~~of shares of common stock issuable for~~ the ~~conversion~~date of ~~preferred~~this ~~stock~~filing, ~~exceeded~~ the ~~number~~Company ofraised ~~shares~~$363,500 ofin ~~common~~a ~~stock~~convertible ~~authorized~~notes byoffering ~~39,477,094~~with ~~shares,~~thirteen ~~which~~accredited ~~represents 19~~investors.3% ofThe ~~the~~notes ~~total~~have ~~number~~an ofinterest ~~shares~~rate ~~into~~of ~~which~~10% ~~the preferred~~per ~~shares~~annum, ~~are~~a ~~convertible~~term atof ~~March~~one 31year, ~~2009. The~~a ~~Company~~conversion ~~reclassified~~rate of 19$0.3%10 ~~the~~per ~~total value of its preferred shares~~share, orand ~~$86,850,~~carry warrants to ~~current~~purchase ~~liabilities~~common onstock ~~its balance sheet~~ at ~~March 31, 2009~~$0. ~~The~~15 ~~Company~~per ~~also~~share ~~calculated the value of the beneficial conversion feature associated~~ with ~~this~~a ~~liability~~50% atwarrant ~~$4,571,~~coverage and ~~charged~~a ~~this~~term ~~amount~~of toone ~~operations~~year. These ~~and~~notes toare ~~additional~~outstanding ~~paid-in~~as ~~capital~~of atthe ~~March~~date ~~31,~~of ~~2009~~this filing.

~~(c)~~13. ~~Equity~~CONVERTIBLE ~~Incentive Plan:~~DEBENTURE

OnConvertible ~~August~~Notes 9, 2006, the Company adopted the Innovative Software Technologies, Inc. 2006 Equity Incentive Plan (the "Plan"). An aggregate of 20 million shares of common stock is authorized for issuance under the Plan. Options must terminate no later than the tenth (10th) anniversary of the date of grant, and ~~each~~Common incentive stock option granted to any 10% Owner-Employee (as defined in the Plan) must terminate no later than the fifth (5th) anniversary of the date of grant. The Company accounts for stock-based compensation using the fair value method as defined in SFAS No. 123, "Accounting for Stock~~-Based~~ ~~Compensation" and estimates the fair value of each option grant on the grant date using an option-pricing model.~~Warrants

On ~~August~~December 2422, ~~2007~~2006, the Company ~~adopted~~entered into a securities purchase agreement with an accredited investor (the ~~Innovative~~“Investor”) ~~Software~~for ~~Technologies~~the sale of $1,000,000 ~~Inc~~Convertible Debentures (the “Debentures”). ~~2007~~The ~~Equity~~Debentures ~~Incentive~~are ~~Plan~~convertible (into shares of the Company’s common stock at a price of $0.112 per share. In connection with the Agreement, the Investor received (i) a warrant to purchase 8,928,571 shares of common stock (“~~2007~~Long-Term ~~Plan~~Warrants”) exercisable at $0.30 Anand ~~aggregate~~(ii) ofa 60warrant ~~million~~to purchase 1,785,714 shares of common stock is(“Short ~~authorized~~Term Warrants”) exercisable at $0.143 per share. The Long Term Warrants and the Short Term Warrants are exercisable for a period of four years from the date of issuance ~~under~~and the earlier of (i) December 22, 2007 ~~Plan.~~and ~~The~~(ii) ~~Company~~the ~~accounts~~date ~~for~~a ~~stock-based~~registration ~~compensation~~statement(s) ~~using~~covering the ~~fair~~resale ~~value~~of ~~method~~all Registrable Securities (as defined in ~~SFAS~~the ~~No. 123,~~Registration ~~"Accounting~~Rights ~~for~~Agreement) ~~Stock-Based~~is ~~Compensation"~~declared ~~and~~effective ~~estimates~~by the ~~fair~~SEC ~~value~~(the of“Initial ~~each~~Exercise ~~option~~Date”) ~~grant~~and on ~~the~~or ~~grant~~prior ~~date~~to ~~using~~the anclose ~~option-pricing~~of ~~model.~~business ~~During~~on the ~~years~~four ~~ended~~month ~~March~~anniversary ~~31,~~of ~~2009~~the ~~and~~Initial ~~2008~~Exercise Date, respectively. The Debentures are convertible at the ~~Company~~option ~~recognized~~of ~~$165,150~~the ~~and~~note ~~$300,794,~~holder ~~respectively,~~into inshares of common stock~~-based~~ ~~compensation~~at a price of $0.112 per share.

AThe ~~summary~~Debentures ofbear ~~the~~interest ~~Company's~~at ~~stock~~4% ~~option~~until ~~2006~~June ~~and~~22, 2007 ~~Plans~~and as9% thereafter, payable in arrears and mature three years from the date of ~~March~~issuance. 31Accrued interest is payable in cash semi-annually, ~~2009~~beginning on July 1, ~~and~~2007. ~~the~~The ~~changes~~Company ~~during~~has not made interest payments in the ~~years~~aggregate ~~ending~~amount of ~~March~~$203,397, 31as of June 30, 2009 and ~~2008,~~intends isto ~~presented~~negotiate ~~below:~~a settlement with the Debenture holder; however there can be no assurance that such negotiation will be successful.

