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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to Section 13 or 15(d) of the </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Securities
      Exchange Act of 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of Earliest Event Reported): June 26, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INNOVATIVE
      SOFTWARE TECHNOLOGIES, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>California</strong></font></div>
            </td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>000-1084047</strong></font></div>
            </td>
            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>95-4691878</strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or other jurisdiction of incorporation)</font></div>
            </td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File Number)</font></div>
            </td>
            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(I.R.S.
                Employer Identification No.)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>3998
      FAU Boulevard, </u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Bldg
      1-210, </u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Boca
      Raton, FL</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>
      / </u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>33431</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
      of Principal Executive Offices/Zip Code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>(561)
      417-7250</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant&#8217;s
      telephone number, including area code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>1413
      South Howard Avenue, Suite 220, Tampa, FL / 33606</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      name or former address, if changed since last report)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>see</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      General
      Instruction A.2. below):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>
      Soliciting material
      pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>
      Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(17
      CFR
      240.14d-2(B))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>
      Pre-commencement
      communications pursuant to Rule 13e-4(c)) under the Exchange Act </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(17
      CFR
      240.13e-4(c))</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01 Entry into a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.01 Completion of Acquisition or Disposition of Assets.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Overview</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">26,
      2006,
      Innovative Software Technologies, Inc., a California corporation (&#8220;Innovative&#8221;
or the &#8220;Company&#8221;), completed the acquisition of AcXess, Inc., a Florida
      corporation (&#8220;AcXess&#8221;), in a stock exchange transaction (the &#8220;Transaction&#8221;)
      pursuant to a Stock Exchange Agreement by and between Innovative, AcXess, the
      Shareholders of AcXess, and Anthony F. Zalenski, acting as the Shareholder&#8217;s
      Agent (the &#8220;Exchange Agreement&#8221;). As a result of the Transaction, AcXess became
      a wholly owned subsidiary of the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the Exchange Agreement, the shareholders of AcXess exchanged 100% of the
      outstanding shares of capital stock of AcXess </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      an
      aggregate of 11,000,000 shares of common stock of the Company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      $.001
      par value per share (the &#8220;Common Stock&#8221;). The shares of Common Stock issued in
      the Transaction were sold and issued pursuant to the exemption from the
      registration requirements of the Securities Act of 1933, as amended (the &#8220;Act&#8221;)
      provided under Section 4(2) of the Act, as such sales and issuances did not
      involve any public offering, were made without general solicitation or
      advertising, and each purchaser had access to all relevant information necessary
      to evaluate the investment and represented to Innovative that the securities
      were being acquired for investment. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrent
      with the closing of the Transaction, Innovative sold convertible promissory
      notes to four accredited investors in the aggregate principal amount of
      approximately $430,000 (the &#8220;Offering&#8221;). The convertible promissory notes have a
      term of six months and are convertible into shares of Common Stock of the
      Company in a future qualified financing at a 30% discount to the effective
      price
      per share paid in the future qualified financing. In the Offering, Innovative
      also issued to the purchasers of the notes warrants to purchase an aggregate
      of
      2,120,000 shares of Common Stock at an exercise price of $0.05, subject to
      adjustment. These warrants will expire in 2011. The investors in the Offering
      were granted piggyback registration rights with respect to the shares issuable
      upon the conversion of the notes or the exercise of the warrants in accordance
      with a registration rights agreement. Also in conjunction with the Offering,
      Innovative exchanged an outstanding promissory note to an investor in the amount
      of $100,000 plus accrued interest for a promissory note with the above terms
      for
      $100,000, and interest accrued to date on the pre-existing note was forgiven
      by
      the investor and credited to other income. The notes and warrants issued in
      the
      Offering, as well as the shares of Common Stock issuable pursuant thereto,
      were
      sold and issued pursuant to the exemption from the registration requirements
      of
      the Act provided under Section 4(2) of the Act and Rule 506 promulgated
      thereunder, as such sales and issuances did not involve any public offering,
      were made without general solicitation or advertising, and each purchaser was
      an
      accredited investor with access to all relevant information necessary to
      evaluate the investment and represented to Innovative that the securities were
      being acquired for investment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Offering, Innovative paid to the placement agents in the
      Offering (i) a cash fee equal to eight (8%) percent of the gross cash receipts
      in the Offering and (ii) an agreement to receive warrants (the &#8220;Agent Warrants&#8221;)
      to purchase up to that number of shares of Common Stock equal to ten (10%)
      percent of the shares of Common Stock issued by the Company upon conversion
      of
      the promissory notes issued in the Offering. The Agent Warrants are exercisable
      for a two year period following the date of issuance at a price per share equal
      to $0.05 per share.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      after the closing of the Transaction, Innovative had 67,455,379 shares of Common
      Stock issued and outstanding, with holders of the outstanding shares of Common
      Stock immediately prior to the Closing holding approximately 84% of the
      outstanding Common Stock, and the former AcXess common shareholders holding
      approximately 16% of the outstanding Common Stock. In addition, the Company
      intends to offer the holders of $175,115 in AcXess promissory notes the
      opportunity to convert their notes into shares of the Company at $0.04 per
      share, the last sales price per share of the Company&#8217;s Common Stock on the date
      of Closing. Should the Company make such an offer and should all note holders
      accept such an offer, approximately 4,377,872 additional shares of Common Stock
      of the Company would be issued and the total number of shares outstanding would
      then be 71,833,251. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Transaction, Anthony F. Zalenski was appointed to our Board
      of Directors as Chairman and William E. Leathem resigned as director. As a
      result, Innovative&#8217;s board currently comprises Mr. Zalenski and Pete M.
      Peterson, our former Chairman. In addition, Mr. Peterson resigned as Chief
      Executive Officer and Mr. Zalenski accepted the position of Chief Executive
      Officer of the Company. Christopher J. Floyd remains as Chief Financial Officer
      and Secretary of Innovative.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      FAS 141, as governing and operating control of the combined entity is under
      Mr.
      Zalenski, AcXess is deemed to be the purchaser in the Transaction for financial
      reporting purposes. Therefore, reverse acquisition accounting applies whereby
      AcXess is deemed to have issued its common stock for the net assets or
      liabilities of Innovative accompanied by a recapitalization of AcXess. For
      accounting purposes, AcXess is treated as the continuing reporting entity.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing description of the Exchange Agreement is qualified in its entirety
      by
      the full text of the Exchange Agreement filed as Exhibit 2.1 attached to this
      report hereto. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      10-SB DISCLOSURE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      closing of the Transaction, Innovative was a &#8220;shell company&#8221; as such term is
      defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended,
      (the &#8220;Exchange Act&#8221;) immediately prior to the Transaction. Accordingly, set
      forth below is the information that would be required if Innovative were filing
      a general form for registration of securities on Form 10-SB under the Exchange
      Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPLANATORY
      NOTE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
      otherwise indicated or the context otherwise requires, all references below
      in
      this Current Report on Form 8-K to "we," "us," &#8220;Innovative,&#8221; and the "Company"
      are to Innovative Software Technologies, Inc. a California corporation, together
      with its wholly-owned subsidiaries.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF BUSINESS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Innovative
      was incorporated in the State of California in May 1998. Immediately prior
      to
      the Transaction, the Company had nominal assets and revenues and no business
      operations. The Company&#8217;s strategy was to enter into a business combination
      transaction with an entity that has business operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Innovative
      commenced business on April 16, 2001, when it acquired 100% of the outstanding
      common stock of Triad Media, Inc. (&#8220;Triad&#8221;), formerly known as Hackett Media,
      Inc. (&#8220;Hackett&#8221;) 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, the Company&#8217;s and its subsidiaries&#8217; primary business
      consisted of Internet sales and marketing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      December 31, 2001, we purchased all of the outstanding shares of Energy
      Professional Marketing Group, Inc. (&#8220;EPMG&#8221;), 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.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      the purchase, EPMG became a wholly owned subsidiary of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 (the
      &#8220;Settlement Agreement&#8221;) 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 filed an action against the Company
      for breach of the Settlement Agreement related to certain reserve liabilities
      (see &#8220;Legal Proceedings&#8221; below). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      4, 2004, Peter M. Peterson replaced Douglas S. Hackett as our Chief Executive
      Officer (with Mr. Hackett remaining as President), and Christopher J. Floyd
      was
      elected as our Chief Financial Officer. In October 2004 we relocated our
      corporate headquarters from Kansas City, Missouri, to Tampa, Florida. Effective
      April 7, 2005, Mr. Hackett resigned as President and as a director of the
      Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      April
      20, 2005, we entered into a stock purchase agreement with Mr. 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 receipt of our common stock in exchange
      for
      the subsidiary, we recorded this transaction&#160;in April 2005&#160;as an
      equity transaction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 &#8220;Data Tech&#8221;), 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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      remainder of the 2005 calendar year the Company 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 are 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 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      June 26, 2006 Innovative and its subsidiaries employed a total of 1 person
      who
      is not represented by a labor union.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Market
      Strategy</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the Transaction, AcXess became a wholly owned subsidiary of
      Innovative. AcXess was formed to provide Business Continuity (&#8220;BC&#8221;) products and
      services to the Small and Medium Enterprise (&#8220;SME&#8221;) market. &#8220;Business
      Continuity&#8221; products and services are an advanced form of disaster recovery
      solutions for electronic data backup wherein the data and/or applications are
      available immediately upon failure through means of connectivity to remote
      server locations. We believe that the North American SME market for BC services
      (defined as companies with 50 to 5,000 employees) is underserved. Furthermore,
      we believe that various technologies have matured to a point where the SME
      market can now be supplied with robust BC services which were previously only
      available to large corporations and at substantial cost. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      founders of AcXess, Anthony F. Zalenski, and Thomas J. Elowson, were approached
      by senior executives of Citrix Systems, Inc. (NASD: CTXS) who offered their
      support for AcXess to develop, test, and market a BC solution. In response,
      AcXess developed its &#8220;AcX Application Continuity Xchange&#8221;&#8482; platform based on
      Citrix technology combined with AcXess&#8217; own proprietary software and
      methodologies. Citrix has over 35,000 client companies the US alone and more
      than 180,000 worldwide. Management has identified approximately 7,000 Citrix
      mid-market client companies as its initial target market in North
      America.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      May
      2005 AcXess signed a Services Partner Agreement with SAP Business One to offer
      the AcXess BC service to all SAP Business One customers in North America through
      their exclusive, invitation only business partner network. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Products/Services</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AcXess
      service offerings consist of business continuity and application availability
      services for single or multi-application small to medium enterprise-level hosted
      environments. The AcXess Application Continuity Xchange&#8482; offers seamless web
      access to the mission critical applications that employees need during any
      IT
      downtime with their business. These mission critical business applications
      are
      backed up and mirrored in a secure data center with tier-one network backbone
      access. Application data and all relevant databases are replicated 24 hours
      a
      day, 7 days a week, 365 days a year. Tiered pricing allows for shorter
      increments of Recovery Time Objectives (RTO) based on the needs of the customer.
      AcXess uses virtual server technology along with its intellectual property
      through the AcX Framework&#8482;, resulting in an inexpensive and efficient business
      continuity platform. The Company signed its first customer agreement in May
      2006
      and currently has two customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Application Continuity Xchange<sup><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(TM)</font></sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol">&#8217;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      for
      Enterprise Systems enables customers to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Resume
      serving customers quickly without waiting to restore network functionality.
      Instead, displaced workers access their key applications and data securely
      over
      the Internet - even from a home dial-up connection.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Relieve
      their IT staff of the time, burden and expense of reconfiguring each application
      and database after any IT downtime. Applications are mirrored and re-distributed
      to client machines from a secure remote location.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Gain the
      flexibility of allowing workers to use any PC, or browser-based mobile device
      from any location, even over low-bandwidth connections. The AcXess remote
      server-based solution allows a consistent user interface that can be delivered
      and accessed from anywhere.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gain
      a
      turnkey managed BC solution for a fixed monthly service fee at a substantially
      reduced Total Cost of Ownership (TCO) comparable to existing in-house
      solutions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Potential
      Future Products and Services</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AcXess
      has conducted basic research and development as well as business planning for
      the rollout of several future products including: an Email Xchange Gateway&#8482; for
      customers who desire an automated process for email backup; AcXERA&#8482;, a
      replication appliance for on-site backup for complex enterprises; and a SOX/ICD&#8482;
business service for clients that fall under reporting requirements of the
      Sarbanes-Oxley Act (&#8220;SOX&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      and Development </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s Application Continuity Xchange<sup>(TM)</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol">&#8217;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      (AcX&#8482;)
      technology platform has been designed and developed over the past year. The
      Company intends to continue to pursue R&amp;D for continued development of new
      products and services. However, any future R&amp;D will be dependent on our
      ability to raise funds via future financings (see &#8220;liquidity&#8221;
below).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Government
      Regulation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company expects to service Clients that fall under both SOX and HIPPA compliance
      and, as such, has developed, and is currently developing, certain features
      and
      controls into our current AcX infrastructure design. In addition, the Company&#8217;s
      data center partner is fully SOX and HIPPA compliant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Competition
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the overall market opportunity, companies have emerged to provide
      continuity services. The competitive landscape includes both multi-billion
      dollar multi-faceted professional services companies as well as emerging
      competitive carriers and regional VARs. Companies offering full enterprise
      level
      professional services include EDS, Comdisco and Sungard. Competitive carriers
      offering some function-specific level of continuity services include Avaya.
      ASP&#8217;s and software companies offering full time application hosting, or
      application specific hosting include Salesforce.com and Mi8. Companies offering
      backup data storage services on tape and disk include Iron mountain, E-vault
      &amp; Live vault. The principal competitive factors in the market include price,
      quality of service, breadth of service, customer service, applications
      supported, capacity, reliability and availability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following is a summary of the Company&#8217;s direct and indirect competitors:
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>SunGard
      Availability Systems</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 10.1pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SunGard
      provides software and processing solutions for financial services, higher
      education and the public sector and also provides customers with a range of
      managed IT services, including application and data center outsourcing and
      managed services.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Avaya</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Avaya
      Inc. designs, builds and manages communications networks for over one million
      businesses worldwide and provides secure Internet Protocol telephony systems
      and
      communications software applications and services. Business Continuity solutions
      are sold through its professional services organization. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>SalesForce.com</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SalesForce.com
      provides primarily Customer Relationship Management applications as a service.
      Customers who use the salesforce.com CRM software are already running this
      aspect of their business offsite, and have no specific need for a direct BC
      solution for this application. Management sees SalesForce.com as an indirect
      competitor.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Mi8</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mi8's
      core mission is to transform Microsoft Exchange, a sophisticated messaging
      and
      collaboration system, into easy-to-use subscription services. Mi8 functions
      as
      an extension of a company&#8217;s Information Technology team, managing and monitoring
      sophisticated messaging and collaboration infrastructure. To the extent Mi8
      hosts the exchange messaging function for </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">companies
      off-site, they are also providing continuity &amp; availability services to
      their customers, although Mi8 does not compete directly on
      continuity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>EVault</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EVault
      Inc. provides online backup and recovery solutions for secure data backup and
      recovery of critical business applications. EVault&#8217;s disk-based backup software
      design and certified processes automate the customer&#8217;s own data protection
      processes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>LiveVault</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">LiveVault
      provides disk-to-disk backup and recovery applications for small and mid- sized
      businesses and enterprises with remote offices. LiveVault&#8217;s products automate
      and integrate data backup, offsite protection, archiving and recovery. LiveVault
      was recently purchased by Iron Mountain. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Iron
      Mountain</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Established
      in 1951, Iron Mountain stores and manages records, media and electronic data
      and
      has been acquiring other companies in the disaster recovery and business
      continuity arena.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Intellectual
      Property </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company intends to submit in the future one or more patent applications relating
      to certain aspects of its technology, but there can be no assurance that the
      Company will be able to obtain patent protection for any of its technology.
      The
      Company owns the registered trademark &#8220;Down Proof Your Business&#8221; but has not
      filed trademark registrations for any other marks and may choose not to do
      so.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Employees
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      immediately after the closing of the Transaction, we had a total of seven (7)
      full time employees. None of our employees are represented by a trade union.
      We
      anticipate hiring additional full time employees within the next twelve months.
      </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Customers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company signed its first customer agreement in May 2006 and currently has two
      customers.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Sales,
      Marketing, Distribution</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s sales and marketing efforts are primarily focused on the well-defined
      Citrix and SAP SME market with an initial emphasis on North America. The Company
      believes this market has the highest internal costs, and greatest need of
      business continuity services, and therefore provides the greatest opportunity
      for the Company to offer significant cost savings and quality of service to
      Citrix and SAP customers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      reach
      this segment, the Company intends to hire territory managers to run BC
      engagements with the Citrix ERM&#8217;s (Enterprise Relationship Managers) and Citrix
      Consulting Services professionals. Territory managers will be responsible for
      all initial customer contact, coordination of Business Impact Analysis studies
      with Citrix and other consulting services, pilot programs, and resulting BC
      service contracts. They will also be responsible for up-selling into each
      account as new services are made available. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      channel strategy leverages strategic relationships with Citrix and its reseller
      partner companies who already sell enterprise level solutions to the expanding
      75 million-user Citrix market. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Insurance
      Matters </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      intend
      to bind a general business liability policy and an errors and omission policy
      by
      mid July 2006. We also intend to bind a directors and officers liability
      coverage at that time. We believe that our insurance program provides adequate
      coverage for all reasonable risks associated with operating our
      business.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MANAGEMENT&#8217;S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Introduction</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Innovative
      had no revenue from operations since the sale of its Triad Media, Inc.
      subsidiary in April 2005. Following the Transaction, AcXess&#8217; operations shall
      constitute principally all of Innovative&#8217;s operations. AcXess was founded on
      January 12, 2005 and had minimal operations in the first quarter of 2005.
