U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                  Form 10-KSB

              [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934
                  for the fiscal year ended September 30, 2002

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
        For the transition period from ______________ to ________________

                        Commission File Number: 0-30611

                                ITS Networks Inc.
                 (Name of small business issuer in its charter)

              Florida                                   52-2137517
(State  or  other jurisdiction  of         (I.R.S. Employer Identification  No.)
 incorporation  or  organization)



                C/Villanueva 16, 5th Floor, 28001 Madrid, Spain
                    (Address of principal executive offices)

Issuer's  telephone  number:  011-34-91-431-2475

Securities  registered  under  Section  12(b)  of  the  Exchange  Act:

Title of each class                    Name of each exchange on which registered

       N/A                                                N/A

         Securities registered under Section 12(g) of the Exchange Act:


                          Common Stock, par value $.001

     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 is not contained in this form, and no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [   ]

      State issuer's revenues for its most recent fiscal year: $2,186,000

     The aggregate market value of voting stock held by non-affiliates of the
     registrant as of September 30, 2002:
                    Common stock, $.001 par value: $2,939,319

     The  number  of  shares  of the registrant's common stock outstanding as of
September  30,  2002:
                               25,013,870 shares.

<PAGE>

     Documents  incorporated  by  reference:  None

     Transitional  Small  Business  Disclosure  Format:

                          Yes                No    X
                              -------           -------





























                                        2
<PAGE>

                                TABLE OF CONTENTS


PART  I

Item  1.  Description  of  Business                                           3

Item  2.  Description  of  Property                                          20

Item  3.  Legal  Proceedings                                                 20

Item  4.  Submission  of  Matters  to  Vote  of  Security  Holders           20

PART  II

Item  5.  Market  Price  of  and  Dividends on the Registrant's
Common Equity and Other  Stockholder  Matters                                20

Item  6.  Managements  Discussion  and  Analysis  and Plan of Operations     21

Item  7.  Financial  Statements                                              30

Item  8.  Changes  in  and  Disagreements  with  Accountants
on  Accounting and Financial  Disclosure                                     31

PART  III

Item  9.  Directors,  Executive  Officers,  Promoters  and
Control  Persons; Compliance  with  Section 16(a) of the
Exchange  Act.                                                               32

Item  10.  Executive  Compensation                                           32

Item  11.  Security Ownership of Certain Beneficial Owners and Management    36

Item  12.  Certain  Relationships  and  Related  Transactions                37

Item  13.  Exhibits  and  Reports  on  Form  8-K                             38

Financial  Statements                                                       F-1

Signatures                                                                   41

Exhibits                                                                     42








                                        3
<PAGE>

                                     PART I

Item  1.   Description  of  Business.
           --------------------------

General
-------

     ITS  Networks  Inc.  (the "Company") was incorporated under the laws of the
State  of  Florida  on  November  23,  1998.  However,  it  did  not conduct any
significant operations until December 2000 when there was a change in control of
the  Company.  The  new controlling stockholders changed its corporate name from
Technology  Systems  International,  Inc. to ITS Networks Inc. and increased the
authorized  number  of  shares  of  common  stock  from 25,000,000 to 50,000,000
shares.  In  connection  with  the  change of control of the Company in December
2000,  the  Company  acquired all of the issued and outstanding capital stock of
ITS  Europe,  S.L.,  a  Spanish telecommunications company that was organized in
1995.  As  a  result,  ITS  Europe,  S.L.  ("ITS  Europe") became a wholly owned
subsidiary  of  the  Company.

     The  Company  is  engaged  in  the  telecommunication industry in Spain and
offers  telecommunications  services  for home and business use.  These services
include  the  following:  postpaid  and prepaid local and long distance calling,
prepaid  calling  cards,  WIFI  (wireless internet access), WIFI project design,
installation,  commissioning,  maintenance  and  consultancy,  e-mail  accounts,
Internet  and  Web  design  services.