~~Exercise~~Warrants are accounted for as a derivative discount to the debentures and accordingly, the initial fair value of the warrants was $964,286. The fair value of the warrants was determined using the Black-Scholes valuation model, based on the market price of the common stock on the dates the warrants were issued, an expected dividend yield of 0%, a risk-free interest rate based on constant maturity rates published by the U.S. Federal Reserve, applicable to the life of the warrants, expected volatility of 114% (based on analysis of historical stock prices of ~~options~~the ~~outstanding~~Company atand ~~March~~its 31selected peers), ~~2009:~~and the five year and four year life of the warrants relating to the Debentures.

The discount from the face amount of the Debentures represented by the value assigned to the warrants and bifurcated derivative instruments is being amortized over the period to the due date of the Debentures, using the effective interest method. Amortization related to the Debentures for the twelve months ended March 31, 2010 and 2009 was $664,595 and $265,011, respectively.

A summary of the Debentures and unamortized discount at March 31, 2010 and March 31, 2009, is as follows:

	March 31,		March 31,
	2010		2009
Debenture; 4% per annum (increased to 9%
per annum in July 2007); due December 22, 2009)	$	1,000,000	$	1,000,000
Less: Unamortized discount		-		(664,595	)
Net carrying value	$	1,000,000	$	335,405

The Registration Rights Agreement contains a “Liquidating Damages” provision, whereby the Company is obligated to file a registration statement covering the Securities within 60 days of the Purchase Agreement, and cause such registration statement to become effective within 90 days of the Purchase Agreement. If either of these deadlines is not met, the Company incurs a penalty in the amount of 2% per month of the aggregate purchase price of the securities. The Company filed such registration statement within the 60 day period, but the registration statement did not become effective until 123 days after the Purchase Agreement, and the Company incurred liquidated damages in the amount of $81,140. The Purchase Agreement became effective on July 23, 2007, which was 123 days after the agreed upon date in the Purchase Agreement, March 22, 2007. This penalty is payable in cash and was shown as accrued liabilities on the Company’s balance sheet at June 30, 2009 and March 31, 2009.

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Convertible Notes and Common Stock Warrants - Subsequent Events.

The Debentures are in default as of the date of this filing. The Company is in discussions with the Investor in order to negotiate a mutually agreeable settlement. However there can be no assurances that such negotiations will be successful.

14.	STOCKHOLDERS' EQUITY

Common Stock

The Company has authorized 300,000,000 shares of common stock, $0.001 par value; at March 31, 2010, a total of 99,036,851 shares are issued and outstanding.

On June 19, 2009, pursuant to the terms of the AcXess Sale Agreement, the Company cancelled 4,477,348 shares of stock previously held by the managers of AcXess. The Company recorded the fair value of these shares of $13,433 as a component of the gain on the sale of AcXess (see note 5).

Convertible Preferred Stock

The Company has 25,000,000 shares of preferred stock authorized and has designated 1,500,000 shares as $1.00 stated value Series A Preferred and 3,000,000 shares as $1.00 stated value Series B Preferred, of which 450,000 and -0- shares, respectively, are issued and outstanding as of March 31, 2010 and 2009. 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, (iii) redeemable at any time by the Company for $1.00 per share, and (iv) entitled to one vote per share. As of March 31 2010, the outstanding Series A Preferred has a calculated conversion price of $0.0052 per share of common equivalent to 85,812,357 of common stock.

At March 31, 2010 and 2009, the Company had 450,000 shares of preferred stock outstanding. The Company has accrued 4% or $18,000 per year of undeclared preferred stock dividends. As of March 31, 2010 and 2009, the Company has a total of $67,500 and $49,500, respectively, in undeclared preferred stock dividends.

Equity Incentive Plan:

On August 9, 2006, the Company adopted the Innovative Software Technologies, Inc. 2006 Equity Incentive Plan (the "Plan"). An aggregate of 20 million shares of common stock is authorized for issuance under the Plan. Options must terminate no later than the tenth (10th) anniversary of the date of grant, and each incentive stock option granted to any 10% Owner-Employee (as defined in the Plan) must terminate no later than the fifth (5th) anniversary of the date of grant. The Company accounts for stock-based compensation using the fair value method and estimates the fair value of each option grant on the grant date using an option-pricing model.

On August 24, 2007, the Company adopted the Innovative Software Technologies, Inc. 2007 Equity Incentive Plan (the “2007 Plan”). An aggregate of 60 million shares of common stock is authorized for issuance under the 2007 Plan. The Company accounts for stock-based compensation using the fair value method and estimates the fair value of each option grant on the grant date using an option-pricing model. During the years ended March 31, 2010 and 2009, the Company recognized $2,999 and $165,150, respectively, in stock-based compensation.