      AcXess&#8217; fiscal year ends March 31. The following discussion and analysis
      summarizes the significant factors affecting AcXess&#8217; results of operations for
      its fiscal year ended March 31, 2006 (fiscal year 2006) and Innovative&#8217;s and
      AcXess&#8217; combined financial liquidity and capital resources. This discussion and
      analysis should be read in conjunction with the financial statements and notes,
      and pro forma financial statements, included with this Report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Results
      of Operations</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenues.
      Revenues were $-0- in fiscal 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
      Expenses. Total operating expenses were $473,542 in fiscal 2006. Principal
      expenditures included officer stock compensation of $191,494, consulting
      expenses primarily for the development of products and services, and for
      business planning, of $185,871, and rent of $17,735.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Loss
      from
      Operations. Loss from operations for fiscal 2006 was $473,542.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interest
      Expense. Interest expense for fiscal 2006 was $13,809. The interest expense
      was
      attributable to interest on notes payable to vendors ($2,640) and interest
      imputed on the conversion of debt due to an officer to equity which conversion
      price ($0.033 per share) was exceeded by the fair market value ($0.05 per share)
      as established by AcXess&#8217; accounting policy.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
      Loss.
      Net loss for fiscal 2006 was $487,351.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Impact
      of Inflation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inflation
      has not had a material effect on our results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
      Liquidity and Capital Resources</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Offering, Innovative received gross proceeds of $430,000
      from the sale of convertible notes, and we paid the selling agent in the
      Offering a cash fee of $44,400, comprising $10,000 in expense reimbursement
      and
      $34,400 as a commission.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      expect
      that the remaining proceeds from the Offering and cash flows from operations
      will not be sufficient to pay our other existing obligations and obligations
      as
      they arise for the next twelve months for will only be sufficient for the next
      three to four months. Management therefore intends to immediately pursue further
      fund raising activities. However, there can be no assurance we will be
      successful in raising additional funds and in the event we are not able to
      increase working capital we may need to curtail our business activities.
</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Off
      Balance Sheet Arrangements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
      applicable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Critical
      Accounting Policies</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      significant accounting policies are more fully described in Note 2 to the
      audited financial statements of AcXess. 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, liabilities, revenues and expenses, and the related
      disclosures of contingent assets and liabilities. Actual results could differ
      from those estimates under different assumptions or conditions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Investing
      in our Common Stock involves a high degree of risk. Prospective investors should
      carefully consider the following risks and uncertainties and all other
      information contained or referred to in this Current Report on Form 8-K before
      investing in our Common Stock. The risks and uncertainties described below
      are
      not the only ones facing us. Additional risks and uncertainties that we are
      unaware of, or that we currently deem immaterial, also may become important
      factors that affect us. If any of the following risks occur, our business,
      financial condition or results of operations could be materially and adversely
      affected. In that case, the trading price of our Common Stock could decline,
      and
      you could lose all of your investment. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em><u>Risks
      Related To Our Business</u></em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have not applied for patents on our proprietary technology and rely upon trade
      secret protection to protect our intellectual property; it may be difficult
      and
      costly to protect our proprietary rights and we may not be able to ensure their
      protection. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      this
      time we have not applied for patent protection for our proprietary technology
      and therefore cannot rely on court action to protect our intellectual property.
      Although management intends to apply for patents where applicable, the Company
      currently relies on trade secrets. Trade secrets are difficult to protect and
      while we use reasonable efforts to protect our trade secrets, we cannot assure
      that our employees, consultants, contractors or scientific advisors will not,
      unintentionally or willfully, disclose our trade secrets to competitors or
      other
      third parties. In addition, courts outside the United States are sometimes
      less
      willing to protect trade secrets. Moreover, our competitors may independently
      develop equivalent knowledge, methods and know-how. If we are unable to defend
      our trade secrets from illegal use, or if our competitors develop equivalent
      knowledge, it could have a material adverse effect on our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      infringement of our proprietary rights could result in significant litigation
      costs, and any failure to adequately protect our proprietary rights could result
      in our competitors&#8217; offering similar products, potentially resulting in loss of
      a competitive advantage and decreased revenue. Existing patent, copyright,
      trademark and trade secret laws afford only limited protection. In addition,
      the
      laws of some foreign countries do not protect our proprietary rights to the
      same
      extent as do the laws of the United States. Therefore, we may not be able to
      protect our proprietary rights against unauthorized third party use. Enforcing
      a
      claim that a third party illegally obtained and is using our trade secrets
      could
      be expensive and time consuming, and the outcome of such a claim is
      unpredictable. Litigation may be necessary in the future to enforce our
      intellectual property rights, to protect our trade secrets or to determine
      the
      validity and scope of the proprietary rights of others. This litigation could
      result in substantial costs and diversion of resources and could materially
      adversely affect our future operating results.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Potential
      claims alleging infringement of third party&#8217;s intellectual property by us could
      harm our ability to compete and result in significant expense to us and loss
      of
      significant rights.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>To
      date we have had significant operating losses, and an accumulated deficit and
      have had limited revenues and do not expect to be profitable for at least the
      foreseeable future, and cannot predict when we might become profitable, if
      ever.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      been operating at a loss since our inception, and we expect to continue to
      incur
      substantial losses for the foreseeable future. Net loss for the fiscal year
      ended March 31, 2006 was $487,351 resulting in an accumulated deficit of
      $487,351. We had no revenue for the fiscal year ended March 31, 2006. Further,
      we may not be able to generate significant revenues in the future. In addition,
      we expect to incur substantial operating expenses in order to fund the expansion
      of our business. As a result, we expect to continue to experience substantial
      negative cash flow for at least the foreseeable future and cannot predict when,
      or even if, we might become profitable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Going
      concern opinions </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      audited financial statements for Innovative for the year ended December 31,
      2005
      and the audited financial statements for AcXess for the year ended March 31,
      2006, each included an explanatory footnote that such financial statements
      were
      prepared assuming that Innovative and AcXess, respectively, would continue
      as a
      going concern. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      are dependent upon future financings to fund our operations.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      had no revenues and as of March 31, 2006 we had incurred a cumulative net loss
      of $487,351. As of June 27, 2006 we had approximately $230,000 in available
      funds. We are therefore wholly dependent upon the net proceeds of a future
      financing to have working capital to continue operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      management will have broad discretion in the application of the net proceeds
      of
      future financings. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
      will have broad discretion to adjust the application and allocation of the
      net
      proceeds of any future financings in order to address changed circumstances
      and
      opportunities. As a result of the foregoing, our success will be substantially
      dependent upon the discretion and judgment of our management with respect to
      the
      application and allocation of the net proceeds of any such offerings.
</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      lack sales, marketing and distribution capabilities and depend on third parties
      to market our services. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      do not
      have personnel dedicated solely to sales and marketing of our services and
      therefore we must rely primarily upon third party distributors to market and
      sell our services. These third parties may not be able to market our product
      successfully or may not devote the time and resources to marketing our services
      that we require. We also rely upon third party carriers to distribute and
      deliver our services. As such, our deliveries are to a certain extent out of
      our
      control. If we choose to develop our own sales, marketing or distribution
      capabilities, we will need to build a marketing and sales force with technical
      expertise and with supporting distribution capabilities, which will require
      a
      substantial amount of management and financial resources that may not be
      available. If we or a third party are not able to adequately sell and distribute
      our product, our business will be materially harmed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may face product liability for the services we provide.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we are unable to establish sufficient sales and marketing capabilities or enter
      into and maintain appropriate arrangements with third parties to sell, market
      and distribute our services, our business will be harmed. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      limited experience as a company in the sale, marketing and distribution of
      our
      products and services. We depend upon third parties to sell our product both
      in
      the United States and internationally. To achieve commercial success, we must
      develop sales and marketing capabilities and enter into and maintain successful
      arrangements with others to sell, market and distribute our products.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      we are
      unable to establish and maintain adequate sales, marketing and distribution
      capabilities, independently or with others, we may not be able to generate
      product revenue and may not become profitable. If our current or future partners
      do not perform adequately, or we are unable to locate or retain partners, as
      needed, in particular geographic areas or in particular markets, our ability
      to
      achieve our expected revenue growth rate will be harmed. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>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. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      services face competition from services which may be used as an alternative
      or
      substitute therefore. In addition we compete with several large companies in
      the
      BC 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 competitive position is based principally on our intellectual
      property developed with Citrix technology as well as our relationships in the
      BC
      industry. 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. See &#8220;Description of Business - Competition.&#8221;</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may not be able to manage our growth effectively, which could adversely affect
      our operations and financial performance.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      ability to manage and operate our business as we execute our development and
      growth strategy will require effective planning. Significant rapid growth could
      strain our internal resources, and other problems that could adversely affect
      our financial performance. We expect that our efforts to grow will place a
      significant strain on our personnel, management systems, infrastructure and
      other resources. Our ability to manage future growth effectively will also
      require us to successfully attract, train, motivate, retain and manage new
      employees and continue to update and improve our operational, financial and
      management controls and procedures. If we do not manage our growth effectively,
      our operations could be adversely affected, resulting in slower growth and
      a
      failure to achieve or sustain profitability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      future success depends on retaining our existing key employees and hiring and
      assimilating new key employees. The loss of key employees or the inability
      to
      attract new key employees could limit our ability to execute our growth
      strategy, resulting in lost sales and a slower rate of
      growth.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success depends in part on our ability to retain key employees including our
      executive officers. Following the Transaction we do not have any employment
      agreements with our executives. Also, we do not currently carry "key man"
      insurance on our executives but intend to obtain it in the near future. It
      would
      be difficult for us to replace any one of these individuals. In addition, as
      we
      grow we may need to hire additional key personnel. We may not be able to
      identify and attract high quality employees or successfully assimilate new
      employees into our existing management structure.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      cannot predict the impact of our proposed marketing efforts. If these efforts
      are unsuccessful we may not earn enough revenue to become
      profitable.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success will depend on investing in marketing resources. Our proposed business
      plan includes considerable outsourcing of marketing as well as dependence on
      channel partners unaffiliated with the Company. Any marketing plans developed
      may include attending trade shows and making private demonstrations, advertising
      and promotional materials, advertising campaigns in both print and broadcast
      media, and advertising/promotion-related operations. We cannot give any
      assurance that these marketing efforts will be successful. If they are not,
      revenues may be insufficient to cover our fixed costs and we may not become
      profitable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      expect to incur additional losses in the future. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      expect
      to incur significant operating losses in the near future. We intend to use
      a
      portion of the net proceeds from the Offering for sales and marketing, research
      and development and operating expenses. We will continue to incur significant
      expenses. We cannot predict when, if ever, we will operate
      profitably.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      will require significant additional capital to support business growth, and
      this
      capital might not be available.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe that the net proceeds from the Offering, after repayment of our debt
      obligations, will satisfy our current capital needs for only two (2) to three
      (3) months and we intend to raise substantial additional capital. Such capital
      might be raised through public or private financings, as well as borrowings
      and
      other sources. We do not currently have any commitments or immediate plans
      with
      respect to acquisition financing, and there can be no assurance that additional
      or sufficient financing will be available, or, if available, that it will be
      available on acceptable terms. The failure to obtain required financing by
      us
      when needed could result in us being required to substantially scale back our
      then operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      business may be affected by factors outside of our
      control.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may incur increased legal, accounting and other expenses as a result of having
      to assimilate AcXess into our business. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      the Transaction, we will incur significant legal, accounting and other expenses
      in connection with bringing AcXess in compliance with rules and regulations
      applicable to public companies that AcXess did not incur as a private company
      prior to the Transaction. In addition, if our Common Stock is eventually listed
      on NASDAQ or another major market, we will incur further additional listing
      and
      compliance expenses. We expect these new rules and regulations to increase
      our
      legal and financial compliance costs and to make some activities more
      time-consuming and costly. In addition, we will incur additional costs
      associated with our public company reporting requirements. We also expect these
      new rules and regulations to make it more difficult and more expensive for
      us to
      obtain director and officer liability insurance and we may be required to accept
      reduced policy limits and coverage or incur substantially higher costs to obtain
      the same or similar coverage. As a result, it may be more difficult for us
      to
      attract and retain qualified persons to serve on our board of directors or
      as
      executive officers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em><u>Risks
      Related To Our Common Stock</u></em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      price of our Common Stock may fluctuate significantly, which could lead to
      losses for stockholders.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      stock
      of public companies can experience extreme price and volume fluctuations, which
      can be unrelated or out of proportion to the operating performance of such
      companies. We expect our stock price will be subject to similar volatility.
      Any
      negative change in the public&#8217;s perception of the prospects of our company or
      companies in our market could also depress our stock price, regardless of our
      actual results. Factors affecting the trading price of our common stock may
      include: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#216;&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">variations
                in our operating results; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#216;&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">announcements
                of technological innovations, new products or product enhancements,
                strategic alliances or significant agreements by us or by our competitors;
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#216;&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">recruitment
                or departure of key personnel; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#216;&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">litigation,
                legislation, regulation or technological developments that adversely
                affect our business; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#216;&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">changes
                in the estimates of our operating results or changes in recommendations
                by
                any securities analyst that elect to follow our common stock; and
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      <div>&#160;</div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#216;&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">market
                conditions in our industry, the industries of our customers and the
                economy as a whole. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      securities analysts do not publish research or reports about our business or
      if
      they downgrade our stock, the price of our stock could
      decline.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      trading market for our Common Stock may be affected by research and reports
      that
      industry or financial analysts may in the future publish about us or our
      business. We will not control these analysts. There are many large,
      well-established publicly traded companies active in our industry and market,
      which will mean it will be less likely that we receive widespread, if any,
      analyst coverage. Furthermore, if one or more of the analysts who in the future
      elect to cover us, downgrade our stock, our stock price would likely decline
      rapidly. If one or more of these analysts cease coverage of our Company, we
      could lose visibility in the market, which in turn could cause our stock price
      to decline. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have no intention to pay dividends on our Common Stock.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      foreseeable future, we intend to retain any remaining future earnings, if any,
      to finance our operations and do not anticipate paying any cash dividends with
      respect to our Common Stock. As a result, investors should not expect to receive
      dividends on any of the Shares purchased by them, for a long period of time,
      if
      ever.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      Common Stock is quoted on the OTC Bulletin Board, and there may be a limited
      trading market for our Common Stock.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Common Stock is quoted on the OTC Bulletin Board. There is extremely limited
      and
      sporadic trading of our Common Stock, and no assurance can be given, when,
      if
      ever, an active trading market will develop or, if developed, that it will
      be
      sustained. As a result, investors in our Common Stock may be unable to sell
      their shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      any registration statement that we file is declared effective, sales of shares
      of our Common Stock on the open market could reduce the market price of our
      Common Stock.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Common Stock has limited and sporadic trading. Sales of shares of the Common
      Stock in the open market could reduce any market price of the Common Stock,
      if a
      market should develop. An absence of a market for the Common Stock would make
      it
      more difficult for the Company to raise additional funds through an equity
      financing. Additionally, if any future registration statement for the Shares
      is
      filed and becomes effective, the number of shares of Common Stock eligible
      for
      public sale will increase, which could decrease any such market price, if a
      market were to develop for the shares. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      Common Stock will be subject to Penny Stock Rules, which could affect
      trading.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Broker-dealer
      practices in connection with transactions in &#8220;penny stocks&#8221; are regulated by
      certain rules adopted by the SEC. Penny stocks generally are equity securities
      with a price of less than $5.00 (other than securities registered on certain
      national securities exchanges or quoted on the NASDAQ Stock Market if current
      price and volume information with respect to transactions in such securities
      is
      provided by the exchange or system). The rules require that a broker-dealer,
      prior to a transaction in a penny stock not otherwise exempt from the rules,
      deliver a standardized risk disclosure document that provides information about
      penny stocks and the risks in the penny stock market. The broker-dealer also
      must provide the customer with current bid and offer quotations for the penny
      stock, the compensation of the broker-dealer and its salesperson in connection
      with the transaction and monthly account statements showing the market value
      of
      each penny stock held in the customer&#8217;s account. In addition, the rules
      generally require that prior to a transaction in a penny stock the broker-dealer
      must make a special written determination that the penny stock is a suitable
      investment for the purchaser and receive the purchaser&#8217;s written agreement to
      the transaction. These disclosure requirements may have the effect of reducing
      the liquidity of penny stocks. If our securities become subject to the penny
      stock rules, investors in our Common Stock may find it more difficult to sell
      our shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">15</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CAUTIONARY
      NOTICE REGARDING FORWARD-LOOKING STATEMENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Current Report on Form 8-K contains &#8220;forward-looking statements&#8221; that include
      information relating to future events, future financial performance, strategies,
      expectations, competitive environment, regulation and availability of resources.