Telecommunication  Industry  in  Spain  and  ITS  Europe
--------------------------------------------------------

     Full  deregulation  was  instituted  in Spain on December 1, 1998, almost a
year  behind  most  other  countries in western Europe, but since that time many
companies have entered the market providing end users with a variety of services
and  competitive  offers.   A  limited  number  of  operators have traditionally
dominated  the  European  telecommunications  market.  In  Spain,  the principal
operator  has  been,  and  still  is,  Telefonica  de  Espana  S.A.

     In  order  to  offer  telecommunications services in Spain, a company  must
apply  for  the  appropriate  license or authorization to conduct business.   In
Spain,  there  are  several  companies  with  carrier licenses which allow these
companies  to  build  their  own  telecommunications  infrastructures  and  also
interconnect  with  Telefonica.  ITS Europe S.L.  (wholly owned by ITS Networks
Inc.)  possesses an "A" type authorization to resell telecommunications services
and  as  such  cannot  build  its  own  infrastructure.  Hence,  ITS Europe is a
reseller  of  telecommunications products and services.  ITS Europe can also act
as  a  VISP (virtual ISP) reselling Internet Access from actual Internet service
providers.

     Long distance services in Spain have become very competitive since 1999 and
as  such  prices have been reduced considerably. ITS Europe focuses primarily on
offering  inexpensive  international  calling to foreign residents in Spain that
make  a  higher than average number of calls internationally.  In order to offer
this  service,  ITS  Europe resells the long distance services from UNI2 (France
Telecom  joint  venture in Spain).  UNI2 has a carrier license in Spain, has its
own  infrastructure  as  well  as  direct  international  connections  to  other
carriers.  ITS Europe depends completely on its relationship with UNI2 such that
any  failure  in  service  from  UNI2  would affect all of its customers of long
distance calling.  The level of dependency is such that ITS Europe needs to wait
for UNI2 to send the call detail records (CDRs) of ITS Europe clients before ITS
can  bill  these  end  users.

                                        4
<PAGE>

     Several  new  companies  entered the Spanish market in the last three years
years  on  the  wave  of  new technologies such as LMDS and UMTS. The former was
intended  as  an  alternative  to  Telefonica's  local  loop  while  the  latter
supposedly  offered  more  advanced services for mobile users. Today, due to the
current market conditions, a lack of clients, or problems with the technologies,
many  of  these  companies  have  either  folded,  joined together or left their
business  projects  in  hibernation  awaiting  better  times.

Products  and  Services
-----------------------

     Long  Distance  Calling.   ITS  Europe  resells UNI2 long distance service.
This  service  allows  the  private  or business user to call internationally at
reduced  rates  compared  to Telefonica's published tariffs.   The user can make
these  calls  in  either  one of two ways; by signing up for "preselection" i.e.
having  all  calls  from  his  phone  automatically routed through ITS-UNI2 even
though  the  local  loop is from Telefonica, or by dialing a 4-digit access code
before  dialing  the  international number.  In the first case, it is Telefonica
that  automatically  directs  all  calls  to  UNI2.  In  the  second  case,  an
alternative  to  introducing  the  4-digit  code,  is  to  have  ITS  install an
autodialer.  The  Auto  Dialer  is  a  small  piece of hardware installed in the
customer's home or business located between the phone and the phone jack. When a
user  picks  up the handset to make a call, the dialer automatically inserts the
4-digit  code associated with UNI2 (1052) in a fraction of a second and then the
user dials  the number he wishes to reach. The auto dialer automatically directs
all calls through to UNI2.    ITS Europe has approximately 5,100 customers using
its  telecommunications  calling  services.

     Internet  Access.   ITS Europe resells UNI2 internet access service.   This
service  allows  the  private  or  business user to access the internet from his
location  of  work;  be it home or office.  The user dials a local access number
which  connects him to the UNI2 servers.  From this point, the user can navigate
through  the  Internet  as  he would from any browser.  ITS Europe provides each
user  with  a free email address for his use.  ITS Europe presently has under 50
clients  using  its  Internet  access  features  and  service.

