8-K

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): October 13, 2006

INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

( Exact name of Registrant as Specified in its Charter )

California (State or other jurisdiction of incorporation or organization) 000-1084047 (Commission File Number) 95-4691878 (I.R.S. Employer Identification No.)

3998 FAU Blvd, Building 1-210

Boca Raton, Florida 33431

(Address of Principal Executive Offices; Zip Code)

Registrant’s telephone number, including area code: (561) 417 - 7250

Copies to:

Darrin M. Ocasio, Esq.

Sichenzia Ross Friedman Ference LLP

1065 Avenue of the Americas

New York, New York 10018

Phone: (212) 930-9700

Fax: (212) 930-9725

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:

□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b))

□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT

ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES

On October 13, 2006, Innovate Software Technologies, Inc. (the "Company"), entered into an agreement (the "Agreement") with an accredited investor (the “Investor”) and completed the sale of a $300,000 Convertible Promissory Note (the "Note") for an original issue discount of $285,000. In connection with the Agreement, the Investor received a warrant to purchase 1,200,000 shares of common stock of the Company at a strike price which shall be equal the lesser of (i) five cents ($.05) or (ii) the price per share paid by a third-party investor for a share of common stock in a Qualified Financing (the “Warrant”). The term “Qualified Financing” shall mean the first transaction after the date of the Note in which the Company issues to any person or entity any shares of common stock, or any rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of common stock. The Warrant is exercisable for a period of five years.

The Note matures on the earlier of six months from the issue date of the Note or the Mandatory Repayment Date. The term “Mandatory Repayment Date” shall mean the date that is fourteen (14) days after the Company closes any public or private equity or debt offering that, together with all preceding public or private equity or debt offerings for cash that closed after the date of the Note, results in the Company receiving gross cash proceeds of at least $2,000,000 (the “Qualified Offering”). The Note will be convertible, at the option of the holder, beginning on the date on which the Company closes such Qualified Offering and continuing for thirty (30) days thereafter, at a 30% discount to the lowest effective per share purchase price of the Company’s common stock in the Qualified Offering.

The Investor received “piggyback” registration rights for the shares of common stock underlying the Note and shares of common stock issuable upon exercise of the Warrant in connection with any registration statement filed by the Company.

The Note is a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company.

The securities were offered and sold to the Investor in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated thereunder. The Investor is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

Item 9.01Financial Statements and Exhibits

Exhibit No.	Description
4.1	Form of Investor Certificate
4.2	Form of Promissory Note
4.3	Form of Warrant
4.4	Form of Registration Rights Agreement

SIGNATURES

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 TECHOLOGIES, INC.
Date: October 20, 2006	By: /s/ Anthony F. Zalenski
	Anthony F. Zalenski
	Chief Executive Officer

EX-4.1

INVESTOR CERTIFICATE

For purposes of inducing Innovative Software Technologies, Inc., a California corporation (the “Company”), to issue to the undersigned on the date hereof a Convertible Promissory Note Due April 15, 2007 (the “Note”) and a Warrant to purchase shares of the Company’s common stock, par value $0.001 per share (the “Warrant”), the undersigned (the “Investor”) hereby certifies to the Company as follows:

a.Business and Financial Experience. Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). Investor has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the purchase of the Note and the Warrant. Investor was not solicited to purchase the Note and Warrant by any means of general solicitation.

b.Information. Investor and his or her advisors, if any, have been furnished with all materials relating to the business, finances, and operations of the Company which have been requested by Investor and all materials relating to the offer and sale of the Note and Warrant which have been requested by Investor. Investor and his or her advisors, if any, have been afforded the opportunity to ask questions of the Company. In determining whether to enter into this Agreement and purchase the Note and Warrant, Investor has relied solely on the written information supplied by Company employees, and Investor has not received nor relied upon any oral representation or warranty relating to the Company, the Note, the Warrant, or any of the transactions or relationships contemplated thereby. Investor understands that his purchase of the Note and Warrant involves a high degree of risk. Investor has sought such accounting, legal and tax advice as he or she has considered necessary to make an informed investment decision with respect to his acquisition of the Note and Warrant.

c. Investment Intent; Blue Sky. Investor is acquiring the Note and Warrant for investment for Investor’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Investor understands that the issuance of the Note and Warrant has not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the Investor’s investment intent and the accuracy of the Investor’s certifications as expressed herein. The address listed in the Note for Investor is the Investor’s true and correct state of domicile, upon which the Company may rely for the purpose of complying with applicable “Blue Sky” laws.

d. Rule 144; No Public Market. Investor acknowledges that the Warrant Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. Investor understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company’s securities. Investor understands that the transfer of the Note and Warrant is restricted by applicable state and federal securities laws.

INVESTOR

Signature:______________________________

Printed Name:____________________________

Company:_______________________________

Date:___________________________________

EX-4.2

NEITHER THE SECURITIES REPRESENTED BY THIS CONVERTIBLE SECURED PROMISSORY NOTE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO SUCH SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE ACT, BUT, THEN, ONLY UPON THERE HAVING FIRST BEEN OBTAINED A WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR STATE SECURITIES LAW.

Innovative Software Technologies, Inc.

CONVERTIBLE PROMISSORY NOTE

	October 16, 2006
USD $300,000	Tampa, Florida

FOR VALUE RECEIVED,Innovative Software Technologies, Inc.,a California corporation, having its principal place of business located at 3998 FAU Blvd., Bldg. 1-210, Boca Raton, Florida (the "Company"), hereby promises to pay to the order of Crescent International Ltd., a Bermuda corporation, having its principal place of business locatedat 84 av. Louis-Casaï, CH 1216 COINTRIN , Geneva Switzerland, (the "Original Holder"), or registered assigns (each, a "Subsequent Holder", and, together with the Original Holder, a "Holder" or the "Holders"), in immediately available funds and subject to the terms hereof, the principal sum ofThree Hundred Thousand dollars and 00/100 (USD $300,000) payable in a single sum on the earlier of (i) the date that is one hundred eighty (180) days after the date of this Note or (ii) the Mandatory Repayment Date. For purposes hereof, the term “Mandatory Repayment Date” shall mean the date that is fourteen (14) days after the Company closes any public or private equity or debt offering for cash that, together with all preceding public or private equity or debt offerings for cash that closed after the date of this Note, results in the Company receiving gross cash proceeds of at least $2,000,000 (provided that purchase money financing for equipment or capital assets shall be excluded from this calculation).

