# UNITED STATES SECURITIES AND EXCHANGE COMMISSION

# Washington, D.C. 20549

Form 10-KSB/AAmendment No. 3

[X]
     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934

For the
 fiscal year ended December 31, 2003

[   ]
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934

For
 the transition period from ____________ to ____________

# Commission File Number: 0-14793

# TEKNOWLEDGE CORPORATION

(Name of small business issuer as specified in its
 charter)

Delaware                      
                        
                       
                        
          94-2760916


(State of Incorporation)       
                     
                       
            (I.R.S. Employer Identification No.)

1800 Embarcadero Road, Palo Alto, California 94303


(Address of principal executive offices)(Zip Code)


Issuers telephone number: (650) 424-0500


Securities registered pursuant to Section 12(b) of
 the Act: None


Securities registered pursuant to Section 12(g) of
 the Act:

# Common Stock, $0.01 Par Value

# Series A Preferred Stock Purchase Rights

Check whether the issuer (1) filed all reports required
 to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
 period that the registrant was required to file such reports), and (2) has been subject to such filing
 requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers
 in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained,
 to the best of the registrants knowledge, in definitive proxy or information statements incorporated
 by reference in Part III of this Form 10-KSB/A or any amendment to this Form 10-KSB/A. [X]

State issuer's revenues for its most recent fiscal
 year: $11,408,000

The aggregate market value of Common Stock, $.01 par
 value per share, held by non-affiliates of the registrant was $16,647,000 on March 4, 2004 (based on
 the average bid and ask price per share of Common Stock on that date as reported by the Nasdaq SmallCap
 Market). Shares of Common Stock held by each officer and director and by each person who owns 5% or
 more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates.
 This determination of affiliate status is not necessarily a conclusive determination for other purposes.

On March 4, 2004, there were 5,735,754 shares of Common
 Stock, $.01 par value per share, of the registrant outstanding.

Teknowledge®, TekPortal® and
 Sales Associate are trademarks of Teknowledge Corporation. All other brand names, product names, trademarks
 and registered trademarks are the property of their respective holders.

Website Access to Reports.

The Companys filings
with the Securities and Exchange Commission, including its Annual Reports on From 10-KSB, its Quarterly Reports on Form 10-QSB
 and its Current Reports on Form 8-K, including amendments thereto, are made available as soon as reasonably
 practicable after such material is electronically filed with the SEC. These filings can be accessed
 free of charge at the SECs website at http://www.sec.gov

EXPLANATORY NOTE. This Form
 10-KSB/A amends the Form 10-KSB filed by Teknowledge Corporation with the Securities and Exchange
 Commission on March 30, 2004, to update Part II, Item 8A.
 In addition, in connection with the filing of this Amendment No. 3 to the Item 8A of the annual report on Form 10-KSB and pursuant
 to Rule 12b-15, the Company is including certain currently dated certifications. The remainder of the annual report
 on Form 10-KSB filed on March 30, 2004, as amended to date, remains unchanged.

1

PART II

# Item 8A. Controls And Procedures

(a)    
          Evaluation of disclosure controls and procedures. Our principal executive officer and principal financial
          officer designed our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
          under the Securities Exchange Act of 1934, as amended) as of the end of the
          period covered by this annual report. Based on this evaluation, our principal
          executive officer and principal financial officer concluded that these
          disclosure controls and procedures are effective and designed to ensure that the
          information required to be disclosed in our reports filed or submitted under the
          Securities Exchange Act of 1934 is recorded, processed, summarized and reported
          within the requisite time periods.

In connection with its audit of the Companys consolidated
financial statements for the year ended December 31, 2003, Grant Thornton LLP (Grant Thornton), the Companys
independent public accountants, advised the Audit Committee and management of internal control
matters with respect to certain revenue recognition transactions, government overhead rate reserves, segregation of duties, and
monitoring controls that they considered to be reportable conditions as that term is defined under standards established by the
American Institute of Certified Public Accountants. The Company considered these matters in connection with the year end closing
process and the preparation of the December 31, 2003 consolidated financial statements included in this Form 10-KSB and also
determined that no prior period financial statements were materially affected by such matters. In response to the observations made
by Grant Thornton, in 2004 the Company will implement certain enhancements to its internal controls and procedures, which it
believes address the matters raised by Grant Thornton.

The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events; however, they
are designed to provide reasonable assurance that the controls and procedures will meet their objectives. There can be no
guarantee, however, that any design will succeed in achieving its stated goals under all potential future conditions, and over time,
control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.

(b)    
          Changes in internal control.. There was no change in our
          internal control over financial reporting (as defined in Rules 13a-15(f) and
          15d-15(f) under the Securities Exchange Act of 1934, as amended) identified in
          connection with the evaluation of our internal control performed during our
          fourth quarter that has materially affected, or is reasonably likely to
          materially affect, our internal control over financial reporting.

2



Item 6. Exhibits

(a)     Exhibits:

Set
forth below is a list of all exhibits filed herewith or incorporated by reference as part
of this Amendment No. 3.

|            | 
|----------- | 
|Exhibit No. | 
|            | 

| | 31.1 | Certification of Principal Executive Officer pursuant to rule 13a-14(a) and Section 302 of
the Sarbanes-Oxley Act of 2002, dated July 29, 2005.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification of Principal Financial Officer pursuant to rule 13a-14(a) and Section 302 of
the Sarbanes-Oxley Act of 2002, dated July 29, 2005.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------

3



# SIGNATURES

In
 accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
 Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
 authorized.

|                    |  |                                   
|------------------- |  | ----------------------------------
|                    |  | Teknowledge Corporation           
|                    |  |                                   
|Date: July 29, 2005 |  | By:/s/ Neil A. Jacobstein         
|                    |  | Neil A. Jacobstein                
|                    |  | Chairman of the Board of Directors
|                    |  | and Chief Executive Officer       

Pursuant
 to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
 following persons on behalf of the Registrant and in the capacities and on the dates indicated.

|Name                           | Capacity                                     | Date         
|------------------------------ | -------------------------------------------- | -------------
|                              
|/s/ Neil A. Jacobstein         | Chairman of the Board of Directors           | July 29, 2005
|Neil A. Jacobstein             | and Chief Executive Officer                 
|                               | (Principal Executive Officer)                |              
|                              
|                               |                                              |              
|/s/ Dennis A. Bugbee           | Vice President Finance,                      | July 29, 2005
|Dennis A. Bugbee               | Chief Financial Officer                     
|                               | (Principal Financial and Accounting Officer)
|                              
|                               |                                             
|/s/ Benedict O'Mahoney         | Director, Vice President,                    | July 29, 2005
|Benedict O'Mahoney             | Administration and Legal Affairs            
|                              
|                               |                                              |              
|/s/ Lawrence Druffel           | Director                                     | July 29, 2005
|Lawrence Druffel              
|                              
|                               |                                              |              
|/s/ General Robert T. Marsh    | Director                                     | July 29, 2005
|General Robert T. Marsh (Ret.)
|                              
|                               |                                              |              

4