     Web  page  design  and  hosting.   ITS  Europe has the capability to assist
companies in the design and implementation of their web pages.  In addition, ITS
Europe  can  host  clients'  web pages on a server which it leases offsite.  ITS
Europe  presently  has  only  a  small  number  of customers using this service.

     Calling  Cards.  The  Company  offers one principal type of calling card to
its  customers.

     Prepaid  Calling  Cards  are  used primarily by tourists and students.
They  are  purchased  from a variety of local merchants, kiosks, etc.  These are
cost  effective  and  can  be  used  from  hotels, pay phones, public and/or any
private  telephone.

     The  calling  cards  require  the  user  to dial a toll free prefix number,
listen  to  the  instructions,  which  can  be given in either Spanish, English,
German or French, and dial in their "code" or "PIN".  The code is then confirmed
and  the  user  dials  the number.  The calling cards typically have a six month
expiration  date.  ITS  Europe sold approximately 6,500 calling cards during the
months  of  July,  August  and  September,  2002.

     WIFI  and  Associated  Services.   ITS  Europe started in mid 2002 to offer
WIFI  solutions  to  potential  customers.   The  WIFI solutions offers wireless
internet  access  at  11Mbps  within  an  area  of  coverage.  ITS  Europe  is
specializing  its  coverage  in open/public areas.  This service is particularly
useful  for  hotels,  restaurants,  etc.  ITS  Europe  provides  the  equipment,
installation,  engineering  project and consulting as well as the maintenance on
the  network.   This  area today accounts for minimal revenue but is the area of
most  potential  growth.  Revenues from turnkey solutions in the WIFI area could
account for 15% of the Company's revenue by the end of 2003.  ITS Europe has two
main clients of WIFI.  These are the Port of Benalmadena and the Hotel Meli  Don
Pepe.  At the Port of Benalmadena, ITS Europe installed its open-air WIFI system
to  provide  wireless  access  to  over 1,000 potential boat owners and to local
restaurants and cafes.  The Port Authority handles signing up the client and ITS
Europe  manages the network.  The Hotel Don Pepe is similar.  The local staff at
the  front desk offers the service and signs up the client while ITS Europe runs
and  manages the network.  At the hotel, a client with his portable computer has
access  to internet from anywhere on the hotel's property, including the pool or
even  the  beachfront.

                                        5
<PAGE>

     In  the  case  of the Port of Benalmadena, the clients that sign up for the
WIFI service are generally boat owners that spend a good part of the year living
on  the  boat  and  as such request to sign the yearly contract for WIFI service
from  anywhere  in  the port's area of influence.  The Hotel guests on the other
hand,  sign  up for the service during their stay which is usually 1 to 2  weeks
for  tourists  and  2  nights  for  business  guests.

     Other  Previously  Supported Services.   Certain products and services have
been discontinued due to financial reasons.  One of the decisions of the current
management was to discontinue all products and services which did not contribute
positively to our financial bottom line or could not be turned around in a short
period  of  time  with  a minimum investment to contribute positively.  As such,
services  such  as  e-commerce  or  intelligent  numbers  (906)  have since been
discontinued.  The  philosophy  is that the margin from segments of our business
must  be  able  to  sustain  their  own  activity.

Marketing
---------

     The  marketing  strategy  of  the  Company  is presently focused on foreign
residents  in Spain.  These foreigners are primarily located on the costal areas
of  Spain,  including  the  islands.   There  are also a large number of foreign
residents in the major cities such as Madrid and Barcelona.  Such is the case of
the  long  distance  phone  calling  service  which  is  primarily  marketed  in
foreign-language  newspapers and magazines.  For this service an end user simply
dials  the  toll-free  number from the advertisement and ITS Europes call center
can  take  down  his  information  and  give  him  access  to the service almost
immediately  without  having  to visit the end user at his home or business.  In
the  case  of our pre-paid calling cards, these are distributed throughout Spain
via  distribution  channels  with  thousands  of  vending  points.  WIFI is more
complicated  in  that  each  potential  customer  needs to have a site survey to
validate the installation of the system as well as requiring a much longer sales
process  of  weeks  or  even  months.