There were no stock options outstanding at March 31, 2010. A summary of the Company's stock option 2006 and 2007 Plans as of March 31, 2009 is presented below:

Weighted

average

Weighted

average

exercise

Range of

Number of

remaining

price of

Number of

price of

exercise

options

contractual

outstanding

options

exercisable

prices

outstanding

life (years)

options

exercisable

options

0.14

5,978,349

2.3

0.14

5,978,349

0.14

Total

5,978,349

2.3

0.14

5,978,349

0.14

	Options			Weighted Average Exercise Price
Outstanding at March 31, 2007		12,387,349		$	0.11
Issued		28,500,000			0.05
Exercised		-			-
Forfeited or expired		-			-
Outstanding at March 31, 2008		40,887,349		$	0.08
Issued		-			-
Exercised		-			-
Forfeited or expired		(34,909,000	)		0.06
Outstanding at March 31, 2009		5,978,349		$	0.14

~~Aggregate~~Table ~~intrinsic value~~ of options outstanding and exercisable at March 31, 2009 and 2008 was $0. Aggregate intrinsic value represents the difference between the Company's closing stock price on the last trading day of the fiscal period, which was $0.002 and $ 0.02 as of March 31, 2009 and 2008, respectively, and the exercise price multiplied by the number of options outstanding. As of March 31, 2009, total unrecognized stock-based compensation expense related to stock options was $0. The total stock-based compensation expense for the years ended March 31, 2009 and 2008 was $165,150 and $300,794, respectively.Contents

	Options			Weighted Average Exercise Price
Outstanding at March 31, 2008		40,887,349		$	0.08
Issued		-			-
Exercised		-			-
Forfeited or expired		(34,909,000	)		0.06
Outstanding at March 31, 2009		5,978,349		$	0.14
Issued		-			-
Exercised		-			-
Forfeited or expired		(5,978,349	)		0.14
Outstanding at March 31, 2010		-		$	-

Aggregate intrinsic value of options outstanding and exercisable at March 31, 2010 and 2009 was $0. Aggregate intrinsic value represents the difference between the Company's closing stock price on the last trading day of the fiscal period, which was $0.01 as of March 31, 2010 and 2009, and the exercise price multiplied by the number of options outstanding. As of March 31, 2010, total unrecognized stock-based compensation expense related to stock options was $-0-. The total stock-based compensation expense for the years ended March 31, 2010 and 2009 was $2,999 and $165,150, respectively.

All options were granted at exercise prices that either equaled or exceeded fair market value at the respective dates of grant. No options had been granted to a 10% Owner-Employee.

36During the year ended March 31, 2009, the Company used the Black-Scholes method to value options issued. The significant assumptions made were as follows:

Expected life of award (years)	3
Risk free interest rate range	0.40	%
Expected volatility range	798.93	%
Expected dividend yield	0.00	%

The expected life of the awards is based on the term of the option agreement. The risk free interest rate range is based on the United States Treasury bill rate for the comparable term. The expected volatility is derived from the changes in the Company's historical common stock prices over a time frame similar to the expected life of the awards. The dividend yield is based on the Company's historical yield, which was considered a non-dividend paying equity assumption.

Warrants

A summary of the Company's warrants outstanding as of March 31, 2010, and the changes during the years ending March 31, 2010 and 2009, is presented below:

				Weighted		Weighted average				Weighted average
				average		exercise				exercise
Range of		Number of		remaining		price of		Number of		price of
exercise		warrants		contractual		outstanding		warrants		exercisable
prices		outstanding		life (years)		warrants		exercisable		warrants


$	0.14		1,785,714		0.7	$	0.14		1,785,714	$	0.14
$	0.18		1,350,000		1.8	$	0.18		1,350,000	$	0.18
$	0.30		8,928,571		0.7	$	0.30		8,928,571	$	0.30
			12,064,285		0.8	$	0.21		12,064,285	$	0.21

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During the year ended March 31, 2008, the Company used the Black-Scholes method to value options issued. The significant assumptions made were as follows:

	Warrants			Weighted Average Exercise Price
Outstanding at March 31, 2008		16,510,520		$	0.20
Issued		-			-
Exercised		-			-
Forfeited or expired		-			-
Outstanding at March 31, 2009		16,510,520		$	0.20
Issued		-			-
Exercised		-			-
Forfeited or expired		(4,446,235	)		(0.05	)
Outstanding at March 31, 2010		12,064,285		$	0.26

Expected life of award (years)	10
Risk free interest rate range	4.75	%
Expected volatility range	169.85	%
Expected dividend yield	0.00	%
Suboptimal Exercise Factor	-
Post Vesting Forfeiture Rate	0	%

Stockholders' Equity - Subsequent Events

~~The~~As ~~expected life~~ of the ~~awards~~date isof ~~based~~this onfiling the ~~Company's~~number ~~historical~~of ~~exercise~~shares ~~patterns and the term~~ of ~~the~~common ~~options.~~stock ~~The~~outstanding ~~risk~~is ~~free~~approximately ~~interest~~218 ~~rate~~million, ~~range~~an isincrease ~~based~~of onapproximately ~~zero~~119 ~~coupon~~million ~~U.S~~shares ~~Treasury~~from ~~strips~~March ~~for~~31, ~~the comparable term~~2010. This ~~The~~increase ~~expected~~was ~~volatility~~primarily isdue ~~derived~~to ~~from~~(1) ~~the~~debt ~~changes~~conversions in the ~~Company's~~amount ~~historical~~of ~~common~~approximately ~~stock~~$538,000, ~~prices~~including ~~over a time frame similar to~~ the ~~expected~~conversion ~~life~~ of ~~the~~debt ~~awards.~~due ~~The~~to ~~dividend~~B2 ~~yield~~Capital isin ~~based~~the onamount ~~the~~of ~~Company's~~$238,581, ~~historical~~for ~~yield~~79,527,000 ~~which~~shares ~~was~~(see ~~considered~~Note a11 ~~non~~-~~dividend~~ ~~paying~~Payable ~~equity assumption. The suboptimal exercise option is the stock-price-~~to~~-exercise-price~~ ~~ratio~~Related ~~at which suboptimal early option exercise is assumed~~Party), ~~generally~~(2) ~~between~~the ~~1.5 and 3. Empirical data from actual~~ exercise ~~patterns~~of atwarrants ~~S&P~~resulting ~~1500~~in ~~companies~~an ~~indicated~~issuance aof ~~median~~16 ~~price~~million ~~ratio~~shares ~~for~~of ~~exercise~~common ofstock ~~2.0,~~with ~~which~~proceeds isto the ~~assumption~~Company ~~applied~~of inapproximately ~~Lattice~~$180,000, ~~models.~~(3) ~~Lastly~~10,000,000 ~~the~~shares ~~post~~issued ~~vesting forfeiture~~for ~~rate is based on~~ the ~~Company's~~acquisition ~~rate~~of atIntech ~~which~~Ventures, ~~employees~~Inc. ~~may lose unvested options when they leave their jobs~~ and ~~may~~(4) beapproximately ~~forced~~4 tomillion ~~exercise~~shares ~~prematurely~~issued ~~then~~for ~~unexercised~~the ~~but~~payment ~~vested~~of ~~options~~services.