      These forward-looking statements include, without limitation, statements
      regarding: proposed new services; our expectations concerning litigation,
      regulatory developments or other matters; statements concerning projections,
      predictions, expectations, estimates or forecasts for our business, financial
      and operating results and future economic performance; statements of
      management&#8217;s goals and objectives; and other similar expressions concerning
      matters that are not historical facts. Words such as &#8220;may,&#8221; &#8220;will,&#8221; &#8220;should,&#8221;
&#8220;could,&#8221; &#8220;would,&#8221; &#8220;predicts,&#8221; &#8220;potential,&#8221; &#8220;continue,&#8221; &#8220;expects,&#8221; &#8220;anticipates,&#8221;
&#8220;future,&#8221; &#8220;intends,&#8221; &#8220;plans,&#8221; &#8220;believes&#8221; and &#8220;estimates,&#8221; and similar
      expressions, as well as statements in future tense, identify forward-looking
      statements. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-looking
      statements should not be read as a guarantee of future performance or results,
      and will not necessarily be accurate indications of the times at, or by which,
      that performance or those results will be achieved. Forward-looking statements
      are based on information available at the time they are made and/or management&#8217;s
      good faith belief as of that time with respect to future events, and are subject
      to risks and uncertainties that could cause actual performance or results to
      differ materially from those expressed in or suggested by the forward-looking
      statements. Important factors that could cause these differences include, but
      are not limited to other factors discussed under the headings &#8220;Risk Factors&#8221; and
&#8220;Description of Business.&#8221; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-looking
      statements speak only as of the date they are made. You should not put undue
      reliance on any forward-looking statements. We assume no obligation to update
      forward-looking statements to reflect actual results, changes in assumptions
      or
      changes in other factors affecting forward-looking information, except to the
      extent required by applicable securities laws. If we do update one or more
      forward-looking statements, no inference should be drawn that we will make
      additional updates with respect to those or other forward-looking
      statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF PROPERTY</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Facilities
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company leases approximately 3,200 square feet of office space, as well as
      a
      corporate apartment, pursuant to leases expiring through June 2007 for aggregate
      monthly rentals of $8,350. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Future
      minimum payments for the years ending March 31 are as follows: 2007: $97,700
      2008: $17,550</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
      believes the current space is sufficient for its operations through the 2006
      year but that it may require more space thereafter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Security
      Ownership of Certain Beneficial Owners and Management</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth certain information as of the date immediately
      following the closing of the Transaction regarding the beneficial ownership
      of
      our Common Stock by (i) each person who, to our knowledge, beneficially owns
      more than 5% of our Common Stock; (ii) each of our directors and executive
      officers; and (iii) all of our executive officers and directors as a
      group:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
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          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                and address of Beneficial Owner</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amount
                (1)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Percent</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>of
                Class</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Directors
                and Named Executive Officers (2):</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Anthony
                F. Zalenski</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7,258,559</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10.10</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Peter
                M. Peterson </font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6,956,874</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.68</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Christopher
                J. Floyd </font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6,956,874</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.68</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="71%" style="border-bottom: white double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
                directors and named executive officers as a group (5 persons)
                </font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">21,172,307</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">29.46</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beneficial
                ownership is calculated based on 71,833,251 shares of our Common
                Stock
                issued and outstanding which assumes that an additional 4,377,872
                shares
                are issued as full payment for certain outstanding promissory notes
                of
                AcXess. Beneficial ownership is determined in accordance with Rule
                13d-3
                of the Securities and Exchange Commission. The number of shares
                beneficially owned by a person includes shares of common stock subject
                to
                options or warrants held by that person that are currently exercisable
                or
                exercisable within 60 days following theclosing of the Transaction.
                The
                shares issuable pursuant to those options or warrants are deemed
                outstanding for computing the percentage ownership of the person
                holding
                these options and warrants but are not deemed outstanding for the
                purposes
                of computing the percentage ownership of any other person. The persons
                and
                entities named in the table have sole voting and sole investment
                power
                with respect to the shares set forth opposite the stockholder&#8217;s name,
                subject to community property laws, where applicable.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                address for the directors and named executive officers is c/o Innovative
                Software Technologies, Inc., 3998 FAU Blvd, Bldg 1-210, Boca Raton,
                FL
                33431.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">17</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DIRECTORS
      AND EXECUTIVE OFFICERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the name, age and position of each of Innovative&#8217;s
      directors and executive officers at the closing of the Transaction.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="31%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Age</strong></font></div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Position(s)</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="31%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="31%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Anthony
                F. Zalenski</font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">63</font></div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer, Chairman </font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="31%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Peter
                M. Peterson</font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">49</font></div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                </font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="31%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Christopher
                J. Floyd</font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">43</font></div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Financial Officer, Secretary</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Anthony
      F. Zalenski </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">has
      served as Chairman of the Board of Directors and as Chief Executive Officer
      since his appointment on the date of the Transaction. Mr. Zalenski has over
      30
      years of international high tech industry experience specializing in the
      Internet, infotainment, information appliances, applications rental, enterprise
      software, and telecommunications and data communications markets. Mr. Zalenski
      has managed start-ups, led turnarounds and held executive positions with Fortune
      100 companies. He has extensive experience in managing merger and acquisition
      transactions, public and private financings, as well as strategic corporate
      relationships. As the new President of the $55 million enterprise security
      software company Casi-Rusco, a wholly owned subsidiary of Interlogix, Mr.
      Zalenski successfully transitioned Casi-Rusco during the purchase of Interlogix
      by General Electric. Prior to his time with Casi-Rusco, Mr. Zalenski served
      as
      Chairman, CEO and President of SoftMountain, an enterprise software start-up
      company. As President and CEO of Boca Research (NASDAQ: BOCI), Mr. Zalenski
      grew
      annual sales from $40 million to $150 million. While leading Boca Research
      and
      in response to changing market conditions, he strategically repositioned the
      company to address the emerging Internet appliance market and arranged financing
      and strategic customer relationships. Previously, Mr. Zalenski served as
      Corporate Vice President and COO of Motorola UDS/ISG, a $750 million entity.
      Prior to Motorola, Mr. Zalenski was a founding member of Isacomm, a
      Telecommunications startup, subsequently purchased by US Sprint.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Peter
      M Peterson </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">has
      served as Chairman of the Board of Directors of Innovative since his election
      in
      November of 2003, and served as Chief Executive Officer since his appointment
      in
      August 2004 until the date of the Transaction. Mr. Peterson is President, CEO
      and founder of Aspen Capital Partners, LLC a firm specializing in financial
      advisory and capital formation. Prior to founding Aspen Capital Partners, Mr.
      Peterson was Managing Director of Investment Banking with H. C. Wainwright
&amp;
Co. He was also president of First American Holdings and Managing Director
      of
      Investment Banking for the firm. Prior to First American, he served as Vice
      President of Investment Banking with Josephthal, Lyons and Ross, A New York
      Stock Exchange member firm. Previous to Josephthal, Mr. Peterson was President
      of Triad Capital Partners and was responsible for assisting companies in going
      public, mergers and acquisitions, leveraged buyouts, recapitalizations, and
      private placements. Mr. Peterson has experience in arranging private placements,
      SEC documentation and reporting, financial consulting, real estate financings,
      securitized receivable and asset financings, strategic planning, transaction
      structuring, and negotiating. Mr. Peterson is a member of the National
      Association of Corporate Directors and Association of Corporate Growth. He
      is a
      1979 graduate of University Florida. Mr. Peterson is chairman of the board
      of
      directors of CleanFuel USA, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Christopher
      J. Floyd</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      served as Chief Financial Officer, Vice President of Finance and Secretary
      of
      the Board of Directors since his appointment on August 4, 2004. Mr. Floyd has
      a
      broad financial, consulting and entrepreneurial background. As President of
      Axim
      Consulting Group, Inc. he worked with Innovative for a period of ten months,
      negotiating with former officers of the Company, performing accounting and
      SEC
      filing work, and assisting in strategic planning and business development.
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Previously,
      Mr. Floyd was the co-founder and Chief Financial Officer for Comworxx, Inc.,
      which pioneered telematics products and services. Prior to Comworxx, Mr. Floyd
      was the co-founder and served as Chief Financial Officer, Treasurer, and a
      director for Intelliworxx, Inc., a public company that designed and manufactured
      tablet computers and developed equipment training and maintenance software
      applications. He was responsible for all financial, administrative, legal,
      auditing and securities matters. Prior to Intelliworxx, Mr. Floyd worked in
      a
      variety of startup and turnaround situations both as a principal and as a
      consultant. Previously, Mr. Floyd worked for Ernst &amp; Young in Berlin,
      Germany, performing both audit and consulting work, principally under
      privatization engagements for former East German enterprises. Mr. Floyd received
      his Master of Business Administration from the Wharton School of the University
      of Pennsylvania and his Bachelor of Science in Electrical Engineering from
      the
      University of South Florida.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Election
      of Directors and Officers </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders
      of our Common Stock are entitled to one (1) vote for each share held on all
      matters submitted to a vote of the stockholders, including the election of
      directors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Board
      of Directors will be elected at the annual meeting of the shareholders or at
      a
      special meeting called for that purpose. Each director shall hold office until
      the next annual meeting of shareholders and until the director&#8217;s successor is
      elected and qualified. If a vacancy occurs on the Board of Directors, including
      a vacancy resulting from an increase in the number of directors, then the
      shareholders may fill the vacancy at the next annual meeting or at a special
      meeting called for the purpose, or the Board of Directors may fill such
      vacancy.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Compensation
      of Directors</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      intended that each member of our board of directors who is not an employee
      of
      the Company (a &#8220;non-employee director&#8221;) will receive an annual retainer in cash
      and/or shares of Common Stock or in options to purchase shares of Common Stock
      as determined by our board of directors and all directors will be reimbursed
      for
      costs and expenses related to attendance at meetings of the board of directors.
      The amount of this retainer has not yet been determined.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      employee directors will not receive any additional compensation for serving
      on
      our board of directors or any committee of our board of directors, and our
      non-employee directors will not receive any compensation from us for their
      roles
      as directors other than the retainer, attendance fees and stock or stock option
      grants described above.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXECUTIVE
      COMPENSATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      table
      below details all plan and non-plan compensation awarded to, earned by, or
      paid
      to the persons serving as named executive officers Innovative for the fiscal
      years 2005 and 2004 per Item 402 of Regulation S-B. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">19</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table border="1" bordercolor="black" cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="14%" style="border-bottom: black thin solid;">&#160;</td>
            <td valign="top" width="6%" style="border-bottom: black thin solid;">&#160;</td>
            <td colspan="3" valign="top" width="22%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Annual
                Compensation</font></div>
            </td>
            <td colspan="3" valign="top" width="25%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Long-Term
                Compensation</font></div>
            </td>
            <td valign="top" width="7%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr>
            <td valign="top" width="14%" style="border-bottom: black thin solid;">&#160;</td>
            <td valign="top" width="6%" style="border-bottom: black thin solid;">&#160;</td>
            <td valign="top" width="7%" style="border-bottom: black thin solid;">&#160;</td>
            <td valign="top" width="7%" style="border-bottom: black thin solid;">&#160;</td>
            <td valign="top" width="7%" style="border-bottom: black thin solid;">&#160;</td>
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            <td valign="bottom" width="14%" style="border-bottom: black thin solid;">
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            <td valign="bottom" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Year</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">($)</font></div>
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            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Restricted
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">($)</font></div>
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            <td valign="bottom" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Securities
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Underlying
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(#)</font></div>
            </td>
            <td valign="bottom" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">LTIP
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Payouts
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">($)</font></div>
            </td>
            <td valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other
                </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Compen-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">sation</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">($)</font></div>
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          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Peter
                M. Peterson</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CEO
                &amp; Chairman</font></div>
            </td>
            <td valign="top" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">77,785</font></div>
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            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="14%">&#160;</td>
            <td valign="top" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">144,910</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,000</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
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          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="14%">&#160;</td>
            <td valign="top" width="6%">&#160;</td>
            <td align="right" valign="top" width="7%">&#160;</td>
            <td align="right" valign="top" width="7%">&#160;</td>
            <td align="right" valign="top" width="7%">&#160;</td>
            <td align="right" valign="top" width="9%">&#160;</td>
            <td align="right" valign="top" width="9%">&#160;</td>
            <td align="right" valign="top" width="7%">&#160;</td>
            <td align="right" valign="top" width="7%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Christopher
                J. Floyd</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CFO</font></div>
            </td>
            <td valign="top" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">77,785</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="14%" style="border-bottom: black thin solid;">&#160;</td>
            <td valign="top" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">75,000</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4,000</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
            <td align="right" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      its
      inception no officer of AcXess has received salary and bonus in aggregate
      exceeding $100,000 per year.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Employment
      Agreements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      August 1, 2004, we entered into an employment agreement with Christopher Floyd
      that provides for his employment as Chief Financial Officer of the Company,
      which agreement expires on August 1, 2007. Mr. Floyd has agreed in principle
      to
      modify his contract according to the recommendations of the compensation
      committee of the board, which committee has not yet been formed. Until such
      agreement is executed Mr. Floyd will be paid an annual salary of
      $84,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      expect
      to execute an employment agreement with Anthony F. Zalenski within 30 days
      following the filing of this report. Currently Mr. Zalenski receives an annual
      salary of $84,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      Compensation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may in
      the future also issue to our officers and directors stock options on terms
      and
      conditions to be determined by our Board of Directors or designated Board
      Committee.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>AcXess
      Transactions</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Innovative
      Transactions</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      August 1, 2004, we entered into an employment agreement with Peter Peterson
      that
      provided for his employment as Chief Executive Officer of the Company, which
      agreement was to expire on August 1, 2007. The agreement stipulated an annual
      base salary of $180,000 and an incentive compensation plan to be determined
      by
      the board. Mr. Peterson&#8217;s employment agreement was mutually terminated by Mr.
      Peterson and the Company effective January 4, 2006. In lieu of paying Mr.
      Peterson&#8217;s salary for January 2006 and the following 12 months thereafter as
      stipulated in the employment contract, the Company agreed to a one-time issuance
      to Mr. Peterson of 950,495 shares of common stock, payment of salary though
      January 2006, and health benefits to continue for the 2006 calendar year. Mr.
      Peterson retained the office of Chief Executive Officer of the Company until
      the
      date of the Transaction. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">20</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF SECURITIES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      total
      authorized capital stock consists of 100,000,000 shares of Common Stock, par
      value $0.001 per share and 25,000,000 shares of preferred stock, par value
      $0.001 per share. After the Closing, 71,883,251 shares of Common Stock were
      issued and outstanding. There are 450,000 shares of preferred stock issued
      and
      outstanding.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following description of our capital stock does not purport to be complete
      and
      is subject to and qualified by our Aertificate of Incorporation and By-laws,
      and
      by the provisions of applicable California law. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Common
      Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders
      of our Common Stock are entitled to receive dividends out of assets legally
      available therefore at such times and in such amounts as the Board of Directors
      from time to time may determine. Holders of our Common Stock are entitled to
      one
      (1) vote for each share held on all matters submitted to a vote of the
      stockholders. Our Common Stock is not entitled to preemptive rights and is
      not
      subject to conversion or redemption. Upon our liquidation, dissolution or
      winding-up, the assets legally available for distribution to stockholders are
      distributable ratably among the holders of the Common Stock after payment of
      liquidation preferences, if any, on any outstanding stock having prior rights
      on
      such distributions and payment of other claims of creditors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Preferred
      Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Certificate of Incorporation authorizes the issuance of shares of preferred
      stock in one or more series. Our Board of Directors has the authority, without
      any vote or action by the shareholders, to create one or more series of
      preferred stock up to the limit of our authorized but unissued shares of
      preferred stock and to fix the number of shares constituting such series and
      the
      designation of such series, the voting powers (if any) of the shares of such
      series and the relative participating, option or other special rights (if any),
      and any qualifications, preferences, limitations or restrictions pertaining
      to
      such series which may be fixed by the Board of Directors pursuant to a
      resolution or resolutions providing for the issuance of such series adopted
      by
      the Board of Directors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      provisions of a particular series of authorized preferred stock, as designated
      by the Board of Directors, may include restrictions on the payment of dividends
      on Common Stock. Such provisions may also include restrictions on the ability
      of
      the Company to purchase shares of Common Stock or to purchase or redeem shares
      of a particular series of authorized preferred stock. Depending upon the voting
      rights granted to any series of authorized preferred stock, issuance thereof
      could result in a reduction in the voting power of the holders of Common Stock.
      In the event of any dissolution, liquidation or winding up of the Company,
      whether voluntary or involuntary, the holders of the preferred stock will
      receive, in priority over the holders of Common Stock, a liquidation preference
      established by the Board of Directors, together with accumulated and unpaid
      dividends. Depending upon the consideration paid for authorized preferred stock,
      the liquidation preference of authorized preferred stock and other matters,
      the
      issuance of authorized preferred stock could result in a reduction in the assets
      available for distribution to the holders of Common Stock in the event of the
      liquidation of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">21</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      450,000 shares of Series A Preferred issued and outstanding as of the date
      of
      the Transaction. These shares are entitled to receive dividends at the rate
      of
      4% per annum of the liquidation preference per share payable yearly in fully
      paid and non-assessable shares of the Corporation&#8217;s common stock. The number of
      shares of common stock to be distributed as a dividend is calculated by dividing
      such payment by 95% of the Market Price on the first five trading days after
      January 1 of each year. The term &#8220;Market Price&#8221; means, as of any date, the
      average of the daily closing price for the five consecutive trading days ending
      on such date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Warrants</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Offering, we issued Warrants to purchase 2,120,000 shares
      of
      our common stock at a price of $0.05 per share. Such Warrants have an expiration
      of 5 years. Also in connection with the Offering, we agreed to issue Agent
      Warrants equal to ten percent (10%) of the number of shares into which the
      convertible promissory notes convert. The Agent Warrants will have an expiration
      of two years from the date of issuance and a strike price of $0.05. The shares
      of Common Stock underlying the Warrants and the Agent Warrants carry &#8220;piggyback&#8221;
registration rights as described below. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stock
      Option Plans</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company currently has no stock option plans. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Registration
      Rights</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Offering, we granted purchasers of the Convertible
      Promissory notes &#8220;piggyback&#8221; registration rights which call for the inclusion of
      any shares of common stock resulting from the conversion of the Convertible
      Promissory notes in any registration statement the Company may file pursuant
      to
      a future financing. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Indemnification
      Matters</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section&#160;317
      of the California Corporations Code authorizes a court to award, or a
      corporation&#8217;s board of directors to grant, indemnity to directors and officers
      who are parties or are threatened to be made parties to any proceeding (with
      certain exceptions) by reason of the fact that the person is or was an agent
      of
      the corporation, against expenses, judgments, fines, settlements and other
      amounts actually and reasonably incurred in connection with the proceeding
      if
      that person acted in good faith and in a manner the person reasonably believed
      to be in the best interests of the corporation. Section&#160;204 of the
      California Corporations Code provides that this limitation on liability has
      no
      effect on a director&#8217;s liability (a)&#160;for acts or omissions that involve
      intentional misconduct or a knowing and culpable violation of law, (b)&#160;for
      acts or omissions that a director believes to be contrary to the best interests
      of the corporation or its shareholders or that involve the absence of good
      faith
      on the part of the director, (c)&#160;for any transaction from which a director
      derived an improper personal benefit, (d)&#160;for acts or omissions that show a
      reckless disregard for the director&#8217;s duty to the corporation or its
      shareholders in circumstances in which the director was aware, or should have
      been aware, in the ordinary course of performing a director&#8217;s duties, of a risk
      of a serious injury to the corporation or its shareholders, (e)&#160;for acts or
      omissions that constitute an unexcused pattern of inattention that amounts
      to an
      abdication of the director&#8217;s duty to the corporation or its shareholders,
      (f)&#160;under Section&#160;310 of the law (concerning contracts or transactions
      between the corporation and a director), or (g)&#160;under Section&#160;316 of
      the law (directors&#8217; liability for improper dividends, loans and guarantees).
