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XFormity Technologies, Inc.

60 Revere Drive

Suite 725

Northbrook, Illinois 60062

(847) 562-0700

July 15, 2005

Mr. Craig Wilson, Senior Assistant Chief Accountant

Ms. April Coleman, Staff Accountant

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W.

Room 4561

Washington, D.C. 20549

Re:

XFormity Technologies, Inc.

Form 8-K/A filed December 6, 2004

Form 10-QSB for the Fiscal Quarter ended March 31, 2005

Filed May 18, 2005

File No. 000-23391

Dear Mr. Wilson and Ms. Coleman:

        On behalf of XFormity Technologies, Inc. (the "Company"), I am writing to respond to the comments set forth in your letter dated June 22, 2005 with respect to the above referenced filing (the "Filing"). For your convenience we have repeated each of your comments in this letter.  The Company's responses are provided as supplemental information and are set forth below each comment paragraph.

Form 8-K/A filed December 6, 2004

Note 5 - Stockholders' Equity

1.

We note that in 2004, you entered into agreements with seven of your customers to provide for the development of software called Everest.  In exchange for cash, each of the respective customers received an equity position in the Company, receiving shares of your common stock.  Also, we note that these customers are to receive credits against future revenue billings resulting from any charges for the Everest Software, once developed and operating.

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Describe to us the material terms of this arrangement, including the number of shares issued to each customer.

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The value of the shares at the time of issuance.

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How you determined the value of such shares.

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Tell us the current status of the software development.

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Describe how you have accounted for this transaction and how you have allocated the proceeds between the software development arrangement and the sale of common stock.

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Tell us the authoritative accounting literature that you applied.

Material terms of the agreement and number of shares issued to each Consortium member:

Each of the Consortium members, the group of seven (7) customers who represent six of the largest Taco Bell franchisees, agreed to pay $100,000 to be used by XFormity, Inc. (XFM) as working capital and for the development of the Everest software system that would further enhance their business intelligence usage then provided by XFM's QSRx software.   In exchange for this successful development, XFM would credit the eventual monthly license fee for the use of Everest in an amount equal to $150,000 amortized over 36 to 48 months.  XFM would determine the amount of the monthly fee for that Everest license.  Neither party would be liable to the other for amounts in excess of the amounts paid under the agreement.   Return of the $150,000 would be subject to further negotiations based on the Company's future value in the market place and the value of other programs to be developed by XFM.  All of the Consortium members were issued the same amount of shares, 7,243.

The value of the shares at time of issuance:

The Company valued the shares at the time of issuance at the value of the funds received.

How we determined the value of such shares:

At the time the arrangements were made with the respective Consortium members, the Company was in a development stage, and these funds were to be used as working capital with no assurance of the Company's future viability nor of the success of the development of Everest as required by the Consortium parameters.  This was a venture capital investment and we valued the shares equal to the cash funds received.

Tell us the current status of the software development:

The current status of Everest is on hold subject to determination of a contract with a major franchisor that has a competing product.  Discussions are being held to determine if, in exchange for the discontinued development of Everest, they will use XFM's major product throughout their
  corporate stores and proscribe it for their franchisees.  This could materially affect the value of the Company and the negotiations with Consortium members.

Describe how you have accounted for this transaction and how you have allocated the proceeds between the software development arrangement and the sale of common stock:

XFM issued to the respective consortium members shares of the Company as determined by the Company and recorded the transaction as payment for issuance of common stock based on the par value of the common stock.  Management believed the potential credits had no fair value at June 30, 2004 and because the full development and functionality of the Everest software cannot be determined even as of the date of this letter, has not recorded a deferred revenue liability on its books.  Management has not projected any revenue from Everest for fiscal 2005 in its forecasts and fiscal 2006 revenues are subject to many factors and could change.