~~(d)~~15. ~~warrants:~~RELATED PARTY TRANSACTIONS

AIncluded ~~summary~~in of the ~~Company's~~accompanying ~~warrants~~balance assheet ofat March 31, 2010 and 2009 is $59,500 and ~~the~~$59,500, ~~changes~~respectively, ~~during~~in accrued salary due to the ~~years~~Company's ~~ending~~former ~~March~~Chief 31Executive Officer, ~~2009~~who ~~and~~resigned ~~2008,~~effective isFebruary ~~presented~~12, ~~below:~~2009.

				Weighted		Weighted average				Weighted average
				average		exercise				exercise
Range of		Number of		remaining		price of		Number of		price of
exercise		warrants		contractual		outstanding		warrants		exercisable
prices		outstanding		life (years)		warrants		exercisable		warrants
$	0.05		4,446,235		1.1	$	0.05		4,446,235	$	0.05
$	0.14		1,785,714		1.7	$	0.14		1,785,714	$	0.14
$	0.18		1,350,000		2.8	$	0.18		1,350,000	$	0.18
$	0.30		8,928,571		1.7	$	0.30		8,928,571	$	0.30
Total			16,510,520		1.8	$	0.21		16,510,520	$	0.21

During the year ended March 31, 2010 and March 31 2009, the Company accrued salary in the amount of $110,000 and $50,000 to the Company’s current Chief Executive Officer and Chief Financial Officer, whose tenure with the Company began on June 1, 2008.

	Warrants			Weighted Average Exercise Price
Outstanding at March 31, 2007		16,494,285		$	0.21
Issued		4,446,235			0.05
Exercised		-			-
Forfeited or expired		(4,430,000	)		0.05
Outstanding at March 31, 2008		16,510,520		$	0.20
Issued		-			-
Exercised		-			-
Forfeited or expired		-			-
Outstanding at March 31, 2009		16,510,520		$	0.21

The Company rents its primary office from Peterson (see Note 11 Related Party Payable). This facility comprises approximately 200 square feet of office space at the cost of $1,000 per month. There is no formal lease, and the agreement is on a month-to-month basis.

3716. INCOME TAXES

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(9) RELATED PARTY TRANSACTIONS

On August 9, 2006, the Company entered into an employment agreement with Thomas J. Elowson, the Company's Chief Operating Officer and President. The agreement has a term of 3 years, stipulates a minimum annual salary of $84,000, and has certain provisions regarding termination of employment with and without "cause" as therein defined. In addition, the employment contract provides for a signing bonus of $10,000 payable upon a fundraising event or series of related fundraising events under which the Company raises a cumulative gross amount of at least $2 million. As of March 31, 2009, this signing bonus has not been paid as the condition for its payment has not been met. In connection with his employment agreement the Company granted Mr. Elowson options to purchase 5,978,349 shares of common stock in the Company. The options have an exercise price of $0.14 per share, expire on August 8, 2011, and vested immediately. In June 2009, the Company reached an agreement to sell its ownership interest in its operating subsidiary AcXess. At this time, Mr. Elowson’s employment agreement was terminated, his options were cancelled.

On February 16, 2007, we entered into an employment agreement with Philip Ellett, the Company's former Chief Executive Officer. Pursuant to the terms of the agreement Mr. Ellett is to receive an annual base salary of $84,000 a year and is entitled to receive an increase to his base salary and receive certain bonuses if certain managed business objectives are met by the Company during the 2007 calendar year. Mr. Ellett also received options to purchase 6,000,000 shares of common stock at an exercise price of $0.08 per share. The options vest according to the following schedule: (1) 1,000,000 vested upon approval by the board of directors of the Plan (2) the remaining 5,000,000 will begin vesting on January 31, 2008 at 138,889 per month, for a total of 36 months. The options expire on February 16, 2012. Mr. Ellett resigned his position as the Company’s Chief Executive Officer effective February 19, 2009. These options were forfeited and cancelled during the fiscal year ending March 31, 2009.

In October, 2007, The Company granted options to purchase an additional 21,000,000 shares of its common stock at a price of $0.05 per share to its former Chief Executive Officer, Mr. Ellett. These options have a term of ten years, and vest as follows: 5,250,000 at the grant date, and the balance at the rate of 437,500 per month over the succeeding thirty-six months. During the years ended March 31, 2009, and 2008 the Company recognized an expense of $155,837 and $221,638 respectively, for the value of these options vested during the year. These options were forfeited and cancelled during the fiscal year ending March 31, 2009.