     We  plan to expand our customer base through increased advertising in local
papers  and magazines in order to reach more foreign residents with the types of
calling  habits  we  seek;  i.e.  frequent  international  calling.  A potential
customer  attracted  by  the advertisement would call our Call Center asking for
information and should they wish to sign up they can do so right there and then.
The  Company is primarily focused on foreign residents in Spain with the need to
call  internationally but we do not exclude companies that have a need to reduce
their  international  phone  bill  and  that  call  us,  also  attracted  by our
publicity.  With  respect  to  businesses,  ITS  Europe  serves  mainly  smaller
companies  located  in  the  coastal  regions which traditionally have had fewer
options of telecommunications suppliers. ITS Europe is not in a position, due to
its  size  and  financial  resources,  to compete against the major carriers for
corporate  clients  in  the  big  cities.

     The  Company  has  established a relationship with Melanie Griffith who has
agreed  to  lend  her  image for a line of calling cards and has also recorded a
couple of radio spots. The relationship with Ms. Griffith has not been optimized
in  the  past  due  to  the delicate nature of our financial position. It is the
intention  of  the Company to continue its relationship with Ms. Griffith and to
actively  include  her  in  future  projects.


                                        6
<PAGE>

Industry  Participants  and  Competition
----------------------------------------

     The  growth  of the telecommunications industry from 1997 to 2001 attracted
many  new  entrants  as well as existing businesses from different industries to
enter  the  telecommunications  business.  Current  and  prospective  industry
participants  include  multinational  alliances,  long  distance  and  local
telecommunications  providers,  systems  integrators,  cable  television  and
satellite  communications  companies,  software  and  hardware vendors, wireless
telecommunications  providers and national, local and regional ISPs. Our present
primary  competitor  is  Telefonica de Espana S.A. Other significant competitors
include  British  Telecommunications  PLC,  France  Telecom (UNI2), and JazzTel.

     Some  participants  specialize  in specific segments of the market, such as
access and/or backbone provision; managed access, e.g., intranets and extranets;
application  services,  e.g.,  Web hosting; security services; and communication
services,  e.g.,  IP-based  voice,  fax  and  video  services.

     In  order to become more competitive in the market, ITS Europe will have to
invest  in  setting  up  minimum switching infrastructure in order to reduce its
traffic  carrying  cost  (telephone transmission costs). ITS Europe may do so by
either  investing directly in this equipment as in our business plan or possibly
explore the alternatives of raising capital to acquire companies that complement
our  existing  business.


Subsequent  Event  -  Acquisition
---------------------------------

     On  December  15,  2002, the Company consummated a stock exchange agreement
with  the  majority  stockholders of Teleconnect Comunicaciones, S.A., a company
formed under the laws of Spain which operates a pre-paid telephone card business
in  Spain  ("Teleconnect").  None  of  the  stockholders  of  Teleconnect  were
affiliates  of  the  Company,  or affiliated with any director or officer of the
Company,  nor  did  they  have  any  material  relationships  with  the Company.

The  Company  agreed to issue 3,000,000 shares of its restricted common stock to
the  stockholders  of  Teleconnect  in  reliance  upon  Regulation  S  under the
Securities  Act  of  1933.  The  Company  also  agreed  to  assume and pay up to
approximately  2,200,000  Euro  of  the  outstanding  debts  of  Teleconnect.

     In  order  to pay the approximately 2,200,000 Euro of the outstanding debt
of  Teleconnect, the Company intends to offer and sell Common Stock and Notes of
the Company to raise up to $3,000,000 to pay such debts and for working capital.
However,  there  is  no  assurance that all such capital will be raised, and the
Company  may  seek  bank  financing  and  other  sources of financing to pay the
outstanding  debts  of  Teleconnect.