1.Registered Owner. The Company may consider and treat the person or entity in whose name this Note shall be registered as the absolute owner hereof for all purposes whatsoever (whether or not this Note shall be overdue) and the Company shall not be affected by any notice to the contrary. The registered owner of this Note shall have the right to transfer it by assignment and the transferee thereof, upon its registration as owner of this Note, shall become vested with all the powers and rights of the transferor. Registration of any new owner shall take place upon presentation of this Note to the Company at its principal place of business together with an assignment of this Note duly authenticated. In the case of transfers by operation of law, the transferee shall notify the Company of such transfer and of its address, and shall submit appropriate evidence regarding the transfer so that this Note may be registered in the name of the transferee. This Note is transferable only on the books of the Company by the Holder, in person or by attorney, upon the surrender hereof, duly endorsed. Communications sent to any registered owner shall be effective as against all holders or transferees of this Note not registered at the time of sending the communication.

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2.Conversion Right.

2.1Grant of Right. Subject to the terms hereof, and for so long as any amounts remain unpaid hereunder, beginning on the date on which a Qualified Transaction closes and ending on the thirtieth (30^th) calendar day thereafter, the Holder or the Company shall have the right to convert all (but not less than all) of the principal amount (the “Conversion Amount”), into shares (“Conversion Shares”) of the common stock, par value $0.001 per share, of the Company (the "Common Stock") at a conversion price per share (the "Conversion Price") equal to seventy percent (70%) of the lowest price per share paid by a third-party investor for a share of Common Stock in a Qualified Financing. For purposes hereof, the term “Qualified Financing” shall mean the first transaction after the date of this Note in which the Company issues to any person or entity any shares of Common Stock, or any rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock (excluding (i) the issuance of any convertible promissory note on or after the date hereof having substantially the same conversion price as this Note and the issuance of any warrants issued thereon having substantially the same terms and provisions as the warrants issued in connection this Note, as well as any shares of Common Stock issuable upon the conversion or exercise of such note or warrant in accordance with the terms thereof, (ii) any shares of Common Stock issued or issuable upon conversion or exchange of any rights, options, warrants or convertible or exchangeable securities, and any shares of Common Stock issuable upon exercise thereof, which rights, options, warrants or convertible or exchangeable securities were issued on or prior to the date of this Note, (iii) any rights, options, warrants or convertible or exchangeable securities and any shares of Common Stock issued upon conversion or exercise thereof or any shares of Common Stock otherwise issued or issuable pursuant to employees, directors, officers, consultants, or independent contractors of the Company in consideration of past or future services rendered by such parties to the Company or its affiliates, (iv) shares of Common Stock issued for consideration other than cash, including without limitation shares issued in the settlement of any claim against the Company, (v) shares of Common Stock or other securities issued in a financing transaction that, together with all prior related financing transactions containing the same terms, results in gross proceeds to the Company of less than $2,000,000, and (vi) shares of Common Stock issued as consideration for a merger or acquisition of all or substantially all of the assets of a third party). In a Qualified Financing, if the Company issues any rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock, the per share Common Stock purchase price in such transaction shall be determined by dividing (1) the total amount receivable by the Company in consideration for the sale and issuance of such rights, options, warrants or convertible or exchangeable securities, plus the total consideration receivable by the Company upon exercise, conversion or exchange thereof, by (2) the total number of shares of Common Stock covered by such rights, options, warrants or convertible or exchangeable securities. For purposes of the preceding sentence, the “total amount receivable by the Company” will include the fair market value of all non-cash consideration received or receivable by the Company in consideration for the issuance, including, in the case of warrants granted in conjunction with a debt facility, the value received by the Company for such warrants in excess of the exercise price thereof.

2.2Exercise Procedure. The foregoing conversion privilege may be exercised by the Holder only by delivery and surrender of this Note to the Company at its then principal place of business together with the Note Conversion Form annexed hereto as Exhibit A duly executed ("Notice of Exercise"). Subject to the terms hereof, upon Notice of Exercise, the Holder shall be deemed to be the holder of record of the Conversion Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Conversion Shares shall not then have actually been delivered to the Holder. The Company may exercise the foregoing conversion privilege by delivering to Holder a stock certificate evidencing ownership of the Conversion Shares along with a copy of this Promissory Note marked “Cancelled”.

2.3No Fractional Shares. The Company shall not be required to issue certificates representing fractions of shares upon any conversion hereof, nor shall it be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the Company and the Holder that all fractional interests shall be eliminated.

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2.4Limitation on Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company prior to any conversion hereof, either at law or in equity, and the rights of the Holder are limited to those expressed in this Note.

2.5Certain Adjustments. In case the Company shall: (i) pay a dividend with respect to its Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock (including any such reclassification in connection with a merger, consolidation or other business combination in which the Company is the continuing corporation) (each of the actions in (i)-(iv) is hereinafter referred to as an “Adjustment Event”), the number of Conversion Shares that may be acquired upon conversion of this Note immediately prior to the record date for such Adjustment Event shall be adjusted so that the Holder shall thereafter be entitled to receive the number of Conversion Shares or other securities of the Company that such Holder would have owned or have been entitled to receive after the happening of such Adjustment Event, had the Note been converted in whole immediately prior to the happening of such Adjustment Event or any record date with respect thereto. An adjustment made pursuant to this Section 2.5 shall become effective immediately after the effective date of such Adjustment Event, retroactive to the record date, if any, for such Adjustment Event. Whenever the number of Conversion Shares that can be acquired upon the conversion of this Note is adjusted pursuant to this Section 2.5, the Conversion Price payable upon conversion of this Note shall be adjusted by multiplying such Conversion Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of Conversion Shares that may be acquired upon the conversion of this Note immediately prior to such adjustment, and the denominator of which shall be the number of Conversion Shares that may be acquired immediately thereafter.

3.[Omitted]

4.Representations and Warranties of the Company. The Company hereby represents and warrants to the Holder (which representations and warranties shall be deemed to be repeated by the Company on each day on which any amounts remain outstanding hereunder) that:

(a)Corporate Organization & Standing. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the state of California.

(b)Power, Due Authorization, Execution and Delivery. The Company has full corporate power and authority to (i) carry on its present business as currently conducted, (ii) own its properties and assets, (iii) execute and deliver this Note, (iv) borrow and repay the loan evidenced hereby, (v) issue the Conversion Shares upon any conversion, and (vi) perform all of its obligations hereunder. The Company has taken all requisite corporate and other action to authorize the execution, delivery and performance of this Note and the transactions contemplated hereby. This Note has been duly executed and delivered by the Company.

(c)Valid Issuance of Common Stock. Any Conversion Shares, when issued and delivered in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and, based in part upon the representations of Holder in this Agreement, will be issued in compliance with all applicable U.S. federal and state securities laws. The Conversion Shares will be issued free of any preemptive rights.