In October 2007, the Company granted options to purchase 7,500,000 shares of its common stock at a price of $0.05 per share to its former Vice President and Chief Financial Officer. These options have a term of ten years, and vest as follows: 1,875,000 at the grant date, and the balance at the rate of 156,250 per month over the succeeding thirty-six months. During the year ended March 31, 2009 and 2008, the Company recognized an expense of $9,313 and $79,156, respectively, for the value of these options vested during the year. These options were forfeited and cancelled during the fiscal year ending March 31, 2009.

Included in the accompanying balance sheet at March 31, 2009 and 2008 is $59,500 and $21,000, respectively, in accrued salary due to the Company's former Chief Executive Officer, who resigned effective February 12, 2009.

Included in the accompanying balance sheet at March 31, 2009 and 2008 is $7,000 and $37,500, respectively, in accrued salary due to the Company's previous Chief Financial Officer, who resigned effective May 31, 2008.

In October 2007, the Company converted accrued salary to its Vice President and Chief Financial Officer in the amount of $60,500 into common stock at the fair value of $0.05 per share for a total of 1,210,000 shares.

In May 2008, the Company converted accrued salary to its Chief Financial Officer in the amount of $31,500 into common stock at a fair value of $0.05 per share for a total of 630,000 shares.

In May 2008, the Company converted accrued salary to its Chief Executive Officer in the amount of $35,000 into common stock at a fair value of $0.05 per share for a total of 700,000 shares.

During the year ended March 31, 2009, the Company accrued salary in the amount of $50,000 to the Company’s current Chief Executive Officer and Chief Financial Officer, whose tenure with the Company began on June 1, 2008.

The Company currently rents its primary office from a shareholder. This facilitiy consist of approximately 200 square feet of office space and the cost is $1,000 per month. There is no formal lease, and the agreement is on a month to month basis.

(10) INCOME TAXES

In July 2006, the FASB issued FIN No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” This pronouncement prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in the our tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements for uncertain tax positions. The accounting provisions of FIN 48 were adopted on April 1, 2007. The adoption of FIN 48 did not have a material impact on our financial statements. As of March 31, 2009, all of the federal income tax returns Innovative Software has filed are still subject to adjustment upon audit.

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The Company’s provision for income taxes differs from the expected tax expense (benefit) amount computed by applying the statutory federal income tax rate of 34% to income before income taxes as a result of the following (in thousands):

	Year Ended March 31, 2009			Year Ended March 31, 2008
	Year Ended			Year Ended
Tax at U.S. statutory rate of 34%	$	(328,000	)	$	(506,000	)
	March 31,			March 31,
Permanent differences		146,000			96,000
	2010			2009
Change in valuation allowance		182,000			410,000
Tax at U.S. statutory rate of 34%	$	(128,000	)	$	(328,000	)
Permanent differences		95,000			146,000
Change in valuation allowance		33,000			182,000
Income tax provision (benefit)	$	-		$	-

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

	March 31, 2009			March 31, 2008
	March 31, 2010			March 31, 2009
Deferred tax assets (liabilities):
Federal and state net operating loss	$	1,~~818~~913,000		$	1,~~639~~818,000
Other temporary tax differences	$	(2,000	)	$	(52,000	)
Total net deferred tax assets		1,~~816~~911,000			1,~~634~~816,000
Valuation allowance		(1,~~816~~911,000	)		(1,~~634~~816,000	)
Deferred tax asset, net	$	-		$	-

Due to the uncertainty of the Company’s ability to generate taxable income to realize its net deferred tax assets at March 31, ~~2009~~2010, a full valuation allowance has been recognized for financial reporting purposes. The Company’s valuation allowance for deferred tax assets increased by $~~182~~95,000 during the year ended March 31, ~~2009~~ 2010. The increase in the deferred tax assets in ~~2009~~2010 was primarily the result of increasing net operating loss ~~carryforwards~~carry forwards during the year.

At March 31, ~~2009~~2010, the Company had federal net operating loss ~~carryforwards~~carry forwards of approximately $5.46 million for income tax reporting purposes, which begin to expire in ~~2025~~2026. The Company’s ability to utilize the carryforwards may be limited in the event of an ownership change as defined in current income tax regulations.

~~(11) COMMITMENTS AND CONTINGENCIES~~32

(a) Leases:

The Company does not have any non-cancellable operating leases with initial terms in excess of one year as of March 31, 2009. Future minimum capital lease payments as of March 31, 2009, are as follows:

	Capital
Year ending March 31:	Leases
Total non-cancelable lease payments	$	34,175
Less amount representing interest		-
Present value of minimum lease payments	$	34,175

In February 2007 the Company entered into a $500,000 Master Lease Line for Equipment Purchases (the “Master Lease Agreement”). At that time, the Company sold property and equipment for $125,000 and leased them back under the Master Lease Agreement. The Company recognized a gain on the sale of those assets of $10,633 which was deferred and will be recognized over the 24 month term of the lease. At March 31, 2009, the balance of this deferred gain was $0.

The Master Lease Agreement calls for draws of a minimum of $100,000, a minimum term of 18 months and a maximum term of 36 months. The lease entered into in February 2007 has monthly payments of $6,363. The Company accounted for this lease as a capital lease.