     This  acquisition  is expected to significantly expand our pre-paid calling
card  business,  and  will  also  significantly  increase  our outstanding debt.

Regulation
----------

     General.  The  Spanish  government  undertook  a  process  of  revising the
legislative  and  regulatory  scheme  applicable  to  participants  in  the
telecommunications  industry  in  preparation  for  the  liberalization  of  the
telecommunications  market  in December 1998.  As the main step in this process,
on  April  24,  1998,  the  Spanish  Parliament  passed  the  new General Law on
Telecommunications  (Law  11/1998).  This  law  was  published  in  the Official
Gazette  on  April  25,  1998  and  took  effect  on  April  26,  1998.

                                        7
<PAGE>

     The  General Law on Telecommunications repealed and replaced nearly all the
existing  laws  and regulations on telecommunications (including laws regulating
satellite  and  cable telecommunications).  In general terms, the General Law on
Telecommunications  adopted  all  European  Union  directives  mandating  the
liberalization  of telecommunications services.  Among other things, the General
Law  on  Telecommunications  addresses  the  following  matters  relating to our
business:

     *  conditions for granting licenses to provide telecommunications services;
        and

     * the obligation of telecommunications providers to extend service to rural
       areas  and  the  financing of  associated  capital  expenditures

     European  Union  Regulations.  Since 1995, the European Union has adopted a
number  of directives that regulate the provision of telecommunications services
in  European  Union  member  states,  including:

     *  regulations  designed  to  ensure  the  full  liberalization  of  the
        telecommunications  sector;

     * regulations which impose standard conditions throughout member states for
       granting  individual licenses  and  general  authorizations;

     *  regulations  regarding  access  and  interconnection  between  competing
        operators;

     *  regulations  dealing  with  the  universal  service  obligation;

     *  regulations  requiring  member  states  to allocate wireless radio based
        services according to the  DCS-1800  standard  and  the  UMTS  standard;

     *  regulations  relating  to telecommunications data protection and privacy
        regulations;  and

     *  regulations  for  unbundled  access  to  the  local  loop.

     The General Law on Telecommunications and other applicable Spanish law were
designed  to  implement all applicable European Union directives with respect to
the provision of telecommunications services.  In 1999, the European Union began
to  revise  the  directives  in  force  with  respect  to  the  provision  of

                                        8
<PAGE>

telecommunications  services.  We  anticipate  that  the Spanish government will
revise  its  regulatory  framework  to  comply  with  the  revised  directives.

     Regulatory  Framework.  The  provision  of  telecommunications  services in
Spain  is regulated and overseen by the Spanish government through the Secretary
of  State for Telecommunications and Information Society, a unit of the Ministry
of  Science  and Technology.  The Ministry of Science and Technology has various
powers,  including  in  certain  cases  the  authority  to  grant  licenses  or
authorizations,  if  applicable,  for  telecommunications services and to impose
sanctions  for  certain  infringements of the General Law on Telecommunications.
An  additional  independent  oversight  body,  the  Telecommunications  Market
Commission,  was  created  in  1996.  The  Telecommunications  Market Commission
supervises  the activities of telecommunications operators and has the authority
to grant licenses for telecommunications services and to arbitrate any conflicts
that  may  arise  between  operators,  subject  to the consent of the interested
parties.  The  Telecommunications  Market  Commission  is  also  responsible for
safeguarding  free  competition  in  the telecommunications market, particularly
with  regard to a plurality of service offerings, access to networks and network
interconnection.  With  regard to interconnection, the Telecommunications Market
Commission  may  make  a  binding  decision  in  respect of any conflict between
operators  and  may  fix  tariffs  (other  than for regulated services), such as
interconnection  charges,  in  the  event  of  disputes.

     The  Telecommunications  Market  Commission  has  advisory  and arbitration
responsibilities  with  respect  to  tariffs  for  end user services.  It issues
reports  on  all  proposed  tariffs  and  the  regulation  of  prices  for
telecommunications  services.  It  also  issues  reports on proposed tariffs for
exclusive  services  or  services  for  which  a  dominant  operator  exists.