      Section&#160;317 does not extend to acts or omissions of a director in his
      capacity as an officer. Further, Section&#160;317 has no effect on claims
      arising under federal or state securities laws and does not affect the
      availability of injunctions and other equitable remedies available to our
      shareholders for any violation of a director&#8217;s fiduciary duty to us or our
      shareholders. Although the validity and scope of the legislation underlying
      Section&#160;317 have not yet been interpreted to any significant extent by the
      California courts, Section&#160;317 may relieve directors of monetary liability
      to us for grossly negligent conduct, including conduct in situations involving
      attempted takeovers of our company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">22</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with Section&#160;317, our articles of incorporation eliminate the
      liability of each of our directors for monetary damages to the fullest extent
      permissible under California law. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      indemnification provisions described above provide coverage for claims arising
      under the Securities Act of 1933 and the Securities Exchange Act of 1934.
      Insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers and controlling persons of the Company
      pursuant to the Company&#8217;s Articles of Incorporation, Bylaws, the the California
      Corporations Code, or otherwise, we have been advised that in the opinion of
      the
      SEC, such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Transfer
      Agent and Registrar</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      transfer agent and registrar is Island Stock Transfer 100 Second Avenue South,
      300N, St. Petersburg, Florida 33701.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Market
      Price of and Dividends on Common Equity and Related Stockholder
      Matters</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      shares are currently trading on the OTC Bulletin Board under the stock symbol
      &#8220;INIV.&#8221; The high and the low trades for our shares for each quarter of actual
      trading were:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>
        <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">&#160;</td>
              <td width="2%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">High</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">Low</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Year
                  Ending December 31, 2004:</strong></font></div>
              </td>
              <td width="2%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
              <td align="justify" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.75</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.31</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.51</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.25</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Third
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.35</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.14</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fourth
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.30
                  </font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.08</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Year
                  Ending December 31, 2005:</strong></font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
              </td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.17</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.07</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.12</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.04</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Third
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.08</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.03</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fourth
                  Quarter</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.08</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.01</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      closing price for the common stock on June 26, 2006 was $0.04 per share.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      trades reflect inter-dealer prices, without retail mark-up, markdown or
      commission and may not represent actual transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the Transaction and the associated financing, the value of our Common
      Stock will depend upon the value of our only asset, the business and assets
      of
      AcXess. AcXess was a private company whose business, assets and financial
      performance has not been disclosed to the public, prior to this Current Report
      on Form 8-K. </font></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Holders
      of Common Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
      the
      closing of the Transaction and the Offering, we had 67,455,379 shares of our
      Common Stock issued and outstanding and there were approximately 1,239
      registered shareholders of our common stock. Of such shares, 11,000,000 were
      issued pursuant to the Transaction. In addition, warrants to purchase 2,120,000
      shares of our Common Stock were also outstanding as of that date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dividends</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 no
      revenue or earnings. 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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Legal
      Proceedings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      time
      to time, we are involved in litigation concerning our business operations.
      Management believes that the litigation in which we are currently involved
      is
      not reasonably likely to be material to its financial condition, results of
      its
      operations or its cash flows, other than the litigation noted
      below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>SEC
      Investigation</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      24, 2003 the Securities and Exchange Commission ("SEC") issued a formal order
      of
      investigation, authorizing the investigation of certain securities matters.
      The
      SEC staff has taken the testimony of certain officers and has informed us that
      it intends to take additional testimony. The SEC staff has also issued
      additional requests for the voluntary production of documents. Prior to the
      issuance of the order, we had voluntarily provided documents and information
      to
      the SEC staff in response to informal, non-public inquiries by the staff. On
      April 8</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      2005
      the Independent Committee of the Board of Directors turned over the results
      of
      its investigation to the SEC and we intend to continue to fully cooperate with
      the SEC in its investigation. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Prosper,
      Inc. Complaint</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subsequent
      to the EPMG asset disposition, as discussed above, the former principals, under
      the new name of Prosper, Inc. filed a complaint that seeks a refund to the
      benefit of Prosper of certain reserve funds amounting to $580,000 that are
      due
      to former vendors. Under the EPMG Settlement Agreement, we agreed to pay certain
      reserves potentially owing to third-party vendors upon specified conditions.
      The
      lawsuit alleges that we have breached the obligation to pay these reserves,
      but
      we contest that the conditions for these payments have been satisfied and/or
      contest the amounts and payees of the payments that are alleged to be owed
      by
      us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      we believe that these allegations do not have any merit, if Prosper, Inc. were
      to prevail in its complaint there would be serious negative financial
      consequences resulting from utilization of our cash reserves. Moreover, such
      an
      action could divert management&#8217;s time and efforts away from the business of the
      Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Kansas
      City Explorers</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company is a defendant in a lawsuit in the Circuit Court of Platte County,
      Missouri, &#8220;Kansas City Explorers vs. Innovative Software&#8221; case no. 04CV82050 in
      which the claimant is seeking money for advertising which it alleges is still
      due, and have alleged damages of $50,028. The claimant has been court ordered
      to
      produce answers to certain discovery requests of the Company which they have
      failed to produce. Management intends to aggressively defend the claim based
      upon the lack of contract between the parties, lack of proof of damages, as
      well
      as minimal proof of advertising services actually performed for Company products
      and services.</font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Recent
      Sales of Unregistered Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Transaction, we issued 11,000,000 shares of our Common
      Stock
      to the holders of AcXess common stock for all the issued and outstanding shares
      of AcXess common stock. The shares of Common Stock issued in the Transaction
      were issued in reliance on the exemption from registration afforded by Section
      4(2) under the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;) and
      corresponding provisions of state securities laws, which exempts transactions
      by
      an issuer not involving any public offering, as such sales and issuances did
      not
      involve any public offering, were made without general solicitation or
      advertising, and each purchaser had access to all relevant information necessary
      to evaluate the investment and represented to Innovative that the securities
      were being acquired for investment. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrent
      with the closing of the Transaction, Innovative sold convertible promissory
      notes to&#160;four accredited investors in the aggregate principal amount of
      approximately $430,000 (the &#8220;Offering&#8221;). The convertible promissory notes have a
      term of six months and are convertible into shares of Common Stock of the
      Company in a future qualified financing at a 30% discount to the effective
      price
      per share paid in the future qualified financing. In the Offering, Innovative
      also issued to the purchasers of the notes warrants to purchase an aggregate
      of
      2,120,000 shares of Common Stock at an exercise price of $0.05, subject to
      adjustment. These warrants will expire in 2011. The investors in the Offering
      were granted piggyback registration rights with respect to the shares issuable
      upon the conversion of the notes or the exercise of the warrants in accordance
      with a registration rights agreement. Also in conjunction with the Offering,
      Innovative exchanged an outstanding promissory note to an investor in the amount
      of $100,000 plus accrued interest for a promissory note with the above terms
      for
      $100,000, and interest accrued to date on the pre-existing note was forgiven
      by
      the investor and credited to other income. In connection with the Offering,
      Innovative issued to the placement agent in the Offering an agreement to receive
      warrants (the &#8220;Agent Warrants&#8221;) to purchase up to that number of shares of
      Common Stock equal to ten (10%) percent of the shares of Common Stock issued
      by
      the Company upon conversion of the promissory notes issued in the Offering.
      The
      Agent Warrants will exercisable for a two year period following the date of
      issuance at a price per share equal to $0.05 per share. The notes and warrants
      issued in the Offering, as well as the shares of Common Stock issuable pursuant
      thereto, were sold and issued pursuant to the exemption from the registration
      requirements of the Act provided under Section 4(2) of the Act and Rule 506
      promulgated thereunder, as such sales and issuances did not involve any public
      offering, were made without general solicitation or advertising, and each
      purchaser was an accredited investor with access to all relevant information
      necessary to evaluate the investment and represented to Innovative that the
      securities were being acquired for investment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Indemnification
      of Directors and Officers. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section&#160;317
      of the California Corporations Code authorizes a court to award, or a
      corporation&#8217;s board of directors to grant, indemnity to directors and officers
      who are parties or are threatened to be made parties to any proceeding (with
      certain exceptions) by reason of the fact that the person is or was an agent
      of
      the corporation, against expenses, judgments, fines, settlements and other
      amounts actually and reasonably incurred in connection with the proceeding
      if
      that person acted in good faith and in a manner the person reasonably believed
      to be in the best interests of the corporation. Section 204 of the California
      Corporations Code provides that this limitation on liability has no effect
      on a
      director&#8217;s liability (a) for acts or omissions that involve intentional
      misconduct or a knowing and culpable violation of law, (b) for acts or omissions
      that a director believes to be contrary to the best interests of the corporation
      or its shareholders or that involve the absence of good faith on the part of
      the
      director, (c) for any transaction from which a director derived an improper
      personal benefit, (d) for acts or omissions that show a reckless disregard
      for
      the director&#8217;s duty to the corporation or its shareholders in circumstances in
      which the director was aware, or should have been aware, in the ordinary course
      of performing a director&#8217;s duties, of a risk of a serious injury to the
      corporation or its shareholders, (e) for acts or omissions that constitute
      an
      unexcused pattern of inattention that amounts to an abdication of the director&#8217;s
      duty to the corporation or its shareholders, (f) under Section 310 of the law
      (concerning contracts or transactions between the corporation and a director),
      or (g) under Section 316 of the law (directors&#8217; liability for improper
      dividends, loans and guarantees). Section 317 does not extend to acts or
      omissions of a director in his capacity as an officer. Further, Section 317
      has
      no effect on claims arising under federal or state securities laws and does
      not
      affect the availability of injunctions and other equitable remedies available
      to
      our shareholders for any violation of a director&#8217;s fiduciary duty to us or our
      shareholders. Although the validity and scope of the legislation underlying
      Section 317 have not yet been interpreted to any significant extent by the
      California courts, Section 317 may relieve directors of monetary liability
      to us
      for grossly negligent conduct, including conduct in situations involving
      attempted takeovers of our company. </font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with Section 317, our articles of incorporation eliminate the
      liability of each of our directors for monetary damages to the fullest extent
      permissible under California law. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      indemnification provisions described above provide coverage for claims arising
      under the Securities Act of 1933 and the Securities Exchange Act of 1934.
      Insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers and controlling persons of the Company
      pursuant to the Company&#8217;s Articles of Incorporation, Bylaws, the California
      Corporations Code, or otherwise, we have been advised that in the opinion of
      the
      SEC, such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF THE TRANSACTION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">26,
      2006,
      Innovative Software Technologies, Inc. (&#8220;Innovative&#8221; or the &#8220;Company&#8221;) completed
      the acquisition of AcXess, Inc. (&#8220;AcXess&#8221;) in a stock exchange transaction (the
&#8220;Transaction&#8221;) pursuant to a Stock Exchange Agreement by and between Innovative,
      AcXess, the Shareholders of AcXess, Inc., and Anthony F. Zalenski, acting as
      the
      Shareholder&#8217;s Agent (the &#8220;Exchange Agreement&#8221;). As a result of the Transaction,
      AcXess became a wholly owned subsidiary of the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the Exchange Agreement, the shareholders of AcXess exchanged 100% of the
      outstanding shares of AcXess </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      11,000,000 shares of common stock of the Company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      $0.001
      par value per share (the &#8220;Common Stock&#8221;). The shares of Common Stock issued in
      the Transaction were issued pursuant to the exemption from the registration
      requirements of the Securities Act of 1933, as amended (the &#8220;Act&#8221;) provided
      under Section 4(2) of the Act and Rule 506 promulgated thereunder. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02 Unregistered Sale of Equity Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.01 Changes in Control of Registrant.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02 Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the closing of this Transaction (as described in Item 2.01
      of
      this Current Report on Form 8-K) Anthony F. Zalenski was appointed to our Board
      of Directors as Chairman and William E. Leathem resigned as director. As a
      result our board currently comprises Mr. Zalenski and Pete M. Peterson, our
      former Chairman. In addition, Mr. Peterson resigned as Chief Executive Officer
      and Mr. Zalenski accepted the position of Chief Executive Officer of the
      Company. Christopher J. Floyd remains as Chief Financial Officer and Secretary
      of the Board of Directors.</font></div>
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      certain biographical and other information regarding the newly appointed
      officers and directors, see the disclosure under the heading &#8220;Directors and
      Executive Officers&#8221; under Item 2.01 of this Current Report on Form 8-K, which
      disclosure is incorporated herein by reference.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.06 Change in Shell Company Status.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      8.01 Other Events.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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      connection with the closing of the Transaction, Innovative Software
      Technologies, Inc. relocated its corporate headquarters from 1413 South Howard
      Avenue, Suite 220, Tampa, Florida to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3998
      FAU
      Boulevard, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bldg
      1-210, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Boca
      Raton, F</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">lorida.
      Innovative&#8217;s new phone number is (561) 417-7250.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      9.01 Financial Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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      audited financial statements for the fiscal year ended March 31, 2006 is filed
      as Exhibit 99.1 to this Current Report on Form 8-K. </font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">27</font></div>
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      Pro-Forma Financial Information.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following documents of the Company appear as Exhibit 99.2 to this Form 8-K.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr valign="top" style="line-height: 1.25;">
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            <td style="width: 36pt;">
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
                Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2006;
                </font></div>
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          <tr valign="top" style="line-height: 1.25;">
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)</font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
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                Year
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          <tr valign="top" style="line-height: 1.25;">
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Notes
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          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      unaudited pro forma condensed consolidated financial statements attached as
      Exhibit 99.2 to this Form 8-K are presented for illustrative purposes only
      and
      are not necessarily indicative of the consolidated financial position or results
      of operations for future periods or the financial position or results of
      operations that actually would have been realized had Innovative and AcXess
      been
      a combined company during the specified periods. The unaudited pro forma
      condensed consolidated financial statements, including the related notes, are
      qualified in their entirety by reference to, and should be read in conjunction
      with, the historical consolidated financial statements and related notes of
      Innovative included in its Form 10-KSB filed with the Securities and Exchange
      Commission on December 31, 2006 and the historical financial statements of
      AcXess included herein as Exhibit 99.1. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      unaudited pro forma condensed consolidated financial statements give effect
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      accounting. The pro forma condensed consolidated financial statements are based
      on the respective historical financial statements of Innovative and AcXess.
      The
      unaudited pro forma condensed consolidated financial information has been
      prepared on the basis of assumptions described in the notes to the unaudited
      pro
      forma condensed consolidated financial statements. In the opinion of management,
      all adjustments necessary to present fairly this unaudited pro forma condensed
      consolidated financial information have been made. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
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      OF THIS PAGE LEFT BLANK]</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br>
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        <div id="FTR">
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">28</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Current Report on Form 8-K may contain, among other things, certain
      forward-looking statements within the meaning of the Private Securities
      Litigation Reform Act of 1995, including, without limitation, statements with
      respect to the Company&#8217;s plans, objectives, expectations and intentions and
      other statements identified by words such as may, could, would, should,
      believes, expects, anticipates, estimates, intends, plans or similar
      expressions. These statements are based upon the current beliefs and
      expectations of the Company&#8217;s management and are subject to significant risks
      and uncertainties. Actual results may differ from those set forth in the
      forward-looking statements. These forward-looking statements involve certain
      risks and uncertainties that are subject to change based on various factors
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
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      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
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            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
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                SOFTWARE TECHNOLOGIES, INC.</font></div>
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          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:&#160;
                June 30, 2006</font></div>
            </td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Anthony
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                F. Zalenski</font></div>
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            <td>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer</font></div>
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      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>INDEX
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div align="left">
        <table border="0" cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="12%">
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              </td>
              <td align="left" valign="top" width="88%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="12%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Number</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
              </td>
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            <tr>
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock
                  Exchange Agreement by and between Innovative Software Technologies,
                  Inc.,
                  AcXess, Inc., the Shareholders of AcXess, Inc., and Anthony F.