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(d)Binding Obligations; No Violation. This Note constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law). The execution, delivery and performance of this Note and the payment of all amounts due hereunder by the Company and the consummation of the transactions contemplated hereby do not and will not (i) violate any provision of its certificate of incorporation or bylaws, (ii) conflict with or result in the breach of any material provision of, or give rise to a default under, any agreement with respect to indebtedness or of any other material agreement to which the Company is a party or by which it or any of its properties or assets are bound, (iii) conflict with any law, statute, rule or regulation or any order, judgment or ruling of any court or other agency of government to which it is subject or any of its properties or assets may be bound or affected, in each case except where such conflict would not have a material adverse effect on the Company, or (iv) result in the creation or imposition of any lien, charge, mortgage, encumbrance or other security interest or any segregation of assets or revenues or other preferential arrangement (whether or not constituting a security interest) with respect to any present or future assets, revenues or rights to the receipt of income of the Company, except for the liens and security interests created pursuant to the Security Agreement.

(e)Proceedings. There are no legal actions, suits, arbitration proceedings, official investigations or other proceedings pending or, to the knowledge of the Company, threatened against the Company that if adversely determined would materially affect the financial condition of the Company or the validity or enforceability of, or the Company's ability to perform, this Note or the transactions contemplated hereby.

(f)Consents and Approvals. All governmental and other consents, authorizations, approvals, licenses and orders that are required to have been obtained by the Company with respect to this Note or the transactions contemplated hereby have been obtained and are in full force and effect and all conditions of any such consents, authorizations, approvals, licenses and orders have been complied with.

(g)Reporting Company. The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), has a class of securities registered under Section 15 of the Exchange Act, and has filed all reports required by the Exchange Act since the date the Company first became subject to such reporting obligations.

5.Investment Intent. The Holder, by its acceptance of this Note and notwithstanding any lack of signature hereto on its part, hereby represents and warrants (i) that this Note is being acquired, and any Conversion Shares will be acquired, by the Holder for its own account, for investment purposes, and not with a view to any distribution thereof, and (ii) that it will not sell, assign, mortgage, pledge, hypothecate, transfer or otherwise dispose of any of the Conversion Shares unless a registration statement under the Act with respect thereto is in effect and the prospectus included therein meets the requirements of Section 10 of the Act, or (iii) the Company has received a written opinion of its counsel, or counsel reasonably satisfactory to it, that, after an investigation of the relevant facts, such counsel is of the opinion that such proposed sale, assignment, mortgage, pledge, hypothecation, transfer or disposition does not require registration under the Act or applicable "blue sky" or state securities laws.

6.Events of Default. An "Event of Default" shall be deemed to have occurred if:

(a)The Company defaults in any payment due under this Note, when and as the same shall become due and payable whether at maturity thereof, or by acceleration or otherwise, which default shall continue uncured for a period of ten (10) days from the date thereof; or

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(b)The Company fails to comply with any of the covenants, conditions or agreements set forth in this Note and such default shall continue uncured for a period of thirty (30) days after receipt of written notice to the Company from the Holder stating the specific default or defaults; or

(c)The Company shall file or consent by answer or otherwise to the entry of an order for relief or approving a petition for relief, reorganization or arrangement or any other petition in bankruptcy for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or shall make an assignment for the benefit of its creditors, or shall consent to the appointment of a custodian, receiver, trustee or other officer with similar powers of itself or of any substantial part of its property, or shall be adjudicated a bankrupt or insolvent, or shall take corporate action for the purpose of any of the foregoing, or if a court or governmental authority of competent jurisdiction shall enter an order appointing a custodian, receiver, trustee or other officer with similar powers with respect to the Company or any substantial part of its property or an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law, or an order for the dissolution, winding up or liquidation of the Company, or if any such petition shall be filed against the Company and such petition shall not be dismissed within sixty (60) days.

7.Remedies.In case an Event of Default (other than an Event of Default resulting from the Company's failure to pay the principal amount of this Note, when the same shall be due and payable in accordance with the terms hereof and an Event of Default resulting from bankruptcy, insolvency or reorganization) shall occur and be continuing after giving effect to any applicable cure provisions herein, the Holder may declare by notice in writing to the Company all unpaid principal on the Note then outstanding to be due and payable immediately. In case an Event of Default resulting from the Company's non-payment of principal upon this Note shall occur, the Holder may declare all unpaid principal on this Note to be due and payable immediately. In case an Event of Default resulting from bankruptcy, insolvency or reorganization shall occur, all unpaid principal on the Note shall be due and payable immediately without any declaration or other act on the part of the Holder. Any such acceleration may be annulled and past defaults (except, unless theretofore cured, a default in payment of principal on the Note) may be waived by the Holder.

8.Costs of Collection. Should the indebtedness represented by this Note or any part thereof be collected in any proceeding, or this Note be placed in the hands of attorneys for collection following any Event of Default, the Company agrees to pay as an additional obligation under this Note, in addition to the principal due and payable hereunder, all costs of collecting this Note, including reasonable attorneys' fees.

9.Waiver and Amendments. This Note may be amended, modified, superseded, canceled, renewed or extended, and the terms hereof may be waived only by a written instrument signed by the Company and the Holder. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver hereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or further exercise hereof or the exercise of any other right, power or privilege hereunder. The rights and remedies provided herein are cumulative and are not exclusive of any rights or remedies which any party may otherwise have at law or in equity.

10.Loss, Theft, Destruction or Mutilation of Note.Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and of indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Note, if mutilated, the Company will make and deliver a new Note, of like tenor, in lieu of this Note. Any Note made and delivered in accordance with the provisions of this Section 11 shall be dated as of the date hereof.

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11.Restrictions on Transfer.

11.1Transfer to Comply with the Securities Act of 1933. This Note and any Conversion Shares may not be sold, assigned, mortgaged, pledged, hypothecated, transferred or otherwise disposed of except as follows: (i) to a person or entity who, in the opinion of counsel to the Company, is a person or entity to whom this Note or the Conversion Shares may legally be transferred without registration and without the delivery of a current prospectus under the Act with respect thereto, and then only against receipt of an agreement of such person to comply with the provisions hereof with respect to any resale or other disposition of such securities; or (ii) to any person upon delivery of a prospectus then meeting the requirements of the Act relating to such securities and the offering thereof for such sale or disposition, and thereafter to all successive assignees.

11.2Legend. Upon conversion of this Note and the issuance of any of the Conversion Shares thereunder, all certificates representing shares shall bear on the face thereof substantially the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO SUCH SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE ACT, BUT, THEN, ONLY UPON THERE HAVING FIRST BEEN OBTAINED A WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR STATE SECURITIES LAW.

12.Limitation on Recourse. No recourse shall be had for the payment of the principal of, or other fees in connection with, this Note against any officer, director or agent of the Company, past, present or future, all such liability of the officers, directors and agents having been waived, released and surrendered by the Holder hereof by its acceptance of this Note.

13.Integration. This Note constitutes the rights and obligations of the Holder and the Company. No provision of this Note may be modified except by an instrument in writing signed by the party against whom the enforcement of any such modification is sought.