     The  General  Law  on  Telecommunications.  The  General  Law  on
Telecommunications  culminates  the  liberalization process initiated in 1987 in
Spain  with  the  enactment  of  the  Telecommunications  Regulation  Law  and
establishes a regulatory framework for telecommunications services in accordance
with applicable European Union directives. The General Law on Telecommunications
provides  for  free  competition with respect to all telecommunications services
and  with  respect  to  the  construction  and  operation  of telecommunications
networks,  subject  to  governmental  licensing  or  general  authorization
requirements.  Individual  licenses  are  required:

     *  to  construct  or  operate  public  telecommunications  networks;

     *  to  provide  fixed-line  telephone  services  to the general public; and

     *  to  provide  telecommunications  services  or  construct  or  operate
        telecommunications  networks using  radio  spectrum.

     The  Spanish  government  may determine pursuant to Royal Decree that other
activities  and  services  require individual licenses. In all other cases where
the  type of service or network does not fall within the scope of the individual
license  regime,  only  a  general  authorization  is  required.  A  general
authorization is automatically granted to any party who fulfills basic licensing
requirements.

     The  Ministry of Science and Technology may, in order to guarantee the most
efficient use of radioelectric spectrum, limit the number of individual licenses

                                        9
<PAGE>

it  will  grant, in which case individual licenses will be granted to the winner
of  a  bidding  contest  administered by the Ministry of Science and Technology.

     Tariffs.  Under  the  general  principles  of  the  General  Law  on
Telecommunications, operators are free to fix tariffs. Nevertheless, the Spanish
government's Delegate Commission for Economic Affairs has the authority, subject
to  the  issuance  of  a  report by the Telecommunications Market Commission, to
establish  fixed,  maximum  or  minimum tariffs, or to determine the criteria by
which to establish tariffs and the mechanism for their control. In doing so, the
government's  Delegate  Commission  for Economic Affairs must take into account:

     *  the  effective  cost  of  the  applicable  service;  and

     *  the  degree  of  competition  in  the market for the applicable service.

     The  General  Law  on  Telecommunications  recognized  the  existence of an
imbalance  in  the  tariffs  charged for fixed-line telephone services as of the
date  of  its enactment and the need to rebalance such tariffs.  The General Law
on  Telecommunications  further  recognized  the possibility of compensating the
dominant  operator  (Telefonica  de  Espana, a subsidiary of Telefonica) for the
access  deficit  which  may  result  from  the  existing  rate  imbalance.

     Interconnection.  The  General Law on Telecommunications requires owners of
public  telecommunications  networks  to  allow competitors to interconnect with
their  networks  and  services  at  non-discriminatory  rates  and  under
non-discriminatory  conditions.  The  General Law on Telecommunications provides
that  the  conditions  for  interconnection  are  to  be freely agreed among the
parties  while  the  government  has  the  authority  to  establish  the minimum
conditions  for  interconnection  agreements,  which  must  be  included  in all
interconnection  agreements.  On  July  24,  1998, the government issued a Royal
Decree  elaborating  the  regulations  relating  to  interconnection.  Where the
parties  are  unable  to  reach  an  agreement,  the  Telecommunications  Market
Commission  may  impose  the  obligations to interconnect upon the conditions it
dictates.  Similarly,  the  Telecommunications  Market  Commission  may  release
certain  network  owners,  temporarily  and  on  a  case-by-case basis, from the
obligation  to interconnect where there are technical or commercial alternatives
to  such  interconnection.

     Although under the General Law on Telecommunications interconnection prices
may  be  freely  negotiated,  prices  charged  by  Telefonica  de Espana, as the
dominant operator in Spain, are determined by an Interconnection Offer Framework
approved  by  the  government.