                  Zalenski,
                  acting as the Shareholder&#8217;s Agent, dated as of June 26,
                  2006.</font></div>
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              <td align="left" valign="top" width="88%">&#160;</td>
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            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
                  to the Articles of Incorporation of Innovative Software Technologies,
                  Inc.*</font></div>
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            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
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            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Articles
                  of Incorporation of Innovative Software Technologies, Inc., as
                  amended.*</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
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            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
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                  of Designation of the Series A Preferred Stock of Innovative Software
                  Technologies, Inc. (incorporated by reference from Exhibit 2.2
                  to the
                  Company's Current Report on Form 8-K/A filed March 14,
                  2002).</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.4</font></div>
              </td>
              <td align="left" valign="top" width="88%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                  of Designation of the Series B Preferred Stock of Innovative Software
                  Technologies, Inc.*</font></div>
              </td>
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            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
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            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.5</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By-laws
                  of Innovative Software Technologies, Inc. (incorporated by reference
                  from
                  Exhibit 3(b) to the Company's Annual Report on Form 10-KSB for
                  the year
                  ended December 31, 1999). </font></div>
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            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.6</font></div>
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              <td align="left" valign="top" width="88%">
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                  of Amendment to Articles of Incorporation filed on August 8,
                  2001</font></div>
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              <td align="left" valign="top" width="88%">&#160;</td>
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              <td align="left" valign="top" width="88%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Specimen
                  Certificate of Common Stock (incorporated by reference from Exhibit
                  4(a)
                  to the Company's Annual Report on Form 10-KSB for the year ended
                  December
                  31, 1999).</font></div>
              </td>
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            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
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              <td align="left" valign="top" width="12%">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                  Indemnification Agreement dated August 14, 2003 between Innovative
                  Software Technologies, Inc. and Peter M. Peterson***</font></div>
              </td>
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            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
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            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2</font></div>
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              <td align="left" valign="top" width="88%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                  Indemnification Agreement dated August 4, 2003 between Innovative
                  Software
                  Technologies, Inc. and William E. Leathem***</font></div>
              </td>
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            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
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                  Agreement dated August 1, 2004 between Innovative Software Technologies,
                  Inc. and Christopher J. Floyd.*****</font></div>
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            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td align="left" valign="top" width="88%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Audited
                  Financial Statements of AcXess, Inc. for the year ended as of March
                  31,
                  2006.</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="12%">&#160;</td>
              <td align="left" valign="top" width="88%">&#160;</td>
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            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="12%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.2</font></div>
              </td>
              <td align="left" valign="top" width="88%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
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                  for
                  Innovative Software Technologies, Inc. for the year ended March
                  31,
                  2006</font></div>
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            <tr bgcolor="white">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
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              <td align="left" valign="top" width="88%">&#160;</td>
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                  on Form
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                  number 10.1.</font></div>
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{"company-data": {"conformed-name": "INNOVATIVE SOFTWARE TECHNOLOGIES INC", "cik": "0001084047", "assigned-sic": "7389", "irs-number": "954691878", "state-of-incorporation": "CA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-27465", "film-number": "06938308"}, "business-address": {"street1": "5072 NORTH 300 WEST", "city": "PROVO", "state": "UT", "zip": "84604", "phone": "801-371-0755"}, "mail-address": {"street1": "5072 NORTH 300 WEST", "city": "PROVO", "state": "UT", "zip": "84604"}}
Unassociated Document
UNITED
      STATES
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): June 26, 2006
INNOVATIVE
      SOFTWARE TECHNOLOGIES, INC.
(Exact
      name of registrant as specified in its charter)
California
000-1084047
95-4691878
(State
                or other jurisdiction of incorporation)
(Commission
                File Number)
(I.R.S.
                Employer Identification No.)
3998
      FAU Boulevard,
Bldg
      1-210,
Boca
      Raton, FL
/
33431
(Address
      of Principal Executive Offices/Zip Code)
(561)
      417-7250
(Registrant's
      telephone number, including area code)
1413
      South Howard Avenue, Suite 220, Tampa, FL / 33606
(Former
      name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (
see
General
      Instruction A.2. below):
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting material
      pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act
(17
      CFR
      240.14d-2(B))
o
Pre-commencement
      communications pursuant to Rule 13e-4(c)) under the Exchange Act
(17
      CFR
      240.13e-4(c))
1
Item
      1.01 Entry into a Material Definitive Agreement.
Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.
Item
      2.01 Completion of Acquisition or Disposition of Assets.
Overview
On
      June
26,
      2006,
      Innovative Software Technologies, Inc., a California corporation ("Innovative"
or the "Company"), completed the acquisition of AcXess, Inc., a Florida
      corporation ("AcXess"), in a stock exchange transaction (the "Transaction")
      pursuant to a Stock Exchange Agreement by and between Innovative, 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
      a wholly owned subsidiary of the Company.
Pursuant
      to the Exchange Agreement, the shareholders of AcXess exchanged 100% of the
      outstanding shares of capital stock of AcXess
for
      an
      aggregate of 11,000,000 shares of common stock of the Company
,
      $.001
      par value per share (the "Common Stock"). The shares of Common Stock issued in
      the Transaction were sold and issued pursuant to the exemption from the
      registration requirements of the Securities Act of 1933, as amended (the "Act")
      provided under Section 4(2) of the Act, as such sales and issuances did not
      involve any public offering, were made without general solicitation or
      advertising, and each purchaser had access to all relevant information necessary
      to evaluate the investment and represented to Innovative that the securities
      were being acquired for investment.
Concurrent
      with the closing of the Transaction, Innovative sold convertible promissory
      notes to four accredited investors in the aggregate principal amount of
      approximately $430,000 (the "Offering"). The convertible promissory notes have a
      term of six months and are convertible into shares of Common Stock of the
      Company in a future qualified financing at a 30% discount to the effective
      price
      per share paid in the future qualified financing. In the Offering, Innovative
      also issued to the purchasers of the notes warrants to purchase an aggregate
      of
      2,120,000 shares of Common Stock at an exercise price of $0.05, subject to
      adjustment. These warrants will expire in 2011. The investors in the Offering
      were granted piggyback registration rights with respect to the shares issuable
      upon the conversion of the notes or the exercise of the warrants in accordance
      with a registration rights agreement. Also in conjunction with the Offering,
      Innovative exchanged an outstanding promissory note to an investor in the amount
      of $100,000 plus accrued interest for a promissory note with the above terms
      for
      $100,000, and interest accrued to date on the pre-existing note was forgiven
      by
      the investor and credited to other income. The notes and warrants issued in
      the
      Offering, as well as the shares of Common Stock issuable pursuant thereto,
      were
      sold and issued pursuant to the exemption from the registration requirements
      of
      the Act provided under Section 4(2) of the Act and Rule 506 promulgated
      thereunder, as such sales and issuances did not involve any public offering,
      were made without general solicitation or advertising, and each purchaser was
      an
      accredited investor with access to all relevant information necessary to
      evaluate the investment and represented to Innovative that the securities were
      being acquired for investment.
In
      connection with the Offering, Innovative paid to the placement agents in the
      Offering (i) a cash fee equal to eight (8%) percent of the gross cash receipts
      in the Offering and (ii) an agreement to receive warrants (the "Agent Warrants")
      to purchase up to that number of shares of Common Stock equal to ten (10%)
      percent of the shares of Common Stock issued by the Company upon conversion
      of
      the promissory notes issued in the Offering. The Agent Warrants are exercisable
      for a two year period following the date of issuance at a price per share equal
      to $0.05 per share.
2
Immediately
      after the closing of the Transaction, Innovative had 67,455,379 shares of Common
      Stock issued and outstanding, with holders of the outstanding shares of Common
      Stock immediately prior to the Closing holding approximately 84% of the
      outstanding Common Stock, and the former AcXess common shareholders holding
      approximately 16% of the outstanding Common Stock. In addition, the Company
      intends to offer the holders of $175,115 in AcXess promissory notes the
      opportunity to convert their notes into shares of the Company at $0.04 per
      share, the last sales price per share of the Company's Common Stock on the date
      of Closing. Should the Company make such an offer and should all note holders
      accept such an offer, approximately 4,377,872 additional shares of Common Stock
      of the Company would be issued and the total number of shares outstanding would
      then be 71,833,251.
In
      connection with the Transaction, Anthony F. Zalenski was appointed to our Board
      of Directors as Chairman and William E. Leathem resigned as director. As a
      result, Innovative's board currently comprises Mr. Zalenski and Pete M.
      Peterson, our former Chairman. In addition, Mr. Peterson resigned as Chief
      Executive Officer and Mr. Zalenski accepted the position of Chief Executive
      Officer of the Company. Christopher J. Floyd remains as Chief Financial Officer
      and Secretary of Innovative.
Following
      FAS 141, as governing and operating control of the combined entity is under
      Mr.
      Zalenski, AcXess is deemed to be the purchaser in the Transaction for financial
      reporting purposes. Therefore, reverse acquisition accounting applies whereby
      AcXess is deemed to have issued its common stock for the net assets or
      liabilities of Innovative accompanied by a recapitalization of AcXess. For
      accounting purposes, AcXess is treated as the continuing reporting entity.
The
      foregoing description of the Exchange Agreement is qualified in its entirety
      by
      the full text of the Exchange Agreement filed as Exhibit 2.1 attached to this
      report hereto.
FORM
      10-SB DISCLOSURE
Prior
      to
      closing of the Transaction, Innovative was a "shell company" as such term is
      defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended,
      (the "Exchange Act") immediately prior to the Transaction. Accordingly, set
      forth below is the information that would be required if Innovative were filing
      a general form for registration of securities on Form 10-SB under the Exchange
      Act.
EXPLANATORY
      NOTE
Unless
      otherwise indicated or the context otherwise requires, all references below
      in
      this Current Report on Form 8-K to "we," "us," "Innovative," and the "Company"
      are to Innovative Software Technologies, Inc. a California corporation, together
      with its wholly-owned subsidiaries.
DESCRIPTION
      OF BUSINESS
Innovative
      was incorporated in the State of California in May 1998. Immediately prior
      to
      the Transaction, the Company had nominal assets and revenues and no business
      operations. The Company's strategy was to enter into a business combination
      transaction with an entity that has 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, the Company's and its subsidiaries' primary business
      consisted of Internet sales and marketing.
3
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 a wholly owned subsidiary of the Company.
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 (the
      "Settlement Agreement") 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 filed an action against the Company
      for breach of the Settlement Agreement related to certain reserve liabilities
      (see "Legal Proceedings" below).
On
      August
      4, 2004, Peter M. Peterson replaced Douglas S. Hackett as our Chief Executive
      Officer (with Mr. Hackett remaining as President), and Christopher J. Floyd
      was
      elected as our Chief Financial Officer. In October 2004 we relocated our
      corporate headquarters from Kansas City, Missouri, to Tampa, Florida. Effective
      April 7, 2005, Mr. Hackett resigned as President and as a director of the
      Company.
On
      April
      20, 2005, we entered into a stock purchase agreement with Mr. 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 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 the Company 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 are 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
As
      of
      June 26, 2006 Innovative and its subsidiaries employed a total of 1 person
      who
      is not represented by a labor union.
4
Market
      Strategy
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. "Business
      Continuity" products and services are an advanced form of disaster recovery
      solutions for electronic data backup wherein the data and/or applications are
      available immediately upon failure through means of connectivity to remote
      server locations. We believe that the North American SME market for BC services
      (defined as companies with 50 to 5,000 employees) is underserved. Furthermore,
      we believe that various technologies have matured to a point where the SME
      market can now be supplied with robust BC services which were previously only
      available to large corporations and at substantial cost.
The
      founders of AcXess, Anthony F. Zalenski, and Thomas J. Elowson, were approached
      by senior executives of Citrix Systems, Inc. (NASD: CTXS) who offered their
      support for AcXess to develop, test, and market a BC solution. In response,
      AcXess developed its "AcX Application Continuity Xchange"™ platform based on
      Citrix technology combined with AcXess' own proprietary software and
      methodologies. Citrix has over 35,000 client companies the US alone and more
      than 180,000 worldwide. Management has identified approximately 7,000 Citrix
      mid-market client companies as its initial target market in North
      America.
In
      May
      2005 AcXess signed a Services Partner Agreement with SAP Business One to offer
      the AcXess BC service to all SAP Business One customers in North America through
      their exclusive, invitation only business partner network.
Products/Services
AcXess
      service offerings consist of business continuity and application availability
      services for single or multi-application small to medium enterprise-level hosted
      environments. The AcXess Application Continuity Xchange™ offers seamless web
      access to the mission critical applications that employees need during any
      IT
      downtime with their business. These mission critical business applications
      are
      backed up and mirrored in a secure data center with tier-one network backbone
      access. Application data and all relevant databases are replicated 24 hours
      a
      day, 7 days a week, 365 days a year. Tiered pricing allows for shorter
      increments of Recovery Time Objectives (RTO) based on the needs of the customer.
      AcXess uses virtual server technology along with its intellectual property
      through the AcX Framework™, resulting in an inexpensive and efficient business
      continuity platform. The Company signed its first customer agreement in May
      2006
      and currently has two customers.
The
      Application Continuity Xchange
(TM)
'
for
      Enterprise Systems enables customers to:
·
Resume
      serving customers quickly without waiting to restore network functionality.
      Instead, displaced workers access their key applications and data securely
      over
      the Internet - even from a home dial-up connection.
·
Relieve
      their IT staff of the time, burden and expense of reconfiguring each application
      and database after any IT downtime. Applications are mirrored and re-distributed
      to client machines from a secure remote location.
5
·
Gain the
      flexibility of allowing workers to use any PC, or browser-based mobile device
      from any location, even over low-bandwidth connections. The AcXess remote
      server-based solution allows a consistent user interface that can be delivered
      and accessed from anywhere.
·
Gain
      a
      turnkey managed BC solution for a fixed monthly service fee at a substantially
      reduced Total Cost of Ownership (TCO) comparable to existing in-house
      solutions.
Potential
      Future Products and Services
AcXess
      has conducted basic research and development as well as business planning for
      the rollout of several future products including: an Email Xchange Gateway™ for
      customers who desire an automated process for email backup; AcXERA™, a
      replication appliance for on-site backup for complex enterprises; and a SOX/ICD™
business service for clients that fall under reporting requirements of the
      Sarbanes-Oxley Act ("SOX").
Research
      and Development
The
      Company's Application Continuity Xchange
(TM)
'
(AcX™)
      technology platform has been designed and developed over the past year. The
      Company intends to continue to pursue R&D for continued development of new
      products and services. However, any future R&D will be dependent on our
      ability to raise funds via future financings (see "liquidity"
below).
Government
      Regulation
The
      Company expects to service Clients that fall under both SOX and HIPPA compliance
      and, as such, has developed, and is currently developing, certain features
      and
      controls into our current AcX infrastructure design. In addition, the Company's
      data center partner is fully SOX and HIPPA compliant.
Competition
As
      a
      result of the overall market opportunity, companies have emerged to provide
      continuity services. The competitive landscape includes both multi-billion
      dollar multi-faceted professional services companies as well as emerging
      competitive carriers and regional VARs. Companies offering full enterprise
      level
      professional services include EDS, Comdisco and Sungard. Competitive carriers
      offering some function-specific level of continuity services include Avaya.
      ASP's and software companies offering full time application hosting, or
      application specific hosting include Salesforce.com and Mi8. Companies offering
      backup data storage services on tape and disk include Iron mountain, E-vault
      & Live vault. The principal competitive factors in the market include price,
      quality of service, breadth of service, customer service, applications
      supported, capacity, reliability and availability.
The
      following is a summary of the Company's direct and indirect competitors:
SunGard
      Availability Systems
SunGard
      provides software and processing solutions for financial services, higher
      education and the public sector and also provides customers with a range of
      managed IT services, including application and data center outsourcing and
      managed services.
6
Avaya
Avaya
      Inc. designs, builds and manages communications networks for over one million
      businesses worldwide and provides secure Internet Protocol telephony systems
      and
      communications software applications and services. Business Continuity solutions
      are sold through its professional services organization.
SalesForce.com
SalesForce.com
      provides primarily Customer Relationship Management applications as a service.
      Customers who use the salesforce.com CRM software are already running this
      aspect of their business offsite, and have no specific need for a direct BC
      solution for this application. Management sees SalesForce.com as an indirect
      competitor.
Mi8
Mi8's
      core mission is to transform Microsoft Exchange, a sophisticated messaging
      and
      collaboration system, into easy-to-use subscription services. Mi8 functions
      as
      an extension of a company's Information Technology team, managing and monitoring
      sophisticated messaging and collaboration infrastructure. To the extent Mi8
      hosts the exchange messaging function for
companies
      off-site, they are also providing continuity & availability services to
      their customers, although Mi8 does not compete directly on
      continuity.
EVault
EVault
      Inc. provides online backup and recovery solutions for secure data backup and
      recovery of critical business applications. EVault's disk-based backup software
      design and certified processes automate the customer's own data protection
      processes.
LiveVault
LiveVault
      provides disk-to-disk backup and recovery applications for small and mid- sized
      businesses and enterprises with remote offices. LiveVault's products automate
      and integrate data backup, offsite protection, archiving and recovery. LiveVault
      was recently purchased by Iron Mountain.
Iron
      Mountain
Established
      in 1951, Iron Mountain stores and manages records, media and electronic data
      and
      has been acquiring other companies in the disaster recovery and business
      continuity arena.
Intellectual
      Property
The
      Company intends to submit in the future one or more patent applications relating
      to certain aspects of its technology, but there can be no assurance that the
      Company will be able to obtain patent protection for any of its technology.
      The
      Company owns the registered trademark "Down Proof Your Business" but has not
      filed trademark registrations for any other marks and may choose not to do
      so.
Employees
Effective
      immediately after the closing of the Transaction, we had a total of seven (7)
      full time employees. None of our employees are represented by a trade union.
      We
      anticipate hiring additional full time employees within the next twelve months.
Customers
The
      Company signed its first customer agreement in May 2006 and currently has two
      customers.
7
Sales,
      Marketing, Distribution
The
      Company's sales and marketing efforts are primarily focused on the well-defined
      Citrix and SAP SME market with an initial emphasis on North America. The Company
      believes this market has the highest internal costs, and greatest need of
      business continuity services, and therefore provides the greatest opportunity
      for the Company to offer significant cost savings and quality of service to
      Citrix and SAP customers.
To
      reach
      this segment, the Company intends to hire territory managers to run BC
      engagements with the Citrix ERM's (Enterprise Relationship Managers) and Citrix
      Consulting Services professionals. Territory managers will be responsible for
      all initial customer contact, coordination of Business Impact Analysis studies
      with Citrix and other consulting services, pilot programs, and resulting BC
      service contracts. They will also be responsible for up-selling into each
      account as new services are made available.