In connection with the Master Lease Agreement, the Company agreed to issue five year warrants to the lender to purchase 1,350,000 shares of the Company’s common stock at an exercise price of $0.18 per share. Ten percent (135,000) of the warrants vested upon execution of the Master Lease Agreement. The remaining 90% of the warrants vest as on a pro rata basis as the lender provides funding under the Master Lease Agreement. As such 303,750 warrants vested upon execution of the sale lease-back described above. The total number of warrants, 438,750, was valued using the Black-Scholes method and applied to the capital lease obligation in accordance with Accounting Principles Board (“APB”) No. 14. This resulted in a decrease in capital lease obligation of $37,726 and a corresponding increase in additional paid-in capital.

Rent expense under all operating leases for the year ended March 31, 2009, and 2008, was $13,177 and $27,649 respectively. As of March 31, 2009, our principal executive offices are located at 1413 South Howard Avenue, Suite 220, Tampa Florida, 33606. This office consists of approximately 200 square feet which we rent for $1,000 per month. There is no formal lease, and the office is rented on a month to month basis.

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~~(b)~~17. ~~SEC~~COMMITMENTS ~~Investigation:~~AND CONTINGENCIES

~~On June 24, 2003, the Securities and Exchange Commission~~ (~~"SEC"~~a) issued a formal order of investigation authorizing subpoenas for documents and testimony in connection with the investigation of certain securities matters. On April 8, 2005, the Independent Committee appointed by the Board of Directors of the Company delivered to the SEC its report based on its internal investigation. On June 25, 2007, the SEC notified the Company that it had concluded the investigation as it relates to the Company and was not recommending any enforcement action.Leases:

~~(c)~~The ~~Litigation:~~Company does not have any non-cancellable operating leases with initial terms in excess of one year as of March 31, 2010.

Rent expense under all operating leases for the year ended March 31, 2010, and 2009, was $6,000 and $13,177, respectively. As of March 31, 2010, our principal executive offices are located at 1413 South Howard Avenue, Suite 220, Tampa Florida, 33606. This office consists of approximately 200 square feet which we rent for $500 per month. There is no formal lease, and the office is rented on a month-to-month basis.

Leases - Subsequent Events

As of the date of this filing, the Company leases approximately 8,000 square feet of office space in Tampa, Florida under a 36-month lease entered into in November 2012. Amounts paid and due under the lease are:

12 Months	Facilities
Ending	Lease
03/13/13	$	56,695
03/13/14		65,608
03/13/15		42,262
	$	164,565

(b) Litigation:

Kansas City Explorers

The Company iswas a defendant in a lawsuit in the Circuit Court of Platte County, Missouri, "Kansas City Explorers vs. Innovative Software" Case no. 04CV82050 in which the claimant issought ~~seeking~~ money for advertising which it ~~alleges~~alleged iswas ~~still~~ due, ~~and~~alleging ~~have alleged~~ damages of $50,028. Judgment ~~The~~was ~~claimant~~entered ~~has~~in ~~been~~favor ~~court ordered to produce answers to certain discovery requests~~ of the ~~Company~~plaintiff ~~which~~against ~~they have failed to produce. Management intends to aggressively defend~~ the ~~claim~~Company ~~based~~in ~~upon~~ the ~~lack~~amount of ~~contract between the parties~~$69,975 ~~lack~~on ofNovember ~~proof of damages~~13, as well as minimal proof of advertising services actually performed for Company products and services, and other legal and equitable defenses. Kansas City Explorers have pursued the court and have been granted a court date of September 23, 2009.

~~(12) SUBSEQUENT EVENTS~~Watters

~~Asset~~On ~~Purchase~~June ~~Agreement~~19th, 2014 INIV entered into a stipulated settlement agreement with Stephen Watters. INIV was unable to meet all of the terms of the settlement, as a result a judgment in the amount of $340,000 has been entered against INIV and other parties. Management believes that this dispute can still be settled to the mutual satisfaction of all parties.

On June 17, 2009, the Company, purchased substantially all of the assets of The WEB Channel Network, LLC a Florida limited liability company , and certain other assets of Robert W. Singerman, the manager and sole owner of Seller. The Company also entered into an (c) Employment ~~Agreement with Mr. Singerman, Mr. Singerman also entered into a Non-Disclosure, Non-Competition, Non-Solicitation and Invention Agreement with the Company.~~agreements