14.Notice. Any notice, demand or request relating to any matter set forth herein shall be in writing and shall be deemed effective when hand delivered or when mailed, postage pre-paid by registered or certified mail, return receipt requested, or by overnight courier, or when sent by facsimile transmission to either the Company at its address stated above, or to the Holder at its address stated above, or such other address as either party shall have notified the other in writing as aforesaid.

15.Applicable Law. This Note is issued under and shall for all purposes be governed by and construed in accordance with the laws of the Florida, without regard to conflict of laws.

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IN WITNESS WHEREOF, the Company has caused this Note to be signed on its behalf in its corporate name, by its duly authorized officer, all as of the date first above written.

Innovative Software Technologies, Inc.

By:____________________________

Name:Christopher J. Floyd

Title:Chief Financial Officer

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Exhibit A

Innovative Software Technologies, Inc..

___________

CONVERTIBLE PROMISSORY NOTE

CONVERSION FORM

The undersigned hereby irrevocably elects to convert an amount equal to $_____________ in principal (the "Conversion Amount") of the Convertible Secured Promissory Note into a number of shares of Innovative Software Technologies, Inc. as determined by dividing the Conversion Amount by the Conversion Price.

Date:______________	____________________________________________
	Print Name of Entity or Individual
	[As it is to appear on stock certificate]
	FOR INDIVIDUAL:
	_____________________________________________
	Signature
	_____________________________________________
	Address
	_______________________________________________
	_______________________________________________
	Social Security Number
	FOR ENTITY:
	By:__________________________________________
	Name:
	Title:
	_____________________________________________
	Address
	_______________________________________________
	_______________________________________________
	Employer Identification Number

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EX-4.3

Warrant No. 15 Issuance Date: October 16, 2006

THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO INNOVATIVE SOFTWARE TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

WARRANT TO PURCHASE SHARES

OF COMMON STOCK

OF INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

1.Grant of Warrant.

(a)Innovative Software Technologies, Inc. a California corporation (the “Company”), hereby agrees that Crescent International Ltd., a Bermuda corporation (the “Holder”), for value received, is entitled, subject to the provisions of this Warrant, to purchase from the Company, in whole or in part and at any time or from time to time, during the period commencing on the date hereof and expiring at 5:00 p.m., Eastern time, on the Expiration Date (as defined below), One Million Two Hundred Thousand, (1,200,000) fully paid and non-assessable shares of Common Stock (as defined below). The “Exercise Price” for such shares shall be the lesser of five cents ($.05) or the price per share paid by a third-party investor for a share of Common Stock in a Qualified Financing. For purposes hereof, the term “Qualified Financing” shall mean the first transaction after the date of this Note in which the Company issues to any person or entity any shares of Common Stock, or any rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock (excluding (i) the issuance of any convertible promissory note on or after the date hereof having substantially the same conversion price as the Convertible Promissory Note of even date herewith in the principal amount of $300,000 issued by the Company to Holder (the “Note”) and the issuance of any warrant having substantially the same terms and conditions as this Warrant, as well as the issuance of any shares of Common Stock upon the conversion or exercise of such note or warrant pursuant to the terms thereof , (ii) any shares of Common Stock issued or issuable upon conversion or exchange of any rights, options, warrants or convertible or exchangeable securities, and any shares of Common Stock issuable upon exercise thereof, which rights, options, warrants or convertible or exchangeable securities were issued on or prior to the date of this Warrant, (iii) any rights, options, warrants or convertible or exchangeable securities and any shares of Common Stock issued upon conversion or exercise thereof or any shares of Common Stock otherwise issued or issuable pursuant to employees, directors, officers, consultants, or independent contractors of the Company in consideration of past or future services rendered by such parties to the Company or its affiliates, (iv) shares of Common Stock issued for consideration other than cash, including without limitation shares issued in the settlement of any claim against the Company, (v) shares of Common Stock or other securities issued in a financing transaction that, together with all prior related financing transactions containing the same terms, results in gross proceeds to the Company of less than $2,000,000, and (vi) shares of Common Stock issued as consideration for a merger or acquisition of all or substantially all of the assets of a third party). In a Qualified Financing, if the Company issues any rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock, the per share Common Stock purchase price in such transaction shall be determined by dividing (1) the total amount receivable by the Company in consideration for the sale and issuance of such rights, options, warrants or convertible or exchangeable securities, plus the total consideration receivable by the Company upon exercise, conversion or exchange thereof, by (2) the total number of shares of Common Stock covered by such rights, options, warrants or convertible or exchangeable securities. For purposes of the preceding sentence, the “total amount receivable by the Company” will include the fair market value of all non-cash consideration received or receivable by the Company in consideration for the issuance, including, in the case of warrants granted in conjunction with a debt facility, the value received by the Company for such warrants in excess of the exercise price thereof. The Exercise Price is subject to adjustment as set forth in Section 4 below. This Warrant is being granted in connection with, and in consideration of, a loan in the amount of One Hundred Thousand Dollars ($300,000) as evidenced by that certain Convertible Promissory Note of even date herewith granted to the Holder.

(b)The term “Common Stock” means the common stock, par value $0.001 per share, of the Company as constituted on the date hereof, together with any other equity securities that may be issued by the Company in substitution therefor. The number of shares of Common Stock to be received upon the exercise of this Warrant, and the Exercise Price, shall be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter referred to as “Warrant Stock” or “Warrant Shares.” The term “Company” means and includes the Company as well as (i) any successor corporation resulting from the merger or consolidation of the Company with another corporation, or (ii) any corporation to which the Company has transferred its property or assets as an entirety or substantially as an entirety.

2.Exercise of Warrant.

(a)Subject to the limitations set forth in Section 5, this Warrant may be exercised in whole or in part at any time or from time to time during the period commencing on the date hereof and expiring at 5:00 p.m. Tampa (Florida) time, on the fifth anniversary of the Issuance Date of this Warrant as stated above, or, if such date is a day on which banking institutions in Florida are authorized by law to close, then on the next succeeding day that banking institutions in Florida shall not be authorized to close.

(b)The Holder may exercise this Warrant by presentation and surrender of this Warrant to the Company at its principal office with the Warrant Exercise Form attached hereto duly executed and accompanied by payment (either in cash, wire transfer, or by certified or official bank check, payable to the order of the Company) of an amount equal to the Exercise Price multiplied by the number of shares of Warrant Stock purchased (the “Purchase Price”). The Purchase Price shall be payable in cash.

(c)If this Warrant is exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable hereunder.

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(f)Upon receipt by the Company of this Warrant, together with the Purchase Price, at its office in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder.