Tell us the authoritative accounting literature that you applied:

EITF 1996\ Issue 96-18 and FASB Current Text D10 are the authoritative sources for the accounting treatment reflected in our financial statements. There, the Task Force reached a consensus that if, on the measurement date, the quantity or any of the terms of the equity instruments are dependent on the achievement of counterparty performance conditions that, based on the different possible outcomes, result in a range of aggregate fair values for the equity instruments as of that date, then the issuer should utilize the lowest aggregate (that is, the variable terms times the applicable number of equity instruments) amount within that range for recognition purposes. This amount may be zero.  We valued the securities at their fair value equal to the cash received.

Form 10-QSB/A for the Quarter Ended March 31, 2005

Notes to Condensed Consolidated Financial Statements

Note 3 - Summary of Significant Accounting Principles

2.

Your disclosure indicates that you recognize revenue in accordance with Statement of Position (SOP) 97-2, over the term of the agreement or at specific acceptance points.

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Describe your revenue recognition policy for each type of product and service that you sell.

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Clearly indicate the timing and measurement of revenue from each type of earnings activity.

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Identify the elements included in each type of sales transactions.

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Describe how you considered the guidance in SOP 97-2 for recognizing revenue from the sale of software and for accounting for multiple-element arrangements

Describe your revenue recognition policy for each type of product and service that you sell:

All sales to customers are on a monthly basis for our current two product lines: (1) our QSRx Business Intelligence program and (2) our QSRX financial program. The customer has the option to cancel the service at any time prior to the month of actual usage.   If the software product is used during the month, the Company recognizes revenue during the month of usage.

  Clearly indicate the timing and measurement of revenue from each type of earnings activity:

Our customers are billed in advance for the succeeding month for use of the software during that succeeding month.  Most of our customers have multiple store locations that are billed to a main office based on current fees of $50 per store per month for the QSRx Business Intelligence program.  Our QSRx financial program is billed at $25 per month similar to our QSRx Business Intelligence software.  If the software product is used during the month, the Company recognizes revenue during the month of usage.  Thus, the software developed for all customers is standard, with a minimal adjustment for individual customization along with any technical support provided by an outside contractor that is included in the monthly fee.

Identify the elements included in each type of sales transactions:

Under Statement of Position ("SOP") 97-2 .08, the definition for revenue recognition includes the following:

   Persuasive evidence of an arrangement exists.

   Delivery has occurred.

   The vendor's fee is fixed or determinable.

   Collectibility is probable.

In each case where our customer utilizes our QSRx BI and QSRx Financial programs; all of the above elements are included. The customer has agreed on a monthly basis for the respective program(s), he utilizes the software during the month, at a fixed price and is billed and remits the charge for the service.

Describe how you considered the guidance in SOP 97-2 for recognizing revenue from the sale of software and for accounting for multiple-element arrangements:

We used the guidance in SOP 97-2 Appendix C .148 as our guide.  It reflects that our software is part of a lease transaction that contract accounting does not apply to, where there is persuasive evidence of an arrangement that does not include multiple elements, where the single element has been delivered and there are no undelivered elements essential for the functionality of the delivered product.  Collectibility is highly probable and not subject to forfeiture, refund or other concessions, and the monthly fee fixed and thus revenue is recognized.

Liquidity and Capital Resources

3.

We note that in April 2005, the Board of Directors approved a $1.0 million private placement of convertible debentures.

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Describe to us the material terms of this private placement transaction, including the conversion terms.

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Tell us how you have accounted for the issuance of these debentures, including your consideration of the guidance in EITF 98-5 and EITF 00-27 in determining whether or not the offering includes a beneficial conversion feature.

Describe to us the material terms of this private placement transaction, including the conversion terms:

Attached to our response (Attachment I) is a copy of the Term Sheet for the convertible debentures describing all terms of the private placement transaction including conversion terms.

  Tell us how you have accounted for the issuance of these debentures, including your consideration of the guidance in EITF 98-5 and EITF 00-27 in determining whether or not the offering includes a beneficial conversion feature:

To date, we have accounted for the transaction as a debit to cash of $100,000 (funds received to date) and a credit to convertible debt.  On the date of the term sheet, May 2, 2005, the opening, high, low and closing price of the Company's common stock were $0.26, $0.27, $0.26 and $0.27, respectively.  It is the Company's belief that based on the above stock prices at the commitment date, there is no intrinsic value in the "beneficial conversion feature" embedded in the convertible debt.   The lowest conversion price is at $0.28 and the contingent provision of 80% of a future offering is unknown.  If, at the conversion of the debt into common stock when the contingent provision occurs and intrinsic value is created, that amount would then be recorded as a charge to interest expense and a credit to additional paid in capital.

