SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 23, 2003
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INNOVATIVE SOFTWARE TECHNOLOGIES, INC
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(Exact name of registrant as specified in its charter)
California 000-1084047 95-4691878
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(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
5072 North 300 West, Provo, Utah 84604
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (801) 371-0755
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204 NW Platte Valley Drive, Riverside Mo 64150
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
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We have recently received written communication from our independent
auditors, Grant Thornton LLP, pursuant to Section 10-A of the Securities
Exchange Act of 1934 which questions the accuracy of our filings with the
Securities and Exchange Commission primarily based on the participation of a
consultant who in 1988 entered a guilty plea, representing a criminal
conviction, relating to a tax shelter investment for which the consultant was
the general partner. Grant Thornton LLP also questioned a software sale during
the third quarter of fiscal year 2002 in exchange for Innovative Software
securities pursuant to which the Company reported revenues from the sale based
upon the fair value of the preferred stock received. In a separate letter, Grant
Thornton LLP indicated that as a result of these circumstances they could not
continue to be associated with the Company's December 2001 and 2000 financial
statements, thereby withdrawing their report on these statements.
We were disturbed and upset by the position expressed by Grant Thornton
LLP without any prior discussion with our management, especially since issues
concerning the consultant in question, who was a consultant with the Company and
was never an officer, director or employee of the Company, were previously
discussed in detail at a partnership and management level at Grant Thornton at
the office previously responsible for the audits of Innovative Software. In
addition, the Company, on its own initiative, initiated the write-down of the
securities of the software sales once management ascertained the difficult
financial circumstances that the other party to the transaction had experienced.
The initial security sale and subsequent write-down was discussed in detail with
Grant Thornton LLP by our management, and the accounting firm was involved in
the process at all stages. Prior to the most recent letter, Grant Thornton LLP
had not communicated any concerns or adverse discussions regarding the software
sales.
The correspondence received from Grant Thornton LLP is filed as
Exhibits to this Report as is correspondence from our Company to Grant Thornton
LLP which addresses these issues.
Management of our Company is concerned regarding the conduct and
attitude of Grant Thornton LLP with respect to these matters, which it believes
that senior personnel at the accounting firm were fully cognizant of during the
course of several audits conducted by Grant Thornton LLP.
As a result, our four independent directors have been constituted as a
committee of the Board to conduct an investigation as to all matters pertaining
to the issues raised by Grant Thornton LLP, as well as to make recommendations
with regard to management and the accounting firm once they have had the
opportunity to complete their investigation. We have requested that Grant
Thornton LLP cooperate fully with the committee of independent directors and
give access to Grant Thornton personnel, files and work papers so that they may
fulfill their responsibilities to the shareholders of our Company. The
independent directors committee will receive sufficient funding from the Company
to conduct their evaluation and is expected to retain independent counsel to
assist it in its efforts.
In addition, at a Board of Directors meeting held on Aril 14, 2003 the
Board decided to dismiss Grant Thornton and have engaged the accounting firm of
Robison Hill & Co. as the Company's new independent accountants for the 2001
fiscal year previously audited by Grant Thornton LLP, and to audit the 2002
fiscal year. On April 23, 2003, the Company issued a letter to Grant Thornton
formally dismissing them as the Company's auditors. We will file a separate
report on Form 8-K describing our change of independent accountants. The
independent directors committee will also have the right to approve any other
conditions pertaining to the audit.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(c) Exhibits
1. Correspondence from Grant Thornton LLP to Innovative
Software Technologies, Inc./Board of Directors - April 4,
2003 (Exhibit 99.1)
2. Correspondence from Grant Thornton LLP to Innovative
Software Technologies, Inc. - April 4, 2003 (Exhibit 99.2)
3. Correspondence from Innovative Software Technologies, Inc.
to Grant Thornton LLP - April 4, 2003 (Exhibit 16)
4. Correspondence from Innovative Software Technologies, Inc.
to Grant Thornton LLP - April 11, 2003 (Exhibit 99.3)
5. Correspondence from Innovative Software Technologies, Inc.
to Grant Thornton LLP - April 15, 2003 (Exhibit 99.4)
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INNOVATIVE SOFTWARE TECHNOLOGIES,
INC.
By: /s/ Douglas S. Hackett
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Douglas S. Hackett, President, Chief
Executive Officer and Director
By: /s/ Linda W. Haslem
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Linda W. Haslem, Chief Financial Officer
DATED: April 24, 2003
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