3.Reservation of Shares. The Company will, on the date of issuance of this Warrant, reserve, and use reasonable best efforts to maintain such reservation, for issuance and delivery of all shares of Warrant Stock. All such shares shall be duly authorized and, when issued upon exercise in compliance with the terms of this Agreement, shall be validly issued, fully paid and non-assessable. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but the Company shall pay the Holder an amount equal to the applicable Exercise Price multiplied by such fraction in lieu of each fraction of a share otherwise called for upon any exercise of this Warrant.

4.Adjustments.

(a)Capital Adjustments. In case the Company shall: (i) pay a dividend with respect to its capital stock in shares of Stock, (ii) subdivide its outstanding shares of Stock, (iii) combine its outstanding shares of Stock into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of the Stock (including any such reclassification in connection with a merger, consolidation or other business combination in which the Company is the continuing corporation) (each of the actions in (i)-(iv) is hereinafter referred to as an “Adjustment Event”), the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately prior to the record date for such Adjustment Event shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Warrant Stock or other securities of the Company that such Holder would have owned or have been entitled to receive after the happening of such Adjustment Event, had such Warrant been exercised in whole immediately prior to the happening of such Adjustment Event or any record date with respect thereto. An adjustment made pursuant to this Section 4(a) shall become effective immediately after the effective date of such Adjustment Event, retroactive to the record date, if any, for such Adjustment Event. Whenever the number of shares of Warrant Stock purchasable upon the exercise of this Warrant is adjusted pursuant to this Section 4(a), the Exercise Price payable upon exercise of this Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of Warrant Stock purchasable upon the exercise of this Warrant immediately prior to such adjustment, and the denominator of which shall be the number of shares of Warrant Stock so purchasable immediately thereafter.

(b)Business Combinations. If the Company is a party to a merger, sale of all or substantially all of its assets, share exchange or other similar business combination transaction, this Warrant shall pertain and apply to the securities and/or other property to which the Holder would have otherwise been entitled had this Warrant then been exercised in whole prior to such business combination.

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(c)Notice to Warrant Holder of Adjustment. Whenever the number of shares of Warrant Stock or the Exercise Price is adjusted as herein provided, the Company shall cause to be mailed to the Holder in accordance with the provisions of this Section 4 a notice (i) stating that an event giving rise to an adjustment hereunder has occurred, (ii) setting forth the adjusted number of shares of Warrant Stock and the adjusted Exercise Price and (iii) showing in reasonable detail the computations and the facts upon which such adjustments are based.

5.Restrictions on Transfer. The Holder hereby acknowledges that neither this Warrant nor any of the securities that may be acquired upon exercise of this Warrant have been registered or qualified under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any state. The Holder acknowledges that, upon exercise of this Warrant, the securities to be issued upon such exercise will be subject to applicable federal and state securities (or other) laws requiring registration, qualification or approval of governmental authorities before such securities may be validly issued or delivered upon notice of such exercise. The Holder agrees that the issuance of such securities may be deferred until the issuance or sale of such securities shall be compliant with federal and state securities laws. The restrictions imposed by this Section 5 upon the exercise of this Warrant shall cease and terminate as to any particular shares of Warrant Stock (i) when such securities shall have been effectively registered and qualified under the Securities Act and all applicable state securities laws and disposed of in accordance with the registration statement covering such securities, or (ii) when, in the reasonable opinion of counsel reasonably acceptable to the Company, such restrictions are no longer required in order to insure compliance with the Securities Act and all applicable state securities laws.

6.Legends. Unless (i) the shares of Warrant Stock have been registered under the Securities Act, or (ii) in the reasonable opinion of counsel for the Company such legend is no longer required in order to ensure compliance with the Securities Act and all applicable state securities laws, upon exercise of any of the Warrants and the issuance of any of the shares of Warrant Stock, all certificates representing such shares shall bear on the face thereof substantially the following legend and any additional legends as may be required under state securities laws:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL OR UPON EVIDENCE REASONABLY SATISFACTORY TO INNOVATIVE SOFTWARE TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

7.Notices of Record Date, Etc. In case:

(a)the Company shall establish a record date for the holders of its Stock for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or to receive any other right;

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(b)of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another entity, any share exchange for shares of capital stock of another corporation or any conveyance of all or substantially all of the assets of the Company to another entity;

(c)of any voluntary or involuntary dissolution, liquidation or winding up of the Company; or

(d)the Company shall enter into a letter of intent or agreement with respect to a transaction by which all or substantially all of the outstanding shares of Stock of the Company are to be acquired by a third party;

then the Company shall mail or cause to be mailed to each Holder at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or rights, and stating the amount and character of such dividend, distribution or rights, (ii) the date on which such reorganization, reclassification, offering, consolidation, merger, conveyance, dissolution, liquidation or winding up is to take place, and the time, if any is to be fixed, as to which the holders of record of Stock shall be entitled to exchange their shares for securities or other property deliverable upon the completion of such transaction, or (iii) the date on which the closing of the acquisition by a third party of all or substantially all of the outstanding shares of Stock is to occur. Such notice shall be mailed as soon as practicable after the occurrence or likelihood of such event is publicly disclosed, but in no event later than 15 days prior to the consummation of such event.

8.Transfer and Assignment.

(a)Neither this Warrant nor any rights hereunder may be assigned, transferred, pledged or hypothecated (a “Disposition”) in any way (whether by operation of law or otherwise), unless such securities are registered under the Securities Act, or unless and until Holder shall have obtained the Company’s prior written consent to such Disposition. Any attempted assignment, transfer, pledge, hypothecation or other disposition of this Warrant contrary to the provisions of this Agreement shall be null and void and without legal effect.

(b)Each permitted Disposition of this Warrant shall be effected by the surrender of this Warrant certificate, along with the form of assignment attached hereto, properly completed and executed by the registered holder hereof, at the principal executive office of the Company in the United States of America.

9.Representations and Warranties.The Holder represents and warrants to the Company that:

(a)Investment Purpose. The Holder is acquiring the Warrant for the Holder’s own account and not with a present view to the distribution thereof, and Holder does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer, distribute or grant participation to any third person or entity with respect to the Warrant or Warrant Stock. The Holder understands that the Holder may be required to bear the economic risk of this investment indefinitely, unless the Warrant Stock is registered pursuant to the Securities Act and any applicable state securities or blue sky laws or an exemption from such registration is available, and that the Company has no present intention of registering the Warrant Stock.

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(b)Holder Status. The Holder is either: (i) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act; or (ii) an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D. The Holder is not registered as a broker or dealer under Section 15(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or a member of the National Association of Securities Dealers, Inc.

(c)Reliance on Exemptions. The Holder understands that the Warrant and Warrant Stock are being offered and sold to Holder in reliance upon specific exemptions from the registration requirements of the United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Holder set forth herein to determine the availability of such exemptions and the eligibility of the Holder to acquire the Warrant and Warrant Stock.

