Innovative Software Technologies, Inc.
100 North Tampa Street, Suite 2410
Tampa, Florida 33602
Phone: (813) 387 - 3310
Fax: (813) 387 - 3311
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December 12, 2005
Steven Jacobs
Matthew Maulbeck
Division of Corporate Finance
Securities and Exchange Commission
Washington, D.C. 20549
Mail Stop 4561
Re: Innovative Software Technologies, Inc.
Form 10-QSB for the Quarter Ended June 30, 2005
Filed September 1, 2005
File No. 0-27465
Gentlemen:
This letter is in response to your comments to the company of November 3, 2005.
Form 10-QSB for the Quarter Ended June 30, 2005
Consolidated Statement of Operations, page 4
1. We note your disclosures on page F-19 of Form 10-KSB that you have, "no
continuing involvement with EPMG or Triad," and that in the future financial
statements, "will be restated to reflect EPMG and Triad Media, Inc. as
discontinued operations." In light of these disclosures, please tell us why
these operations, including the goodwill impairment, have not been reflected as
discontinued operations in the June 30, 2005 and 2004 statements of operations.
Reference is made to paragraphs 41 - 44of SFAS 144.
Our conclusion to not report the operations of EPMG and Triad Media, Inc. as
discontinued operations in the June 30, 2005 and 2004 statements of operations
is based on our understanding of the reporting required by the SEC as well as
FAS 144 when a company has no continuing operations. We understand that the SEC
would not expect to see an Issuer account for its only operation as a
discontinued operation, in the absence of continuing operations. We believe that
position is consistent with the language in paragraphs 41-44 of SFAS 144.
Innovative Software Technologies, Inc.
100 North Tampa Street, Suite 2410
Tampa, Florida 33602
Phone: (813) 387 - 3310
Fax: (813) 387 - 3311
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We reasonably expected that we would have continuing operations at the time of
the filing of our Form 10-KSB because we had executed purchase agreements for
other businesses. It was our intention to report the acquired businesses as a
predecessor in order to show a history of the ongoing operations. However, with
the rescission of the acquisition of Data Tech (reference our filing on Form 8-K
of June 28, 2005) the Company has no continuing operations and therefore decided
that showing all historical operations as discontinued would not be appropriate.
We have disclosed in our press release and related filing on Form 8-K of July
18, 2005 that we have no continuing operations. In that filing we stated:
"Currently Innovative Software Technologies, Inc. has no business
operations. Our strategy is to engage in a business combination with
a company that has operations. Such a transaction could include an
acquisition of an operating business or a merger with another
entity. However, there can be no assurances that the company will be
able to succeed in identifying a candidate for such a transaction
or, if such a candidate is identified, that such a transaction can
be successfully negotiated."
Should management be successful in identifying, negotiating and closing another
acquisition, we would expect to use predecessor accounting going forward, where
we would report the operations of the acquired company to which our Company
would have succeeded to. We note that if purchase accounting is appropriate for
such transaction, it would be applied. However, if the transaction should be
accounted for as a reverse merger, we will report the historical operations of
the predecessor.
Innovative Software Technologies, Inc. acknowledges that it is responsible for
the adequacy and accuracy of the disclosure in the filings, that staff comments
or changes to disclosure in response to staff comments do not foreclose the
Commission from taking and action with respect to the filings, and that it may
not assert staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.
Sincerely,
/s/ Christopher J. Floyd
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Christopher J. Floyd
Chief Financial Officer