Our
      channel strategy leverages strategic relationships with Citrix and its reseller
      partner companies who already sell enterprise level solutions to the expanding
      75 million-user Citrix market.
Insurance
      Matters
We
      intend
      to bind a general business liability policy and an errors and omission policy
      by
      mid July 2006. We also intend to bind a directors and officers liability
      coverage at that time. We believe that our insurance program provides adequate
      coverage for all reasonable risks associated with operating our
      business.
8
MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Introduction
Innovative
      had no revenue from operations since the sale of its Triad Media, Inc.
      subsidiary in April 2005. Following the Transaction, AcXess' operations shall
      constitute principally all of Innovative's operations. AcXess was founded on
      January 12, 2005 and had minimal operations in the first quarter of 2005.
      AcXess' fiscal year ends March 31. The following discussion and analysis
      summarizes the significant factors affecting AcXess' results of operations for
      its fiscal year ended March 31, 2006 (fiscal year 2006) and Innovative's and
      AcXess' combined financial liquidity and capital resources. This discussion and
      analysis should be read in conjunction with the financial statements and notes,
      and pro forma financial statements, included with this Report.
Results
      of Operations
Revenues.
      Revenues were $-0- in fiscal 2006.
Operating
      Expenses. Total operating expenses were $473,542 in fiscal 2006. Principal
      expenditures included officer stock compensation of $191,494, consulting
      expenses primarily for the development of products and services, and for
      business planning, of $185,871, and rent of $17,735.
Loss
      from
      Operations. Loss from operations for fiscal 2006 was $473,542.
Interest
      Expense. Interest expense for fiscal 2006 was $13,809. The interest expense
      was
      attributable to interest on notes payable to vendors ($2,640) and interest
      imputed on the conversion of debt due to an officer to equity which conversion
      price ($0.033 per share) was exceeded by the fair market value ($0.05 per share)
      as established by AcXess' accounting policy.
Net
      Loss.
      Net loss for fiscal 2006 was $487,351.
Impact
      of Inflation
Inflation
      has not had a material effect on our results of operations.
Financial
      Liquidity and Capital Resources
In
      connection with the Offering, Innovative received gross proceeds of $430,000
      from the sale of convertible notes, and we paid the selling agent in the
      Offering a cash fee of $44,400, comprising $10,000 in expense reimbursement
      and
      $34,400 as a commission.
We
      expect
      that the remaining proceeds from the Offering and cash flows from operations
      will not be sufficient to pay our other existing obligations and obligations
      as
      they arise for the next twelve months for will only be sufficient for the next
      three to four months. Management therefore intends to immediately pursue further
      fund raising activities. However, there can be no assurance we will be
      successful in raising additional funds and in the event we are not able to
      increase working capital we may need to curtail our business activities.
9
Off
      Balance Sheet Arrangements
Not
      applicable.
Critical
      Accounting Policies
Our
      significant accounting policies are more fully described in Note 2 to the
      audited financial statements of AcXess. 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, liabilities, revenues and expenses, and the related
      disclosures of contingent assets and liabilities. Actual results could differ
      from those estimates under different assumptions or conditions.
RISK
      FACTORS
Investing
      in our Common Stock involves a high degree of risk. Prospective investors should
      carefully consider the following risks and uncertainties and all other
      information contained or referred to in this Current Report on Form 8-K before
      investing in our Common Stock. The risks and uncertainties described below
      are
      not the only ones facing us. Additional risks and uncertainties that we are
      unaware of, or that we currently deem immaterial, also may become important
      factors that affect us. If any of the following risks occur, our business,
      financial condition or results of operations could be materially and adversely
      affected. In that case, the trading price of our Common Stock could decline,
      and
      you could lose all of your investment.
Risks
      Related To Our Business
We
      have not applied for patents on our proprietary technology and rely upon trade
      secret protection to protect our intellectual property; it may be difficult
      and
      costly to protect our proprietary rights and we may not be able to ensure their
      protection.
At
      this
      time we have not applied for patent protection for our proprietary technology
      and therefore cannot rely on court action to protect our intellectual property.
      Although management intends to apply for patents where applicable, the Company
      currently relies on trade secrets. Trade secrets are difficult to protect and
      while we use reasonable efforts to protect our trade secrets, we cannot assure
      that our employees, consultants, contractors or scientific advisors will not,
      unintentionally or willfully, disclose our trade secrets to competitors or
      other
      third parties. In addition, courts outside the United States are sometimes
      less
      willing to protect trade secrets. Moreover, our competitors may independently
      develop equivalent knowledge, methods and know-how. If we are unable to defend
      our trade secrets from illegal use, or if our competitors develop equivalent
      knowledge, it could have a material adverse effect on our business.
Any
      infringement of our proprietary rights could result in significant litigation
      costs, and any failure to adequately protect our proprietary rights could result
      in our competitors' offering similar products, potentially resulting in loss of
      a competitive advantage and decreased revenue. Existing patent, copyright,
      trademark and trade secret laws afford only limited protection. In addition,
      the
      laws of some foreign countries do not protect our proprietary rights to the
      same
      extent as do the laws of the United States. Therefore, we may not be able to
      protect our proprietary rights against unauthorized third party use. Enforcing
      a
      claim that a third party illegally obtained and is using our trade secrets
      could
      be expensive and time consuming, and the outcome of such a claim is
      unpredictable. Litigation may be necessary in the future to enforce our
      intellectual property rights, to protect our trade secrets or to determine
      the
      validity and scope of the proprietary rights of others. This litigation could
      result in substantial costs and diversion of resources and could materially
      adversely affect our future operating results.
10
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.
To
      date we have had significant operating losses, and an accumulated deficit and
      have had limited revenues and do not expect to be profitable for at least the
      foreseeable future, and cannot predict when we might become profitable, if
      ever.
We
      have
      been operating at a loss since our inception, and we expect to continue to
      incur
      substantial losses for the foreseeable future. Net loss for the fiscal year
      ended March 31, 2006 was $487,351 resulting in an accumulated deficit of
      $487,351. We had no revenue for the fiscal year ended March 31, 2006. Further,
      we may not be able to generate significant revenues in the future. In addition,
      we expect to incur substantial operating expenses in order to fund the expansion
      of our business. As a result, we expect to continue to experience substantial
      negative cash flow for at least the foreseeable future and cannot predict when,
      or even if, we might become profitable.
Going
      concern opinions
The
      audited financial statements for Innovative for the year ended December 31,
      2005
      and the audited financial statements for AcXess for the year ended March 31,
      2006, each included an explanatory footnote that such financial statements
      were
      prepared assuming that Innovative and AcXess, respectively, would continue
      as a
      going concern.
We
      are dependent upon future financings to fund our operations.
We
      have
      had no revenues and as of March 31, 2006 we had incurred a cumulative net loss
      of $487,351. As of June 27, 2006 we had approximately $230,000 in available
      funds. We are therefore wholly dependent upon the net proceeds of a future
      financing to have working capital to continue operations.
Our
      management will have broad discretion in the application of the net proceeds
      of
      future financings.
Management
      will have broad discretion to adjust the application and allocation of the
      net
      proceeds of any future financings in order to address changed circumstances
      and
      opportunities. As a result of the foregoing, our success will be substantially
      dependent upon the discretion and judgment of our management with respect to
      the
      application and allocation of the net proceeds of any such offerings.
11
We
      lack sales, marketing and distribution capabilities and depend on third parties
      to market our services.
We
      do not
      have personnel dedicated solely to sales and marketing of our services and
      therefore we must rely primarily upon third party distributors to market and
      sell our services. These third parties may not be able to market our product
      successfully or may not devote the time and resources to marketing our services
      that we require. We also rely upon third party carriers to distribute and
      deliver our services. As such, our deliveries are to a certain extent out of
      our
      control. If we choose to develop our own sales, marketing or distribution
      capabilities, we will need to build a marketing and sales force with technical
      expertise and with supporting distribution capabilities, which will require
      a
      substantial amount of management and financial resources that may not be
      available. If we or a third party are not able to adequately sell and distribute
      our product, our business will be materially harmed.
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.
If
      we are unable to establish sufficient sales and marketing capabilities or enter
      into and maintain appropriate arrangements with third parties to sell, market
      and distribute our services, our business will be harmed.
We
      have
      limited experience as a company in the sale, marketing and distribution of
      our
      products and services. We depend upon third parties to sell our product both
      in
      the United States and internationally. To achieve commercial success, we must
      develop sales and marketing capabilities and enter into and maintain successful
      arrangements with others to sell, market and distribute our products.
If
      we are
      unable to establish and maintain adequate sales, marketing and distribution
      capabilities, independently or with others, we may not be able to generate
      product revenue and may not become profitable. If our current or future partners
      do not perform adequately, or we are unable to locate or retain partners, as
      needed, in particular geographic areas or in particular markets, our ability
      to
      achieve our expected revenue growth rate will be harmed.
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 therefore. In addition we compete with several large companies in
      the
      BC 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 competitive position is based principally on our intellectual
      property developed with Citrix technology as well as our relationships in the
      BC
      industry. 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. See "Description of Business - Competition."
12
We
      may not be able to manage our growth effectively, which could adversely affect
      our operations and financial performance.
The
      ability to manage and operate our business as we execute our development and
      growth strategy will require effective planning. Significant rapid growth could
      strain our internal resources, and other problems that could adversely affect
      our financial performance. We expect that our efforts to grow will place a
      significant strain on our personnel, management systems, infrastructure and
      other resources. Our ability to manage future growth effectively will also
      require us to successfully attract, train, motivate, retain and manage new
      employees and continue to update and improve our operational, financial and
      management controls and procedures. If we do not manage our growth effectively,
      our operations could be adversely affected, resulting in slower growth and
      a
      failure to achieve or sustain profitability.
Our
      future success depends on retaining our existing key employees and hiring and
      assimilating new key employees. The loss of key employees or the inability
      to
      attract new key employees could limit our ability to execute our growth
      strategy, resulting in lost sales and a slower rate of
      growth.
Our
      success depends in part on our ability to retain key employees including our
      executive officers. Following the Transaction we do not have any employment
      agreements with our executives. Also, we do not currently carry "key man"
      insurance on our executives but intend to obtain it in the near future. It
      would
      be difficult for us to replace any one of these individuals. In addition, as
      we
      grow we may need to hire additional key personnel. We may not be able to
      identify and attract high quality employees or successfully assimilate new
      employees into our existing management structure.
We
      cannot predict the impact of our proposed marketing efforts. If these efforts
      are unsuccessful we may not earn enough revenue to become
      profitable.
Our
      success will depend on investing in marketing resources. Our proposed business
      plan includes considerable outsourcing of marketing as well as dependence on
      channel partners unaffiliated with the Company. Any marketing plans developed
      may include attending trade shows and making private demonstrations, advertising
      and promotional materials, advertising campaigns in both print and broadcast
      media, and advertising/promotion-related operations. We cannot give any
      assurance that these marketing efforts will be successful. If they are not,
      revenues may be insufficient to cover our fixed costs and we may not become
      profitable.
We
      expect to incur additional losses in the future.
We
      expect
      to incur significant operating losses in the near future. We intend to use
      a
      portion of the net proceeds from the Offering for sales and marketing, research
      and development and operating expenses. We will continue to incur significant
      expenses. We cannot predict when, if ever, we will operate
      profitably.
We
      will require significant additional capital to support business growth, and
      this
      capital might not be available.
We
      believe that the net proceeds from the Offering, after repayment of our debt
      obligations, will satisfy our current capital needs for only two (2) to three
      (3) months and we intend to raise substantial additional capital. Such capital
      might be raised through public or private financings, as well as borrowings
      and
      other sources. We do not currently have any commitments or immediate plans
      with
      respect to acquisition financing, and there can be no assurance that additional
      or sufficient financing will be available, or, if available, that it will be
      available on acceptable terms. The failure to obtain required financing by
      us
      when needed could result in us being required to substantially scale back our
      then operations.
13
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.
We
      may incur increased legal, accounting and other expenses as a result of having
      to assimilate AcXess into our business.
Following
      the Transaction, we will incur significant legal, accounting and other expenses
      in connection with bringing AcXess in compliance with rules and regulations
      applicable to public companies that AcXess did not incur as a private company
      prior to the Transaction. In addition, if our Common Stock is eventually listed
      on NASDAQ or another major market, we will incur further additional listing
      and
      compliance expenses. We expect these new rules and regulations to increase
      our
      legal and financial compliance costs and to make some activities more
      time-consuming and costly. In addition, we will incur additional costs
      associated with our public company reporting requirements. We also expect these
      new rules and regulations to make it more difficult and more expensive for
      us to
      obtain director and officer liability insurance and we may be required to accept
      reduced policy limits and coverage or incur substantially higher costs to obtain
      the same or similar coverage. As a result, it may be more difficult for us
      to
      attract and retain qualified persons to serve on our board of directors or
      as
      executive officers.
Risks
      Related To Our Common Stock
The
      price of our Common Stock may fluctuate significantly, which could lead to
      losses for stockholders.
The
      stock
      of public companies can experience extreme price and volume fluctuations, which
      can be unrelated or out of proportion to the operating performance of such
      companies. We expect our stock price will be subject to similar volatility.
      Any
      negative change in the public's perception of the prospects of our company or
      companies in our market could also depress our stock price, regardless of our
      actual results. Factors affecting the trading price of our common stock may
      include:
Ø
variations
                in our operating results;
Ø
announcements
                of technological innovations, new products or product enhancements,
                strategic alliances or significant agreements by us or by our competitors;
Ø
recruitment
                or departure of key personnel;
Ø
litigation,
                legislation, regulation or technological developments that adversely
                affect our business;
Ø
changes
                in the estimates of our operating results or changes in recommendations
                by
                any securities analyst that elect to follow our common stock; and
14
Ø
market
                conditions in our industry, the industries of our customers and the
                economy as a whole.
If
      securities analysts do not publish research or reports about our business or
      if
      they downgrade our stock, the price of our stock could
      decline.
The
      trading market for our Common Stock may be affected by research and reports
      that
      industry or financial analysts may in the future publish about us or our
      business. We will not control these analysts. There are many large,
      well-established publicly traded companies active in our industry and market,
      which will mean it will be less likely that we receive widespread, if any,
      analyst coverage. Furthermore, if one or more of the analysts who in the future
      elect to cover us, downgrade our stock, our stock price would likely decline
      rapidly. If one or more of these analysts cease coverage of our Company, we
      could lose visibility in the market, which in turn could cause our stock price
      to decline.
We
      have no intention to pay dividends on our Common Stock.
For
      the
      foreseeable future, we intend to retain any remaining future earnings, if any,
      to finance our operations and do not anticipate paying any cash dividends with
      respect to our Common Stock. As a result, investors should not expect to receive
      dividends on any of the Shares purchased by them, for a long period of time,
      if
      ever.
Our
      Common Stock is quoted on the OTC Bulletin Board, and there may be a limited
      trading market for our Common Stock.
Our
      Common Stock is quoted on the OTC Bulletin Board. There is extremely limited
      and
      sporadic trading of our Common Stock, and no assurance can be given, when,
      if
      ever, an active trading market will develop or, if developed, that it will
      be
      sustained. As a result, investors in our Common Stock may be unable to sell
      their shares.
If
      any registration statement that we file is declared effective, sales of shares
      of our Common Stock on the open market could reduce the market price of our
      Common Stock.
Our
      Common Stock has limited and sporadic trading. Sales of shares of the Common
      Stock in the open market could reduce any market price of the Common Stock,
      if a
      market should develop. An absence of a market for the Common Stock would make
      it
      more difficult for the Company to raise additional funds through an equity
      financing. Additionally, if any future registration statement for the Shares
      is
      filed and becomes effective, the number of shares of Common Stock eligible
      for
      public sale will increase, which could decrease any such market price, if a
      market were to develop for the shares.
Our
      Common Stock will be subject to Penny Stock Rules, which could affect
      trading.
Broker-dealer
      practices in connection with transactions in "penny stocks" are regulated by
      certain rules adopted by the SEC. Penny stocks generally are equity securities
      with a price of less than $5.00 (other than securities registered on certain
      national securities exchanges or quoted on the NASDAQ Stock Market if current
      price and volume information with respect to transactions in such securities
      is
      provided by the exchange or system). The rules require that a broker-dealer,
      prior to a transaction in a penny stock not otherwise exempt from the rules,
      deliver a standardized risk disclosure document that provides information about
      penny stocks and the risks in the penny stock market. The broker-dealer also
      must provide the customer with current bid and offer quotations for the penny
      stock, the compensation of the broker-dealer and its salesperson in connection
      with the transaction and monthly account statements showing the market value
      of
      each penny stock held in the customer's account. In addition, the rules
      generally require that prior to a transaction in a penny stock the broker-dealer
      must make a special written determination that the penny stock is a suitable
      investment for the purchaser and receive the purchaser's written agreement to
      the transaction. These disclosure requirements may have the effect of reducing
      the liquidity of penny stocks. If our securities become subject to the penny
      stock rules, investors in our Common Stock may find it more difficult to sell
      our shares.
15
CAUTIONARY
      NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This
      Current Report on Form 8-K contains "forward-looking statements" that include
      information relating to future events, future financial performance, strategies,
      expectations, competitive environment, regulation and availability of resources.
      These forward-looking statements include, without limitation, statements
      regarding: proposed new services; our expectations concerning litigation,
      regulatory developments or other matters; statements concerning projections,
      predictions, expectations, estimates or forecasts for our business, financial
      and operating results and future economic performance; statements of
      management's goals and objectives; and other similar expressions concerning
      matters that are not historical facts. Words such as "may," "will," "should,"
"could," "would," "predicts," "potential," "continue," "expects," "anticipates,"
"future," "intends," "plans," "believes" and "estimates," and similar
      expressions, as well as statements in future tense, identify forward-looking
      statements.