(d)Information. The Holder and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company, and materials relating to the offer and sale of the Warrant, that have been requested by the Holder or its advisors, if any. The Holder and its advisors, if any, have been afforded the opportunity to ask questions of the Company and have received what the Holder and its advisors, if any, believe to be satisfactory answers to any such inquiries. The Holder acknowledges and understands that its investment in the Warrant or Warrant Stock involves a significant degree of risk.

(e)Experience. The Holder is experienced in evaluating companies such as the Company, is able to fend for itself in transactions such as the one contemplated by this Agreement, has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of such Holder’s prospective investment in the Company, and has the ability to bear the economic risks of an investment in the Warrant and the Warrant Stock.

(f)Governmental Review. The Holder understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Warrant or the Warrant Stock or an investment therein.

(g)Transfer or Resale. The Holder understands that:

i.neither the delivery of the Warrant nor the Warrant Stock has been registered under the Securities Act or any applicable state securities laws, and consequently, the Holder may have to bear the risk of owning the Warrant or the Warrant Stock for an indefinite period of time because the Warrant and Warrant Stock may not be transferred except as set forth in Section 8 of this Agreement and unless; (i) the resale of the Warrant or the Warrant Stock, as the case may be, is registered pursuant to an effective registration statement under the Securities Act or (ii) if requested by the Company, the Holder has delivered to the Company an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions and which counsel shall be reasonably satisfactory to the Company) to the effect that the securities to be sold or transferred may be sold or transferred pursuant to one or more exemptions from such registration (whether pursuant to statute, regulation or otherwise);

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ii.any sale of the Warrant or Warrant Stock made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 (including the holding period requirement, the volume limitations and the manner of sale restrictions, if applicable); and

iii.neither the Company nor any other person is under any obligation to register the Warrant or Warrant Stock under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

(h)No Public Offering. The Holder has not received any information relating to the Warrant, the Warrant Stock or the Company, and is not purchasing the Warrant as a result of, any form of general solicitation or general advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or pursuant to any seminar or meeting whose attendees were invited by any general solicitation or general advertising.

(i)Representation. The Holder has had an opportunity to consult with an attorney in connection with the Holder’s investment in the Company.

10.Notices. All notices required hereunder must be in writing and shall be deemed given when telefaxed, delivered personally or within three days after mailing when mailed by certified or registered mail, return receipt requested, if to the Company, at 100 North Tampa Street, Tampa, Florida 33602, and if to the Holder, at the address for the Holder set forth below Holder’s signature hereto, or at such other address of which the Company or Holder has been advised by notice hereunder.

11.Rights as a Shareholder. The Holder shall have no rights as a shareholder with respect to any shares of Warrant Stock until the date of issuance of such shares.

12.Lost or Destroyed Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. The Holder agrees with the Company that this Warrant is issued, and all the rights hereunder shall be held subject to, all of the conditions, limitations and provisions set forth herein.

13.Applicable Law. The Warrant is issued under and shall for all purposes be governed by and construed in accordance with the internal laws of the State of Florida, without regard to conflicts of laws principles.

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IN WITNESS WHEREOF, the parties have caused this Warrant to be signed on its behalf, in its corporate name, by its duly authorized officer, as of the day and year first above written.

INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

By: _______________________________________

Christopher J. Floyd

Chief Financial Officer

HOLDER

By: _______________________________________

[insert name of Holder]

___________________________________________

___________________________________________

___________________________________________

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WARRANT EXERCISE FORM

The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing __________ shares of common stock, par value $0.001 per share, of Innovative Software Technologies, Inc., a Californica corporation, and hereby makes payment of $____________ in payment therefore.

	Signature
	Signature, if jointly held
Date:_____________________

********************************************************************************************

INSTRUCTIONS FOR ISSUANCE OF STOCK

(if other than to the registered holder of the within Warrant)

Name
	(Please typewrite or print in block letters)
Address

Social Security or Taxpayer Identification Number

 

********************************************************************************************

ASSIGNMENT FORM

FOR VALUE RECEIVED, ______________________________ hereby sells, assigns and transfers unto

Name (please typewrite or print in block letters)

the right to purchase common stock, par value $0.001 per share, of Innovative Software Technologies, Inc., a California corporation (the “Company”), represented by this Warrant to the extent of shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ______________________________, as its attorney in fact, to transfer the same on the books of the Company with full power of substitution in the premises.

Dated:_____________________
	Signature
	Signature, if jointly held

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EX-4.4

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (“Agreement”) is entered into as of October 16, 2006, by and among INNOVATIVE SOFTWARE TECHNOLOGIES, INC., a California corporation with offices at 3998 FAU Blvd., Bldg. 1-210, Boca Raton, Florida (the “Company”), and each of the parties identified as “Purchasers” on the signature pages hereto (collectively and individually, the “Purchaser”).

WITNESSETH:

WHEREAS, the Company has issued to the Purchasers one or more Convertible Promissory Notes on the dates and in the amounts set forth on each Purchaser’s respective signature page hereto (the “Notes”).

WHEREAS, in connection with the issuance of the Notes, the Purchasers have acquired from the Company warrants to purchase shares of common stock, par value $.001 per share, of the Company (“Common Stock”) in the amounts and on the dates set forth on each Purchaser’s respective signature page hereto (the “Warrants”).

WHEREAS, the Notes are convertible into shares of Common Stock under the circumstances and pursuant to the terms and conditions set forth in the Notes (the “Conversion Shares”), and the Warrants contemplate that the Warrants will be exercisable into shares of Common Stock pursuant to the terms and conditions set forth in the Warrants (the “Warrant Shares”).

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement, the Company and the Purchaser agree as follows:

1.Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

“Commission” or “SEC” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

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

“Holder” and “Holders” shall mean the Purchaser and any permitted transferee or transferees of Registrable Securities (as defined below), Notes, or Warrants that have not been sold to the public and to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement; provided that neither such person nor any affiliate of such person is registered as a broker or dealer under Section 15(a) of the Securities Exchange Act of 1934, as amended, or a member of the National Association of Securities Dealers, Inc.

The terms “register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

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“Registrable Securities” shall mean (i) the Conversion Shares and Warrant Shares and (ii) other shares of Common Stock issued or issuable to each Holder or its permitted transferee or designee (a) upon any exchange of or any replacement of the Notes or Warrants, or (b) upon any conversion, exercise or exchange of any securities issued in connection with any such exchange or replacement; provided that all such shares shall cease to be Registrable Securities at such time as they have been sold under a registration statement or pursuant to Rule 144 under the Securities Act or otherwise or at such time as they are eligible to be sold pursuant to Rule 144(k).

“Registration Expenses” shall mean all expenses to be incurred by the Company in connection with each Holder’s registration rights under this Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration.