~~The Purchased~~On ~~Assets~~August ~~include~~15, ~~substantially~~2012, ~~all~~the ofCompany ~~the~~entered ~~assets~~into ofa ~~The~~three-year ~~Web~~employment ~~Channel~~agreement ~~Network~~with Paul Mazzapica, ~~including~~ ~~all~~the ofCompany's ~~its~~Executive ~~intellectual~~Vice-President ~~property~~ and CEO of its ~~signed~~Intech ~~and~~Ventures, ~~pending~~Inc. ~~production~~wholly-owned ~~agreements~~subsidiary, ~~and~~which ~~all~~may ofbe terminated upon 60 day notice by either party. Mr. ~~Singerman’s~~Mazzapica ~~equity~~is ~~positions~~to inreceive ~~several~~an ~~limited liability~~annual ~~companies~~base ~~and~~salary ~~various~~of ~~web~~$150,000 ~~channels~~a year. ~~The~~However, ~~intellectual~~until ~~property~~the ~~acquired includes all~~Board ~~such~~of ~~property~~Directors determines that cash flow breakeven has occurred, Mr. Mazzapica will receive a salary of $24,000 per year. ~~intended~~Mr. Mazzapica is entitled to be ~~used~~receive ~~in:~~an ~~(i)~~increase ~~the~~to ~~development~~his base salary and ~~application~~receive ofcertain ~~standard~~bonuses ~~definition~~if ~~video~~certain ~~integrated~~management ~~with~~business ~~Internet~~objectives ~~protocol~~are ~~television~~met ~~and~~by ~~web~~the ~~design;~~Company ~~(ii)~~during the ~~encoding~~2014 ~~process~~and of2015 ~~FLASH~~calendar ~~video~~years. ~~with~~Mr. ~~Internet~~Mazzapica ~~protocol~~also ~~television;~~received ~~(iii)~~1,000,000 ~~audio digital~~options ~~recording~~to ~~for~~purchase ~~Internet~~shares ~~protocol~~of ~~radio~~the ~~and~~Company's ~~television;~~common ~~(iv)~~stock at a ~~Content~~strike ~~Management~~price ~~System~~equal ~~for~~to ~~Internet~~$0.05 ~~protocol~~per ~~television; acquiring~~share, ~~formatting,~~the ~~programming,~~closing ~~encoding,~~price ~~testing~~per ~~and~~share ~~deploying licensed~~of ~~previously~~the ~~produced~~Company’s ~~broadcast~~common ~~video;~~stock ~~and~~on ~~(v) PODCASTS~~the ~~with~~date ~~Internet~~of ~~protocol~~the ~~television~~employment agreement. The ~~intellectual~~options ~~property~~vest ~~components~~according ~~also~~to ~~include~~the following schedule: (a1) 250,000 will vest on the ~~unencumbered~~ ~~ownership~~six ofmonth ~~over~~anniversary ~~100~~of ~~strategic~~the ~~web~~date ~~domain~~of ~~names~~the agreement, (b2) ~~all~~13,889 ~~inventions~~vest ~~(whether~~each ~~patentable~~month orbeginning ~~un-patentable~~on ~~and~~the ~~whether~~7th ormonthly ~~not~~anniversary ~~reduced~~of tothe ~~practice),~~date ~~all~~of ~~trademarks,~~the ~~service~~agreement ~~marks,~~and ~~trade~~continuing ~~dress,~~on ~~logos,~~each ~~trade~~monthly ~~names,~~anniversary ~~and~~thereafter ~~corporate~~until ~~names,~~the second anniversary and (c3) ~~all~~500,000 ~~copyrightable~~options ~~works,~~are ~~all~~performance-based ~~copyrights,~~options and ~~all~~will ~~applications,~~vest ~~registrations,~~according ~~and~~to ~~renewals~~performance in ~~connection~~fiscal ~~therewith,~~years 2014 and ~~(d)~~2015. The ~~all trade~~options ~~secrets~~expire on August 14, 2019. Mr. Mazzapica's salary and ~~confidential~~bonus ~~business~~schedule ~~information~~will ~~including~~be ~~ideas,~~reviewed ~~research~~by the Board of Directors on an annual basis. During the term of his employment and ~~development~~for a period thereafter, Mr. Mazzapica will be subject to non-competition and ~~know~~non-~~how~~solicitation provisions, subject to standard exceptions.

The Merger has been accounted for under the acquisition method of accounting in accordance with Statement of Financial Accounting Standard (SFAS) No. 141(R), “Business Combinations.” After considering all the relevant factors in determining the acquiring enterprise, including, but not limited to, relative voting rights, composition of the board of directors and senior management, and the relative size of the companies, the merger was deemed a acquisition and the Company was treated as the “acquiring” company for accounting and financial reporting purposes.

A summary of the components of the estimated purchase price for the acquisition, is as follows:

Cash payments due within ninety days of the acquisition date	$	100,000
Note payable		500,000
Warrants		15,000
Total	$	615,000

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~~The~~On July 29, 2013, the Company isentered ~~still~~into ina three-year employment agreement with Jake Wand, the ~~process~~Company's President which may be terminated upon 60 day notice by either party. Mr. Wand is to receive an annual base salary of ~~determining~~$150,000 a year. However, until the ~~fair~~Board ~~value~~of Directors determines that cash flow breakeven has occurred, Mr. Wand will receive a salary of ~~the~~$24,000 ~~tangible~~per year. Mr. Wand is entitled to receive an increase to his base salary and ~~intangible~~receive ~~assets~~certain ~~acquired~~bonuses if certain management business objectives are met by the Company during the 2014 and ~~liabilities~~2015 ~~assumed~~calendar years. ~~The~~ ~~preliminary~~Mr. Wand also received 2,000,000 options to purchase ~~price~~shares ~~was~~of ~~allocated~~the ~~based~~Company's oncommon stock at a ~~determination~~strike price equal to $0.07 per share, the closing price per share of the ~~value~~Company’s common stock on the date of the ~~assets~~employment ~~acquired~~agreement. The Nooptions ~~liabilities~~vest ~~were~~according ~~assumed.~~to ~~The~~the following ~~represents~~schedule: (1) 500,000 will vest on the ~~allocation~~six month anniversary of the ~~purchase price~~date toof the ~~acquired~~agreement, ~~assets~~(2) 27,778 vest each month beginning on the 7th monthly anniversary of ~~$615~~the date of the agreement and continuing on each monthly anniversary thereafter until the second anniversary and (3) 1,000~~. This~~,000 ~~allocation~~options ~~was~~are performance-based options and will vest according to performance in fiscal years 2014 and 2015. The options expire on ~~the~~July ~~fair~~28, ~~value~~2020. Mr. ofWand's salary and bonus schedule will be reviewed by the ~~assets~~Board asof Directors on an annual basis. During the term of ~~June~~his 17employment and for a period thereafter, ~~2009:~~Mr. Wand will be subject to non-competition and non-solicitation provisions, subject to standard exceptions.