Forward-looking
      statements should not be read as a guarantee of future performance or results,
      and will not necessarily be accurate indications of the times at, or by which,
      that performance or those results will be achieved. Forward-looking statements
      are based on information available at the time they are made and/or management's
      good faith belief as of that time with respect to future events, and are subject
      to risks and uncertainties that could cause actual performance or results to
      differ materially from those expressed in or suggested by the forward-looking
      statements. Important factors that could cause these differences include, but
      are not limited to other factors discussed under the headings "Risk Factors" and
"Description of Business."
Forward-looking
      statements speak only as of the date they are made. You should not put undue
      reliance on any forward-looking statements. We assume no obligation to update
      forward-looking statements to reflect actual results, changes in assumptions
      or
      changes in other factors affecting forward-looking information, except to the
      extent required by applicable securities laws. If we do update one or more
      forward-looking statements, no inference should be drawn that we will make
      additional updates with respect to those or other forward-looking
      statements.
DESCRIPTION
      OF PROPERTY
Facilities
The
      Company leases approximately 3,200 square feet of office space, as well as
      a
      corporate apartment, pursuant to leases expiring through June 2007 for aggregate
      monthly rentals of $8,350.
Future
      minimum payments for the years ending March 31 are as follows: 2007: $97,700
      2008: $17,550
Management
      believes the current space is sufficient for its operations through the 2006
      year but that it may require more space thereafter.
16
Security
      Ownership of Certain Beneficial Owners and Management
The
      following table sets forth certain information as of the date immediately
      following the closing of the Transaction regarding the beneficial ownership
      of
      our Common Stock by (i) each person who, to our knowledge, beneficially owns
      more than 5% of our Common Stock; (ii) each of our directors and executive
      officers; and (iii) all of our executive officers and directors as a
      group:
Name
                and address of Beneficial Owner
Amount
                (1)
Percent
of
                Class
None
Directors
                and Named Executive Officers (2):
Anthony
                F. Zalenski
7,258,559
10.10
%
Peter
                M. Peterson
6,956,874
9.68
Christopher
                J. Floyd
6,956,874
9.68
All
                directors and named executive officers as a group (5 persons)
21,172,307
29.46
%
(1)
Beneficial
                ownership is calculated based on 71,833,251 shares of our Common
                Stock
                issued and outstanding which assumes that an additional 4,377,872
                shares
                are issued as full payment for certain outstanding promissory notes
                of
                AcXess. Beneficial ownership is determined in accordance with Rule
                13d-3
                of the Securities and Exchange Commission. The number of shares
                beneficially owned by a person includes shares of common stock subject
                to
                options or warrants held by that person that are currently exercisable
                or
                exercisable within 60 days following theclosing of the Transaction.
                The
                shares issuable pursuant to those options or warrants are deemed
                outstanding for computing the percentage ownership of the person
                holding
                these options and warrants but are not deemed outstanding for the
                purposes
                of computing the percentage ownership of any other person. The persons
                and
                entities named in the table have sole voting and sole investment
                power
                with respect to the shares set forth opposite the stockholder's name,
                subject to community property laws, where applicable.
(2)
The
                address for the directors and named executive officers is c/o Innovative
                Software Technologies, Inc., 3998 FAU Blvd, Bldg 1-210, Boca Raton,
                FL
                33431.
17
DIRECTORS
      AND EXECUTIVE OFFICERS
The
      following table sets forth the name, age and position of each of Innovative's
      directors and executive officers at the closing of the Transaction.
Name
Age
Position(s)
Anthony
                F. Zalenski
63
Chief
                Executive Officer, Chairman
Peter
                M. Peterson
49
Director
Christopher
                J. Floyd
43
Chief
                Financial Officer, Secretary
Anthony
      F. Zalenski
has
      served as Chairman of the Board of Directors and as Chief Executive Officer
      since his appointment on the date of the Transaction. Mr. Zalenski has over
      30
      years of international high tech industry experience specializing in the
      Internet, infotainment, information appliances, applications rental, enterprise
      software, and telecommunications and data communications markets. Mr. Zalenski
      has managed start-ups, led turnarounds and held executive positions with Fortune
      100 companies. He has extensive experience in managing merger and acquisition
      transactions, public and private financings, as well as strategic corporate
      relationships. As the new President of the $55 million enterprise security
      software company Casi-Rusco, a wholly owned subsidiary of Interlogix, Mr.
      Zalenski successfully transitioned Casi-Rusco during the purchase of Interlogix
      by General Electric. Prior to his time with Casi-Rusco, Mr. Zalenski served
      as
      Chairman, CEO and President of SoftMountain, an enterprise software start-up
      company. As President and CEO of Boca Research (NASDAQ: BOCI), Mr. Zalenski
      grew
      annual sales from $40 million to $150 million. While leading Boca Research
      and
      in response to changing market conditions, he strategically repositioned the
      company to address the emerging Internet appliance market and arranged financing
      and strategic customer relationships. Previously, Mr. Zalenski served as
      Corporate Vice President and COO of Motorola UDS/ISG, a $750 million entity.
      Prior to Motorola, Mr. Zalenski was a founding member of Isacomm, a
      Telecommunications startup, subsequently purchased by US Sprint.
Peter
      M Peterson
has
      served as Chairman of the Board of Directors of Innovative since his election
      in
      November of 2003, and served as Chief Executive Officer since his appointment
      in
      August 2004 until the date of the Transaction. Mr. Peterson is President, CEO
      and founder of Aspen Capital Partners, LLC a firm specializing in financial
      advisory and capital formation. Prior to founding Aspen Capital Partners, Mr.
      Peterson was Managing Director of Investment Banking with H. C. Wainwright
&
Co. He was also president of First American Holdings and Managing Director
      of
      Investment Banking for the firm. Prior to First American, he served as Vice
      President of Investment Banking with Josephthal, Lyons and Ross, A New York
      Stock Exchange member firm. Previous to Josephthal, Mr. Peterson was President
      of Triad Capital Partners and was responsible for assisting companies in going
      public, mergers and acquisitions, leveraged buyouts, recapitalizations, and
      private placements. Mr. Peterson has experience in arranging private placements,
      SEC documentation and reporting, financial consulting, real estate financings,
      securitized receivable and asset financings, strategic planning, transaction
      structuring, and negotiating. Mr. Peterson is a member of the National
      Association of Corporate Directors and Association of Corporate Growth. He
      is a
      1979 graduate of University Florida. Mr. Peterson is chairman of the board
      of
      directors of CleanFuel USA, Inc.
Christopher
      J. Floyd
has
      served as Chief Financial Officer, Vice President of Finance and Secretary
      of
      the Board of Directors since his appointment on August 4, 2004. Mr. Floyd has
      a
      broad financial, consulting and entrepreneurial background. As President of
      Axim
      Consulting Group, Inc. he worked with Innovative for a period of ten months,
      negotiating with former officers of the Company, performing accounting and
      SEC
      filing work, and assisting in strategic planning and business development.
Previously,
      Mr. Floyd was the co-founder and Chief Financial Officer for Comworxx, Inc.,
      which pioneered telematics products and services. Prior to Comworxx, Mr. Floyd
      was the co-founder and served as Chief Financial Officer, Treasurer, and a
      director for Intelliworxx, Inc., a public company that designed and manufactured
      tablet computers and developed equipment training and maintenance software
      applications. He was responsible for all financial, administrative, legal,
      auditing and securities matters. Prior to Intelliworxx, Mr. Floyd worked in
      a
      variety of startup and turnaround situations both as a principal and as a
      consultant. Previously, Mr. Floyd worked for Ernst & Young in Berlin,
      Germany, performing both audit and consulting work, principally under
      privatization engagements for former East German enterprises. Mr. Floyd received
      his Master of Business Administration from the Wharton School of the University
      of Pennsylvania and his Bachelor of Science in Electrical Engineering from
      the
      University of South Florida.
18
Election
      of Directors and Officers
Holders
      of our Common Stock are entitled to one (1) vote for each share held on all
      matters submitted to a vote of the stockholders, including the election of
      directors.
The
      Board
      of Directors will be elected at the annual meeting of the shareholders or at
      a
      special meeting called for that purpose. Each director shall hold office until
      the next annual meeting of shareholders and until the director's successor is
      elected and qualified. If a vacancy occurs on the Board of Directors, including
      a vacancy resulting from an increase in the number of directors, then the
      shareholders may fill the vacancy at the next annual meeting or at a special
      meeting called for the purpose, or the Board of Directors may fill such
      vacancy.
Compensation
      of Directors
It
      is
      intended that each member of our board of directors who is not an employee
      of
      the Company (a "non-employee director") will receive an annual retainer in cash
      and/or shares of Common Stock or in options to purchase shares of Common Stock
      as determined by our board of directors and all directors will be reimbursed
      for
      costs and expenses related to attendance at meetings of the board of directors.
      The amount of this retainer has not yet been determined.
Our
      employee directors will not receive any additional compensation for serving
      on
      our board of directors or any committee of our board of directors, and our
      non-employee directors will not receive any compensation from us for their
      roles
      as directors other than the retainer, attendance fees and stock or stock option
      grants described above.
EXECUTIVE
      COMPENSATION
The
      table
      below details all plan and non-plan compensation awarded to, earned by, or
      paid
      to the persons serving as named executive officers Innovative for the fiscal
      years 2005 and 2004 per Item 402 of Regulation S-B.
19
Annual
                Compensation
Long-Term
                Compensation
Awards
Payouts
Name
and
Principal
Position
Year
Salary
                ($)
Bonus
                ($)
Other
                Annual Compen-sation
($)
Restricted
Stock
Award(s)
1
($)
Securities
Underlying
Options/
                SARs
(#)
LTIP
Payouts
($)
All
Other
Compen-
sation
($)
Peter
                M. Peterson
CEO
                & Chairman
2005
77,785
0
0
0
0
0
0
2004
144,910
0
4,000
0
0
0
0
Christopher
                J. Floyd
CFO
2005
77,785
0
0
0
0
0
0
2004
75,000
0
4,000
0
0
0
0
Since
      its
      inception no officer of AcXess has received salary and bonus in aggregate
      exceeding $100,000 per year.
Employment
      Agreements
Effective
      August 1, 2004, we entered into an employment agreement with Christopher Floyd
      that provides for his employment as Chief Financial Officer of the Company,
      which agreement expires on August 1, 2007. Mr. Floyd has agreed in principle
      to
      modify his contract according to the recommendations of the compensation
      committee of the board, which committee has not yet been formed. Until such
      agreement is executed Mr. Floyd will be paid an annual salary of
      $84,000.
We
      expect
      to execute an employment agreement with Anthony F. Zalenski within 30 days
      following the filing of this report. Currently Mr. Zalenski receives an annual
      salary of $84,000.
Other
      Compensation
We
      may in
      the future also issue to our officers and directors stock options on terms
      and
      conditions to be determined by our Board of Directors or designated Board
      Committee.
CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
AcXess
      Transactions
None.
Innovative
      Transactions
Effective
      August 1, 2004, we entered into an employment agreement with Peter Peterson
      that
      provided for his employment as Chief Executive Officer of the Company, which
      agreement was to expire on August 1, 2007. The agreement stipulated an annual
      base salary of $180,000 and an incentive compensation plan to be determined
      by
      the board. Mr. Peterson's employment agreement was mutually terminated by Mr.
      Peterson and the Company effective January 4, 2006. In lieu of paying Mr.
      Peterson's salary for January 2006 and the following 12 months thereafter as
      stipulated in the employment contract, the Company agreed to a one-time issuance
      to Mr. Peterson of 950,495 shares of common stock, payment of salary though
      January 2006, and health benefits to continue for the 2006 calendar year. Mr.
      Peterson retained the office of Chief Executive Officer of the Company until
      the
      date of the Transaction.
20
DESCRIPTION
      OF SECURITIES
Our
      total
      authorized capital stock consists of 100,000,000 shares of Common Stock, par
      value $0.001 per share and 25,000,000 shares of preferred stock, par value
      $0.001 per share. After the Closing, 71,883,251 shares of Common Stock were
      issued and outstanding. There are 450,000 shares of preferred stock issued
      and
      outstanding.
The
      following description of our capital stock does not purport to be complete
      and
      is subject to and qualified by our Aertificate of Incorporation and By-laws,
      and
      by the provisions of applicable California law.
Common
      Stock
Holders
      of our Common Stock are entitled to receive dividends out of assets legally
      available therefore at such times and in such amounts as the Board of Directors
      from time to time may determine. Holders of our Common Stock are entitled to
      one
      (1) vote for each share held on all matters submitted to a vote of the
      stockholders. Our Common Stock is not entitled to preemptive rights and is
      not
      subject to conversion or redemption. Upon our liquidation, dissolution or
      winding-up, the assets legally available for distribution to stockholders are
      distributable ratably among the holders of the Common Stock after payment of
      liquidation preferences, if any, on any outstanding stock having prior rights
      on
      such distributions and payment of other claims of creditors.
Preferred
      Stock
Our
      Certificate of Incorporation authorizes the issuance of shares of preferred
      stock in one or more series. Our Board of Directors has the authority, without
      any vote or action by the shareholders, to create one or more series of
      preferred stock up to the limit of our authorized but unissued shares of
      preferred stock and to fix the number of shares constituting such series and
      the
      designation of such series, the voting powers (if any) of the shares of such
      series and the relative participating, option or other special rights (if any),
      and any qualifications, preferences, limitations or restrictions pertaining
      to
      such series which may be fixed by the Board of Directors pursuant to a
      resolution or resolutions providing for the issuance of such series adopted
      by
      the Board of Directors.
The
      provisions of a particular series of authorized preferred stock, as designated
      by the Board of Directors, may include restrictions on the payment of dividends
      on Common Stock. Such provisions may also include restrictions on the ability
      of
      the Company to purchase shares of Common Stock or to purchase or redeem shares
      of a particular series of authorized preferred stock. Depending upon the voting
      rights granted to any series of authorized preferred stock, issuance thereof
      could result in a reduction in the voting power of the holders of Common Stock.
      In the event of any dissolution, liquidation or winding up of the Company,
      whether voluntary or involuntary, the holders of the preferred stock will
      receive, in priority over the holders of Common Stock, a liquidation preference
      established by the Board of Directors, together with accumulated and unpaid
      dividends. Depending upon the consideration paid for authorized preferred stock,
      the liquidation preference of authorized preferred stock and other matters,
      the
      issuance of authorized preferred stock could result in a reduction in the assets
      available for distribution to the holders of Common Stock in the event of the
      liquidation of the Company.
21
There
      are
      450,000 shares of Series A Preferred issued and outstanding as of the date
      of
      the Transaction. These shares are entitled to receive dividends at the rate
      of
      4% per annum of the liquidation preference per share payable yearly in fully
      paid and non-assessable shares of the Corporation's common stock. The number of
      shares of common stock to be distributed as a dividend is calculated by dividing
      such payment by 95% of the Market Price on the first five trading days after
      January 1 of each year. The term "Market Price" means, as of any date, the
      average of the daily closing price for the five consecutive trading days ending
      on such date.
Warrants
In
      connection with the Offering, we issued Warrants to purchase 2,120,000 shares
      of
      our common stock at a price of $0.05 per share. Such Warrants have an expiration
      of 5 years. Also in connection with the Offering, we agreed to issue Agent
      Warrants equal to ten percent (10%) of the number of shares into which the
      convertible promissory notes convert. The Agent Warrants will have an expiration
      of two years from the date of issuance and a strike price of $0.05. The shares
      of Common Stock underlying the Warrants and the Agent Warrants carry "piggyback"
registration rights as described below.
Stock
      Option Plans
The
      Company currently has no stock option plans.
Registration
      Rights
In
      connection with the Offering, we granted purchasers of the Convertible
      Promissory notes "piggyback" registration rights which call for the inclusion of
      any shares of common stock resulting from the conversion of the Convertible
      Promissory notes in any registration statement the Company may file pursuant
      to
      a future financing.
Indemnification
      Matters
Section 317
      of the California Corporations Code authorizes a court to award, or a
      corporation's board of directors to grant, indemnity to directors and officers
      who are parties or are threatened to be made parties to any proceeding (with
      certain exceptions) by reason of the fact that the person is or was an agent
      of
      the corporation, against expenses, judgments, fines, settlements and other
      amounts actually and reasonably incurred in connection with the proceeding
      if
      that person acted in good faith and in a manner the person reasonably believed
      to be in the best interests of the corporation. Section 204 of the
      California Corporations Code provides that this limitation on liability has
      no
      effect on a director's liability (a) for acts or omissions that involve
      intentional misconduct or a knowing and culpable violation of law, (b) for
      acts or omissions that a director believes to be contrary to the best interests
      of the corporation or its shareholders or that involve the absence of good
      faith
      on the part of the director, (c) for any transaction from which a director
      derived an improper personal benefit, (d) for acts or omissions that show a
      reckless disregard for the director's duty to the corporation or its
      shareholders in circumstances in which the director was aware, or should have
      been aware, in the ordinary course of performing a director's duties, of a risk
      of a serious injury to the corporation or its shareholders, (e) for acts or
      omissions that constitute an unexcused pattern of inattention that amounts
      to an
      abdication of the director's duty to the corporation or its shareholders,
      (f) under Section 310 of the law (concerning contracts or transactions
      between the corporation and a director), or (g) under Section 316 of
      the law (directors' liability for improper dividends, loans and guarantees).
      Section 317 does not extend to acts or omissions of a director in his
      capacity as an officer. Further, Section 317 has no effect on claims
      arising under federal or state securities laws and does not affect the
      availability of injunctions and other equitable remedies available to our
      shareholders for any violation of a director's fiduciary duty to us or our
      shareholders. Although the validity and scope of the legislation underlying
      Section 317 have not yet been interpreted to any significant extent by the
      California courts, Section 317 may relieve directors of monetary liability
      to us for grossly negligent conduct, including conduct in situations involving
      attempted takeovers of our company.