“Regulation D” shall mean Regulation D as promulgated pursuant to the Securities Act, and as subsequently amended.

“Securities Act” or “Act” shall mean the Securities Act of 1933, as amended.

“Selling Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities, including all fees and disbursements of counsel for a Holder in connection with the exercise of Holder’s rights hereunder.

2.Piggyback Registration

(a)If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for persons or entities other than the Holders) any Common Stock in connection with the public offering of such Common Stock (other than a registration relating solely to the sale of securities of participants in a Company stock plan, a registration relating to a corporate reorganization or transaction under Rule 145 of the Act, a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within ten (10) days after mailing of such notice by the Company in accordance with Section 15(c), the Company shall, subject to the provisions of Section 2(c), use reasonable commercial efforts to cause to be registered under the Act all of the Registrable Securities that each such Holder requests to be registered.

(b)The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.

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(c)In connection with any offering involving an underwriting of shares of the Company’s Common Stock, the Company shall not be required under this Section 2 to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company (or by other persons entitled to select the underwriters) and enter into an underwriting agreement in customary form with such underwriters, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of Registrable Securities requested to be included in such offering exceeds the amount of Registrable Securities that the underwriters determine in their sole discretion is compatible with the success of the offering (after taking into account the maximum number of shares to be sold by the Company and the other selling stockholders, if any, in the offering), then the Company shall be required to include in the offering only that number of Registrable Securities that the underwriters determine in their sole discretion will not jeopardize the success of the offering. In the event that the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be apportioned pro rata among the selling Holders based on the number of Registrable Securities held by all selling Holders or in such other proportions as shall mutually be agreed to by all such selling Holders.

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4.Obligations of the Company

5.. Whenever required under Section 2 of this Agreement to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a)prepare and file with the SEC a registration statement with respect to such Registrable Securities and use reasonable commercialefforts to cause such registration statement to become effective and keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed or the Conversion Shares and Warrant Shares can be sold pursuant to Rule 144 under the Act;

(b)prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement;

(c)furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

(d)notify the Holders promptly and, if requested, confirm such advice in writing (i) when a registration statement has become effective and when any post-effective amendments and supplements thereto become effective, and (ii) of the issuance by the SEC or any state securities commission of any stop order suspending the effectiveness of a registration statement; and

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(e)use best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders.

Notwithstanding the provisions of this Section 4, the Company shall be entitled to postpone or suspend, for a reasonable period of time and upon written notice to the Holders (a “Suspension Notice”), the filing, effectiveness or use of, or trading under, any registration statement if the Company shall determine that any such filing or the sale of any securities pursuant to such registration statement would in the good faith judgment of the Board of Directors of the Company:

(A)materially impede, delay or interfere with any material pending or proposed financing, acquisition, corporate reorganization or other similar transaction involving the Company for which the Board of Directors of the Company has authorized negotiations;

(B)materially adversely impair the consummation of any pending or proposed material offering or sale of any class of securities by the Company; or

(C)require disclosure of material nonpublic information that, if disclosed at such time, would be materially harmful to the interests of the Company and its stockholders; provided, however, that during any such period all executive officers and directors of the Company are also prohibited from selling securities of the Company (or any security of any of the Company’s subsidiaries or affiliates).

In the event of the suspension of effectiveness of any registration statement pursuant to this Section 4, the applicable time period during which such registration statement is to remain effective shall be extended by that number of days equal to the number of days the effectiveness of such registration statement was suspended.

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6.Expenses of Registration.All Registration Expenses in connection with any registration, qualification or compliance with registration pursuant to this Agreement shall be borne by the Company, and all Selling Expenses of a Holder shall be borne by such Holder.

7.Indemnification.

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(a)Company Indemnity. The Company will indemnify each Holder, each of its officers, directors, agents and partners, and each person controlling each of the foregoing, within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls, within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, any underwriter, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any final prospectus (as amended or supplemented if the Company files any amendment or supplement thereto with the SEC), registration statement filed pursuant to this Agreement or any post-effective amendment thereof or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, or any violation by the Company of the Securities Act or any state securities law or in either case, any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each Holder, each of its officers, directors, agents and partners, and each person controlling each of the foregoing, for any reasonable legal fees of a single counsel and any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to a Holder to the extent that any such claim, loss, damage, liability or expense arises out of or is based on (i) any untrue statement or omission based upon written information furnished to the Company by such Holder or underwriter (if any) therefor and stated to be specifically for use therein, (ii) any failure by any Holder to comply with prospectus delivery requirements or the Securities Act or Exchange Act or any other law or legal requirement applicable to them or any covenant or agreement contained in this Agreement or (iii) an offer of sale of Conversion Shares or Warrant Shares occurring during a period in which sales under the registration statement are suspended as permitted by this Agreement. The indemnity agreement contained in this Section 7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent will not be unreasonably withheld).

(b)Holder Indemnity. Each Holder will, severally but not jointly, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, officers, agents and partners, and any other stockholder selling securities pursuant to the registration statement and any of its directors, officers, agents, partners, and any person who controls such stockholder within the meaning of the Securities Act or Exchange Act and each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, each other Holder (if any), and each of their officers, directors and partners, and each person controlling such other Holder(s) against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on (i) any untrue statement (or alleged untrue statement) of a material fact contained in any such final prospectus (as amended or supplemented if the Company files any amendment or supplement thereto with the SEC), registration statement filed pursuant to this Agreement or any post-effective amendment thereof or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading in light of the circumstances under which they were made or (ii) failure by any Holder to comply with prospectus delivery requirements or the Securities Act, Exchange Act or any other law or legal requirement applicable to them or any covenant or agreement contained in this Agreement, and will reimburse the Company and such other Holder(s) and their directors, officers and partners, underwriters or control persons for any reasonable legal fees or any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such final prospectus (as amended or supplemented if the Company files any amendment or supplement thereto with the SEC), registration statement filed pursuant to this Agreement or any post-effective amendment thereof in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein, and provided that the maximum amount for which such Holder shall be liable under this indemnity shall not exceed the net proceeds received by the Holders from the sale of the Registrable Securities pursuant to the registration statement in question. The indemnity agreement contained in this Section 7(b) shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld).

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(c)Procedure. Each party entitled to indemnification under this Section 7 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim in any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at its own expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 7 except to the extent that the Indemnifying Party is materially and adversely affected by such failure to provide notice. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such non-privileged information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.

8.Contribution. If the indemnification provided for in Section 7 herein is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein (other than by reason of the exceptions provided therein), then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities as between the Company on the one hand and any Holder(s) on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of such Holder(s) in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of any Holder(s) on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by such Holder(s).

In no event shall the obligation of any Indemnifying Party to contribute under this Section 8 exceeds the amount that such Indemnifying Party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 7(a) or 7(b) hereof had been available under the circumstances.