In the discussion in EITF 00-27 Part II, paragraph 8., consensus that changes to the conversion terms that would be triggered by future events not controlled by the issuer should be accounted for as contingent conversion options, and the intrinsic value of such conversion options would not be recognized until and unless the triggering event occurs.  In EITF 98-5, none of the examples of the Application of the EITF Consensuses on Issue 98-5 were applicable since there was no intrinsic value in the beneficial conversion feature at the commitment date.

Controls and Procedures

4.

We note your disclosure indicating that you have evaluated the effectiveness of your disclosure controls and procedures within 90 days of filing your quarterly report on Form 10-QSB.

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Tell us what consideration you have given to SEC release No. 33-8238 which requires that the evaluation be done as of the end of the period covered by the annual or quarterly reports.

Tell us what consideration you have given to SEC release No. 33-8238 which requires that the evaluation be done as of the end of the period covered by the annual or quarterly reports:

The internal control report must include a statement of management's responsibility for establishing and maintaining adequate internal control over financial reporting. Because of the size of the Company, eight full time active employees, including the President and Chief financial Officer, who are actively involved in the day to day operation of the Company, they are fully aware of all transactions and the proper reflection of those transactions on the Company books and records. Management prepares monthly statements that are approved by senior management and submitted to the audit committee for their review and questions.  Thus management is continually evaluating its control over financial reporting including the end of the reporting periods.

We have concurrently filed an amendment to our Form 10-QSB for the quarter ended March 31, 2005 clarifying that the evaluation was made as of the end of the period covered by the Report.

Section 302 Certifications

5.

We note that you refer to internal control over financial reporting in paragraph 4 of your Section 302 Certifications and you also include paragraph 4(b), despite the fact that you are not yet required to comply with Section 404 of the Sarbanes Oxley Act.

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Tell us what consideration you have given to the guidance in SEC Release 34-47986 when choosing to reference the Company's internal control over financial reporting in your Section 302 Certifications.

Tell us what consideration you have given to the guidance in SEC Release 34-47986 when choosing to reference the Company's internal control over financial reporting in your Section 302 Certifications:

The Sarbanes Oxley Act requires issuers to provide certain certifications required by Section 302 as exhibits to certain periodic reports. Although the Company is not required to comply with Section 404 of the Sarbanes Oxley Act, the Company, because of its size and because of the importance of internal controls and the proper and continual review of said internal controls, has established and continually monitors those controls within its management group and its audit committee.  Under Release 34-47986, the Company realizes the importance of internal controls and financial reporting to investors and thus, believes it important to address these issues to its investors.  Further, we are not aware of any guidance which would permit any latitude or discretion in altering the substance of the certification required by Section 302 of the Sarbanes-Oxley Act.

In connection with the response to your comments, the Company acknowledges that (a) the Company is responsible for the adequacy and accuracy of the disclosure in the Filing; (b) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking action with respect to the Filing; and (c) the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please do not hesitate to call me at (847) 564-7524 if you have any additional comments or questions.

Yours sincerely,

_/s/ Jack Rabin

Jack Rabin

Chief Financial Officer

Attachment I

Information Requested in Comment 3

XFORMITY TECHNOLOGIES, INC.

INVESTMENT TERM SHEET

May 2, 2005

Company:

XFormity Technologies, Inc. (the "Company")

Transaction:

The Company is seeking to raise additional equity through the sale and issuance of up to $1,000,000 in 7% Convertible Debentures (the "Debenture").

Minimum Investment:

Each investor must make a minimum purchase of a Debenture in the principal amount of $50,000; provided, however, that the Company may, in the Company's sole discretion, raise or lower this requirement with respect to any particular