Identifiable intangible assets		$	615,000
Total		$	615,000

On October 11, 2013, the Company entered into a three-year employment agreement with Peter Peterson, the Company's Chief Executive Officer which may be terminated upon 60 day notice by either party. Mr. Peterson is to receive an annual base salary of $150,000 a year. However, until the Board of Directors determines that cash flow breakeven has occurred, Mr. Peterson will receive a salary of $24,000 per year. Mr. Peterson is entitled to receive an increase to his base salary and receive certain bonuses if certain management business objectives are met by the Company during the 2014 and 2015 calendar years. Mr. Peterson also received 2,000,000 options to purchase shares of the Company's common stock at a strike price equal to $0.165 per share, the closing price per share of the Company’s common stock on the date of the employment agreement. The options vest according to the following schedule: (1) 500,000 will vest on the six month anniversary of the date of the agreement, (2) 27,778 vest each month beginning on the 7th monthly anniversary of the date of the agreement and continuing on each monthly anniversary thereafter until the second anniversary and (3) 1,000,000 options are performance-based options and will vest according to performance in fiscal years 2014 and 2015. The options expire on October 10, 2020. Mr. Peterson's salary and bonus schedule will be reviewed by the Board of Directors on an annual basis. During the term of his employment and for a period thereafter, Mr. Peterson will be subject to non-competition and non-solicitation provisions, subject to standard exceptions.

~~Sale~~On October 11, 2013, the Company entered into a three-year employment agreement with Christopher Floyd, the Company's Chief Financial Officer which may be terminated upon 60 day notice by either party. Mr. Floyd is to receive an annual base salary of ~~AcXess~~$150,000 ~~Inc~~a year. However, until the Board of Directors determines that cash flow breakeven has occurred, Mr. Floyd will receive a salary of $24,000 per year. Mr. Floyd is entitled to receive an increase to his base salary and receive certain bonuses if certain management business objectives are met by the Company during the 2014 and 2015 calendar years. Mr. Floyd also received 1,600,000 options to purchase shares of the Company's common stock at a strike price equal to $0.165 per share, the closing price per share of the Company’s common stock on the date of the employment agreement. The options vest according to the following schedule: (1) 400,000 will vest on the six month anniversary of the date of the agreement, (2) 22,222 vest each month beginning on the 7th monthly anniversary of the date of the agreement and continuing on each monthly anniversary thereafter until the second anniversary and (3) 800,000 options are performance-based options and will vest according to performance in fiscal years 2014 and 2015. The options expire on October 10, 2020. Mr. Floyd's salary and bonus schedule will be reviewed by the Board of Directors on an annual basis. During the term of his employment and for a period thereafter, Mr. Floyd will be subject to non-competition and non-solicitation provisions, subject to standard exceptions.

On ~~June~~August 1913, ~~2009~~2014, the Company ~~sold~~ ~~all~~entered ofinto a three-year employment agreement with William Barrett Wellman as its President which may be terminated upon 60 day notice by either party. Mr. Wellman is to receive an annual base salary of $120,000 a year. Mr. Wellman is entitled to receive an increase to his base salary and receive certain bonuses if certain management business objectives are met by the Company during the 2014 and 2015 calendar years. Mr. Wellman received an initial grant of 500,000 options to purchase shares of ~~capital~~the Company's common stock at a strike price equal to $0.08 per share. Mr. Wellman also received an additional grant of ~~AcXess~~2,000,000 ~~Inc~~options to purchase shares of the Company's common stock at a strike price of $0.08 per share which options vest 50% on the first anniversary, ~~three~~25% ~~senior~~on ~~executives~~second anniversary and 25% on the third anniversary of ~~AcXess~~the hire date. The options expire on August 12, 2024. Mr. Wellman's salary and bonus schedule will be reviewed by the Board of Directors on an annual basis. During the term of his employment and for a period thereafter, Mr. Wellman will be subject to non-competition and non-solicitation provisions, subject to standard exceptions.

~~The~~18. ~~sale~~SUBSEQUENT also constituted a settlement of allegations by the AcXess executives that the Company had breached the Initial Agreement by failing to close on the sale within a reasonable time after the July 24, 2007 execution and delivery of the Initial Agreement and the subsequently obtained shareholder approval.EVENTS

AsIn ~~consideration for~~ the ~~sale~~interest of ~~all~~readability, the ~~outstanding~~Company ~~4,500,000~~has ~~shares~~presented ofSubsequent ~~capital~~Events ~~stock~~activity ofas ~~AcXess~~a ~~held~~part byof the ~~Company~~individual toapplicable ~~AcXess~~notes ~~and~~to ~~the~~these ~~AcXess~~financial ~~Managers,~~statements

Filing Compare · INNOVATIVE SOFTWARE TECHNOLOGIES INC