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The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraphs. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraphs shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section, no Holder shall be required to contribute any amount in excess of the amount equal to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to the registration statement in question. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

9.Survival. The indemnity and contribution agreements contained in Sections 7 and 8 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, and (ii) the consummation of the sale or successive resales of the Registrable Securities.

10.Information by Holders. As a condition to the obligations of the Company to complete any registration pursuant to this Agreement with respect to the Registrable Securities of each Holder, such Holder will furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended methods of disposition of the Registrable Securities held by it as is reasonably required by the Company to effect the registration of the Registrable Securities. At least ten business days prior to the first anticipated filing date of a registration statement for any registration under this Agreement, the Company will notify each Holder of the information the Company requires from that Holder whether or not such Holder has elected to have any of its Registrable Securities included in the registration statement. If the Company has not received the requested information from a Holder by the business day prior to the anticipated filing date, then the Company may file the registration statement without including Registrable Securities of that Holder.

11.Further Assurances. Each Holder will cooperate with the Company, as reasonably requested by the Company, in connection with the preparation and filing of any registration statement hereunder, unless such Holder has notified the Company in writing of such Holder’s irrevocable election to exclude all of such Holder’s Registrable Securities from such registration statement.

12.Suspension of Sales. Upon receipt of any Suspension Notice from the Company, each Holder will immediately discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until (i) it receives copies of a supplemented or amended prospectus or (ii) the Company advises the Holder that a suspension of sales under Section 4 has terminated. If so directed by the Company, each Holder will deliver to the Company (at the expense of the Company) or destroy all copies in the Holder’ s possession (other than a limited number of file copies) of the prospectus covering such Registrable Securities that is current at the time of receipt of such notice.

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13.Replacement Certificates. The certificate(s) representing the Conversion Shares or Warrant Shares held by the Purchaser (or then Holder) may be exchanged by the Purchaser (or such Holder) at any time and from time to time for certificates with different denominations representing an equal aggregate number of shares of Common Stock, as reasonably requested by such Purchaser (or such Holder) upon surrendering the same. No service charge will be made for such registration or transfer or exchange.

14.Transfer or Assignment. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The rights granted to the Purchaser by the Company under this Agreement to cause the Company to register Registrable Securities may be transferred or assigned (in whole or in part) to a transferee or assignee of the Notes or Warrants, and all other rights granted to the Purchaser by the Company hereunder may be transferred or assigned to any transferee or assignee of the Notes, Warrants, or Registrable Securities; provided in each case that (i) the Company is given written notice by the Purchaser at the time of or within a reasonable time after such transfer or assignment, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned; and provided further that the transferee or assignee of such rights agrees in writing to be bound by the registration provisions of this Agreement, (ii) such transfer or assignment is made in accordance with applicable law and is not made under the registration statement or Rule 144, (iii) such transfer is made according to the applicable requirements of the Note or Warrant, as the case may be, and (iv) the transferee has provided to the Company an investor questionnaire (or equivalent document) evidencing that the transferee is a “qualified institutional buyer” or an “accredited investor” defined in Rule 501(a)(1),(2),(3), or (7) of Regulation D.

15.Miscellaneous.

(a)Remedies. The Company and the Purchaser acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

(b)Jurisdiction. Each of the Company and the Purchaser (i) hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts sitting in Broward and Hillsborough County, Florida for the purposes of any suit, action or proceeding arising out of or relating to this Agreement and (ii) hereby waives, and agrees not to assert in any such suit action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. The Company and the Purchaser consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this paragraph shall affect or limit any right to serve process in any other manner permitted by law.

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(c)Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing by facsimile, mail or personal delivery and shall be effective upon actual receipt of such notice. The addresses for such communications shall be:

If to the Company:

Innovative Software Technologies, Inc.

3998 FAU Boulevard, Suite 210

Boca Raton, FL 33431

Fax: (561) 417 - 7253

Attention: Christopher J. Floyd, Chief Financial Officer

If to the Purchasers, to the addresses set forth on their respective signature pages hereto:

Any party hereto may from time to time change its address for notices by giving at least five days’ written notice of such changed address to the other parties hereto.

(d)Waivers. No waiver by any party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. The representations and warranties and the agreements and covenants of the Company and each Purchaser contained herein shall survive the closing of the transaction contemplated by this Agreement.

(e)Execution in Counterpart. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, it being understood that all parties need not sign the same counterpart.

(f)Signatures. Facsimile signatures shall be valid and binding on each party submitting the same.

(g)Entire Agreement; Amendment. This Agreement, together with the Notes and Warrants and the other agreements and documents contemplated hereby and thereby, contains the entire understanding and agreement of the parties, and may not be amended, modified or terminated except by a written agreement signed by the Company and the Holder of the Registrable Securities seeking registration of such securities.

(h)Governing Law. This Agreement and the validity and performance of the terms hereof shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts executed and to be performed entirely within such state, except to the extent that the law of the State of California regulates the Company’s issuance of securities.

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(i)Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.

(j)Force Majeure. The Company shall not be deemed in breach of its commitments under this Agreement shall be required if the Company is unable to fulfill its obligations hereunder in a timely fashion if the SEC or the Nasdaq National Market are closed or operating on a limited basis as a result of the occurrence of a Force Majeure. As used herein, “Force Majeure” means war or armed hostilities or other national or international calamity, or one or more acts of terrorism, which are having a material adverse effect on the financial markets in the United States.

(k)Titles. The titles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

(l)No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.

[signatures to follow]

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In Witness Whereof, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

COMPANY:

INNOVATIVE SOFTWARE TECHNOLOGIES, INC.

By:__________________________________

Christopher J. Floyd

Chief Financial Officer

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PURCHASER COUNTERPART SIGNATURE PAGE

TO REGISTRATION RIGHTS AGREEMENT,

DATED October 16, 2006,

AMONG INNOVATIVE SOFTWARE TECHNOLOGIES, INC. AND

THE “PURCHASERS” IDENTIFIED THEREIN

The undersigned hereby executes and delivers the Registration Rights Agreement to which this Signature Page is attached, which, together with all counterparts of the Registration Rights Agreement and Signature Pages of the Company and other “Purchasers” under the Registration Rights Agreement, shall constitute one and the same document in accordance with the terms of the Registration Rights Agreement.

PURCHASER:Crescent International Ltd.

By:__________________________________________

Name:________________________________________

Title:_________________________________________

Date:_________________________________________

Address:                84 av. Louis-Casaï

CH 1216 COINTRIN , Geneva

Switzerland

Date of Note:October 16, 2006

Principal Amount of Note:     $300,000 USD

Date of Warrant:                      October 16, 2006

Number of Shares Covered by Warrant:1,200,000