22
In
      accordance with Section 317, our articles of incorporation eliminate the
      liability of each of our directors for monetary damages to the fullest extent
      permissible under California law.
The
      indemnification provisions described above provide coverage for claims arising
      under the Securities Act of 1933 and the Securities Exchange Act of 1934.
      Insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers and controlling persons of the Company
      pursuant to the Company's Articles of Incorporation, Bylaws, the the California
      Corporations Code, or otherwise, we have been advised that in the opinion of
      the
      SEC, such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.
Transfer
      Agent and Registrar
Our
      transfer agent and registrar is Island Stock Transfer 100 Second Avenue South,
      300N, St. Petersburg, Florida 33701.
Market
      Price of and Dividends on Common Equity and Related Stockholder
      Matters
Our
      shares are currently trading on the OTC Bulletin Board under the stock symbol
      "INIV." The high and the low trades for our shares for each quarter of actual
      trading were:
High
Low
Year
                  Ending December 31, 2004:
First
                  Quarter
$
0.75
0.31
Second
                  Quarter
0.51
0.25
Third
                  Quarter
0.35
0.14
Fourth
                  Quarter
0.30
0.08
Year
                  Ending December 31, 2005:
First
                  Quarter
$
0.17
0.07
Second
                  Quarter
0.12
0.04
Third
                  Quarter
0.08
0.03
Fourth
                  Quarter
0.08
0.01
The
      closing price for the common stock on June 26, 2006 was $0.04 per share.
The
      trades reflect inter-dealer prices, without retail mark-up, markdown or
      commission and may not represent actual transactions.
As
      a
      result of the Transaction and the associated financing, the value of our Common
      Stock will depend upon the value of our only asset, the business and assets
      of
      AcXess. AcXess was a private company whose business, assets and financial
      performance has not been disclosed to the public, prior to this Current Report
      on Form 8-K.
23
Holders
      of Common Stock
After
      the
      closing of the Transaction and the Offering, we had 67,455,379 shares of our
      Common Stock issued and outstanding and there were approximately 1,239
      registered shareholders of our common stock. Of such shares, 11,000,000 were
      issued pursuant to the Transaction. In addition, warrants to purchase 2,120,000
      shares of our Common Stock were also outstanding as of that date.
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 no
      revenue or earnings. 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.
Legal
      Proceedings
From
      time
      to time, we are involved in litigation concerning our business operations.
      Management believes that the litigation in which we are currently involved
      is
      not reasonably likely to be material to its financial condition, results of
      its
      operations or its cash flows, other than the litigation noted
      below.
SEC
      Investigation
On
      June
      24, 2003 the Securities and Exchange Commission ("SEC") issued a formal order
      of
      investigation, authorizing the investigation of certain securities matters.
      The
      SEC staff has taken the testimony of certain officers and has informed us that
      it intends to take additional testimony. The SEC staff has also issued
      additional requests for the voluntary production of documents. Prior to the
      issuance of the order, we had voluntarily provided documents and information
      to
      the SEC staff in response to informal, non-public inquiries by the staff. On
      April 8
th
,
      2005
      the Independent Committee of the Board of Directors turned over the results
      of
      its investigation to the SEC and we intend to continue to fully cooperate with
      the SEC in its investigation.
Prosper,
      Inc. Complaint
Subsequent
      to the EPMG asset disposition, as discussed above, the former principals, under
      the new name of Prosper, Inc. filed a complaint that seeks a refund to the
      benefit of Prosper of certain reserve funds amounting to $580,000 that are
      due
      to former vendors. Under the EPMG Settlement Agreement, we agreed to pay certain
      reserves potentially owing to third-party vendors upon specified conditions.
      The
      lawsuit alleges that we have breached the obligation to pay these reserves,
      but
      we contest that the conditions for these payments have been satisfied and/or
      contest the amounts and payees of the payments that are alleged to be owed
      by
      us.
Although
      we believe that these allegations do not have any merit, if Prosper, Inc. were
      to prevail in its complaint there would be serious negative financial
      consequences resulting from utilization of our cash reserves. Moreover, such
      an
      action could divert management's time and efforts away from the business of the
      Company.
Kansas
      City Explorers
The
      Company is 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 is seeking money for advertising which it alleges is still
      due, and have alleged damages of $50,028. The claimant has been court ordered
      to
      produce answers to certain discovery requests of the Company which they have
      failed to produce. Management intends to aggressively defend the claim based
      upon the lack of contract between the parties, lack of proof of damages, as
      well
      as minimal proof of advertising services actually performed for Company products
      and services.
24
Recent
      Sales of Unregistered Securities.
In
      connection with the Transaction, we issued 11,000,000 shares of our Common
      Stock
      to the holders of AcXess common stock for all the issued and outstanding shares
      of AcXess common stock. The shares of Common Stock issued in the Transaction
      were issued in reliance on the exemption from registration afforded by Section
      4(2) under the Securities Act of 1933, as amended (the "Securities Act") and
      corresponding provisions of state securities laws, which exempts transactions
      by
      an issuer not involving any public offering, as such sales and issuances did
      not
      involve any public offering, were made without general solicitation or
      advertising, and each purchaser had access to all relevant information necessary
      to evaluate the investment and represented to Innovative that the securities
      were being acquired for investment.
Concurrent
      with the closing of the Transaction, Innovative sold convertible promissory
      notes to four accredited investors in the aggregate principal amount of
      approximately $430,000 (the "Offering"). The convertible promissory notes have a
      term of six months and are convertible into shares of Common Stock of the
      Company in a future qualified financing at a 30% discount to the effective
      price
      per share paid in the future qualified financing. In the Offering, Innovative
      also issued to the purchasers of the notes warrants to purchase an aggregate
      of
      2,120,000 shares of Common Stock at an exercise price of $0.05, subject to
      adjustment. These warrants will expire in 2011. The investors in the Offering
      were granted piggyback registration rights with respect to the shares issuable
      upon the conversion of the notes or the exercise of the warrants in accordance
      with a registration rights agreement. Also in conjunction with the Offering,
      Innovative exchanged an outstanding promissory note to an investor in the amount
      of $100,000 plus accrued interest for a promissory note with the above terms
      for
      $100,000, and interest accrued to date on the pre-existing note was forgiven
      by
      the investor and credited to other income. In connection with the Offering,
      Innovative issued to the placement agent in the Offering an agreement to receive
      warrants (the "Agent Warrants") to purchase up to that number of shares of
      Common Stock equal to ten (10%) percent of the shares of Common Stock issued
      by
      the Company upon conversion of the promissory notes issued in the Offering.
      The
      Agent Warrants will exercisable for a two year period following the date of
      issuance at a price per share equal to $0.05 per share. The notes and warrants
      issued in the Offering, as well as the shares of Common Stock issuable pursuant
      thereto, were sold and issued pursuant to the exemption from the registration
      requirements of the Act provided under Section 4(2) of the Act and Rule 506
      promulgated thereunder, as such sales and issuances did not involve any public
      offering, were made without general solicitation or advertising, and each
      purchaser was an accredited investor with access to all relevant information
      necessary to evaluate the investment and represented to Innovative that the
      securities were being acquired for investment.
Indemnification
      of Directors and Officers.
Section 317
      of the California Corporations Code authorizes a court to award, or a
      corporation's board of directors to grant, indemnity to directors and officers
      who are parties or are threatened to be made parties to any proceeding (with
      certain exceptions) by reason of the fact that the person is or was an agent
      of
      the corporation, against expenses, judgments, fines, settlements and other
      amounts actually and reasonably incurred in connection with the proceeding
      if
      that person acted in good faith and in a manner the person reasonably believed
      to be in the best interests of the corporation. Section 204 of the California
      Corporations Code provides that this limitation on liability has no effect
      on a
      director's liability (a) for acts or omissions that involve intentional
      misconduct or a knowing and culpable violation of law, (b) for acts or omissions
      that a director believes to be contrary to the best interests of the corporation
      or its shareholders or that involve the absence of good faith on the part of
      the
      director, (c) for any transaction from which a director derived an improper
      personal benefit, (d) for acts or omissions that show a reckless disregard
      for
      the director's duty to the corporation or its shareholders in circumstances in
      which the director was aware, or should have been aware, in the ordinary course
      of performing a director's duties, of a risk of a serious injury to the
      corporation or its shareholders, (e) for acts or omissions that constitute
      an
      unexcused pattern of inattention that amounts to an abdication of the director's
      duty to the corporation or its shareholders, (f) under Section 310 of the law
      (concerning contracts or transactions between the corporation and a director),
      or (g) under Section 316 of the law (directors' liability for improper
      dividends, loans and guarantees). Section 317 does not extend to acts or
      omissions of a director in his capacity as an officer. Further, Section 317
      has
      no effect on claims arising under federal or state securities laws and does
      not
      affect the availability of injunctions and other equitable remedies available
      to
      our shareholders for any violation of a director's fiduciary duty to us or our
      shareholders. Although the validity and scope of the legislation underlying
      Section 317 have not yet been interpreted to any significant extent by the
      California courts, Section 317 may relieve directors of monetary liability
      to us
      for grossly negligent conduct, including conduct in situations involving
      attempted takeovers of our company.
25
In
      accordance with Section 317, our articles of incorporation eliminate the
      liability of each of our directors for monetary damages to the fullest extent
      permissible under California law.
The
      indemnification provisions described above provide coverage for claims arising
      under the Securities Act of 1933 and the Securities Exchange Act of 1934.
      Insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers and controlling persons of the Company
      pursuant to the Company's Articles of Incorporation, Bylaws, the California
      Corporations Code, or otherwise, we have been advised that in the opinion of
      the
      SEC, such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.
DESCRIPTION
      OF THE TRANSACTION
On
      June
26,
      2006,
      Innovative Software Technologies, Inc. ("Innovative" or the "Company") completed
      the acquisition of AcXess, Inc. ("AcXess") in a stock exchange transaction (the
"Transaction") pursuant to a Stock Exchange Agreement by and between Innovative,
      AcXess, the Shareholders of AcXess, Inc., and Anthony F. Zalenski, acting as
      the
      Shareholder's Agent (the "Exchange Agreement"). As a result of the Transaction,
      AcXess became a wholly owned subsidiary of the Company.
Pursuant
      to the Exchange Agreement, the shareholders of AcXess exchanged 100% of the
      outstanding shares of AcXess
for
      11,000,000 shares of common stock of the Company
,
      $0.001
      par value per share (the "Common Stock"). The shares of Common Stock issued in
      the Transaction were issued pursuant to the exemption from the registration
      requirements of the Securities Act of 1933, as amended (the "Act") provided
      under Section 4(2) of the Act and Rule 506 promulgated thereunder.
26
Item
      3.02 Unregistered Sale of Equity Securities.
Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.
Item
      5.01 Changes in Control of Registrant.
Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.
Item
      5.02 Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.
In
      connection with the closing of this Transaction (as described in Item 2.01
      of
      this Current Report on Form 8-K) Anthony F. Zalenski was appointed to our Board
      of Directors as Chairman and William E. Leathem resigned as director. As a
      result our board currently comprises Mr. Zalenski and Pete M. Peterson, our
      former Chairman. In addition, Mr. Peterson resigned as Chief Executive Officer
      and Mr. Zalenski accepted the position of Chief Executive Officer of the
      Company. Christopher J. Floyd remains as Chief Financial Officer and Secretary
      of the Board of Directors.
For
      certain biographical and other information regarding the newly appointed
      officers and directors, see the disclosure under the heading "Directors and
      Executive Officers" under Item 2.01 of this Current Report on Form 8-K, which
      disclosure is incorporated herein by reference.
Item
      5.06 Change in Shell Company Status.
Reference
      is made to the disclosure made under Item 2.01 of this Current Report on Form
      8-K, which is incorporated herein by reference.
Item
      8.01 Other Events.
In
      connection with the closing of the Transaction, Innovative Software
      Technologies, Inc. relocated its corporate headquarters from 1413 South Howard
      Avenue, Suite 220, Tampa, Florida to
3998
      FAU
      Boulevard,
Bldg
      1-210,
Boca
      Raton, F
lorida.
      Innovative's new phone number is (561) 417-7250.
Item
      9.01 Financial Statements and Exhibits.
(a)
      Financial Statements of Business Acquired.
AcXess'
      audited financial statements for the fiscal year ended March 31, 2006 is filed
      as Exhibit 99.1 to this Current Report on Form 8-K.
27
(b)
      Pro-Forma Financial Information.
The
      following documents of the Company appear as Exhibit 99.2 to this Form 8-K.
(i)
Unaudited
                Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2006;
(ii)
Unaudited
                Pro Forma Condensed Consolidated Statement of Operations for the
                Year
                Ended March 31, 2006; and
(iii)
Notes
                to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
The
      unaudited pro forma condensed consolidated financial statements attached as
      Exhibit 99.2 to this Form 8-K are presented for illustrative purposes only
      and
      are not necessarily indicative of the consolidated financial position or results
      of operations for future periods or the financial position or results of
      operations that actually would have been realized had Innovative and AcXess
      been
      a combined company during the specified periods. The unaudited pro forma
      condensed consolidated financial statements, including the related notes, are
      qualified in their entirety by reference to, and should be read in conjunction
      with, the historical consolidated financial statements and related notes of
      Innovative included in its Form 10-KSB filed with the Securities and Exchange
      Commission on December 31, 2006 and the historical financial statements of
      AcXess included herein as Exhibit 99.1.
The
      unaudited pro forma condensed consolidated financial statements give effect
      to
      Innovative's acquisition of AcXess using the reverse acquisition method of
      accounting. The pro forma condensed consolidated financial statements are based
      on the respective historical financial statements of Innovative and AcXess.
      The
      unaudited pro forma condensed consolidated financial information has been
      prepared on the basis of assumptions described in the notes to the unaudited
      pro
      forma condensed consolidated financial statements. In the opinion of management,
      all adjustments necessary to present fairly this unaudited pro forma condensed
      consolidated financial information have been made.
(d)
      Exhibits.
See
      Exhibit Index following Signature page.
[REMAINDER
      OF THIS PAGE LEFT BLANK]
28
This
      Current Report on Form 8-K may contain, among other things, certain
      forward-looking statements within the meaning of the Private Securities
      Litigation Reform Act of 1995, including, without limitation, statements with
      respect to the Company's plans, objectives, expectations and intentions and
      other statements identified by words such as may, could, would, should,
      believes, expects, anticipates, estimates, intends, plans or similar
      expressions. These statements are based upon the current beliefs and
      expectations of the Company's management and are subject to significant risks
      and uncertainties. Actual results may differ from those set forth in the
      forward-looking statements. These forward-looking statements involve certain
      risks and uncertainties that are subject to change based on various factors
      (many of which are beyond the Company's control).
SIGNATURE
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.
Date: 
                June 30, 2006
By:
/s/
Anthony
              F. Zalenski
Anthony
                F. Zalenski
Chief
                Executive Officer
29
INDEX
      TO EXHIBITS
Exhibit
Number
Description
2.1
Stock
                  Exchange Agreement by and between Innovative Software Technologies,
                  Inc.,
                  AcXess, Inc., the Shareholders of AcXess, Inc., and Anthony F.
                  Zalenski,
                  acting as the Shareholder's Agent, dated as of June 26,
                  2006.
3.1
Amendment
                  to the Articles of Incorporation of Innovative Software Technologies,
                  Inc.*
3.2
Articles
                  of Incorporation of Innovative Software Technologies, Inc., as
                  amended.*
3.3
Certificate
                  of Designation of the Series A Preferred Stock of Innovative Software
                  Technologies, Inc. (incorporated by reference from Exhibit 2.2
                  to the
                  Company's Current Report on Form 8-K/A filed March 14,
                  2002).
3.4
Certificate
                  of Designation of the Series B Preferred Stock of Innovative Software
                  Technologies, Inc.*
3.5
By-laws
                  of Innovative Software Technologies, Inc. (incorporated by reference
                  from
                  Exhibit 3(b) to the Company's Annual Report on Form 10-KSB for
                  the year
                  ended December 31, 1999).
3.6
Certificate
                  of Amendment to Articles of Incorporation filed on August 8,
                  2001
4.1
Specimen
                  Certificate of Common Stock (incorporated by reference from Exhibit
                  4(a)
                  to the Company's Annual Report on Form 10-KSB for the year ended
                  December
                  31, 1999).
10.1
Director
                  Indemnification Agreement dated August 14, 2003 between Innovative
                  Software Technologies, Inc. and Peter M. Peterson***
10.2
Director
                  Indemnification Agreement dated August 4, 2003 between Innovative
                  Software
                  Technologies, Inc. and William E. Leathem***
10.3
Employment
                  Agreement dated August 1, 2004 between Innovative Software Technologies,
                  Inc. and Christopher J. Floyd.*****
99.1
Audited
                  Financial Statements of AcXess, Inc. for the year ended as of March
                  31,
                  2006.
99.2
Unaudited
                  Condensed Consolidated Pro Forma Consolidated Financial Statements
                  for
                  Innovative Software Technologies, Inc. for the year ended March
                  31,
                  2006
30
Exhibit
Number
Description
*
Incorporated
                  by reference from the exhibit to the Company's Quarterly Report
                  on Form
                  10-QSB for the fiscal quarter ended June 30, 2004 which bears the
                  same
                  exhibit number.
***
Incorporated
                  by reference from the exhibit to the Company's Quarterly Report
                  on Form
                  10-QSB for the fiscal quarter ended September 30, 2004 which bears
                  the
                  same exhibit number.
****
Incorporated
                  by reference from the exhibit to the Company's Quarterly Report
                  on Form
                  10-QSB for the fiscal quarter ended June 30, 2004 which bears exhibit
                  number 10.1.
*****
Incorporated
                  by reference from the exhibit to the Company's Quarterly Report
                  on Form
                  10-QSB for the fiscal quarter ended June 30, 2004 which bears exhibit
                  number 10.2.
31