     In  August  2001,  the  Telecommunications  Market  Commission  approved
modifications  to the Interconnection Offer Framework, which include among other
things, new interconnection prices that are between 20% and 30% below previously
existing  interconnection  prices.  Consequently,  on  September  11,  2001,
Telefonica  de  Espana  filed  a  petition  with  the  Telecommunications Market
Commission  against the new interconnection prices, claiming that they are below
Telefonica  de  Espana's actual costs, as measured in accordance with accounting
criteria  approved  by the Telecommunications Market Commission.  On November 2,
2001, the  Telecommunications Market Commission dismissed Telefonica de Espana's
petition,  except  with  respect  to  interconnection  rates  in connection with
Internet  access.  As  a  result, Telefonica de Espana is seeking relief through
administrative  litigation.

                                       10
<PAGE>

     The modifications to the Interconnection Offer Framework approved in August
2001  provide  for  interconnection based on capacity as well as time.  In early
2002,  the Telecommunications Market Commission introduced further modifications
to  the  Interconnection  Offer  Framework  with  respect to intelligent network
services  and establishment of prices for the interconnection of circuits, which
were  reduced  by  approximately  25%.

     Public  Service Obligation.  The General Law on Telecommunications provides
that  the  owners  of  public  telecommunications networks, as well as operators
rendering telecommunications services on the basis of an individual license, are
subject  to  certain  public  service  obligations.  In  addition, some of these
obligations  may  be  imposed  on  operators  whose  services  require a general
authorization.

     The  public  service  obligations  include:

     * the universal service obligation, which is elaborated in the Royal Decree
       of  July  31,  1998;

     *  the  compulsory  services  obligation;  and

     *  other  public  service  obligations.

     The  universal  service  obligation  consists  of the obligation to provide
basic  telephone  to  all  end  users  within  Spain,  free  telephone directory
services,  sufficient public pay phones throughout Spain and access to telephone
services  for  disabled people.  These services must be provided by the dominant
operator  in each territory, and in certain cases, by another operator, pursuant
to  regulations.  Telefonica  is  the  dominant  operator in each territory and,
according  to  the  General  Law  on  Telecommunications,  Telefonica  will  be
considered  to  be  the  dominant  operator until at least 2005.  If meeting the
universal  service  obligation  in a particular territory is loss-producing, all
operators  in  that  territory  could be obligated to contribute to meeting this
obligation  through  the  National  Fund  for  Universal  Service.

     The  compulsory  services  obligation  enables  the government to appoint a
telecommunications  operator  to  provide  certain  essential telecommunications
services,  such  as  emergency call services and telex, telegraphic and maritime
communications.  Telefonica  was  designated  as  the  provider  of  maritime
communications  services.  Telefonica  may  in  the  future be designated as the
provider  of  other  telecommunications  services.  The  Spanish  government may
establish  further  public service obligations to the extent that the government
determines  that  such  services  are not adequately provided, are in the public
interest  or  are  necessary  for  national  defense.

     In  December  2001, the Spanish government adopted a ministerial order that
governs  certain  aspects  of  the universal service obligation, including among
others:

     *  maximum  time  periods  for  the provision of initial interconnection to
        telecommunications  networks;

     *  requirements  with  respect  to  the  guarantee of continuing fixed-line
        telephone  service  to  the  public;

                                       11
<PAGE>

     *  criteria  with  respect  to the information included in public telephone
        directories;  and

     *  standards  for  the  quality  of  service  and systems for measuring the
        quality of  services.

     Terminal  Equipment.  The  General  Law on Telecommunications provides that
consumers  may  freely  purchase  or  lease  any  terminal  equipment, including
telephone  sets,  and  connect that equipment to the telecommunications network.
All  terminal  equipment is required by the General Law on Telecommunications to
meet  certain technical specifications and safety requirements and is subject to
the  prior  approval  of  the  Secretary  of  State  for  Telecommunications and
Information  Society.

     Ownership  Limitations.  Pursuant to the General Law on Telecommunications,
direct  or  indirect investments in us and by foreign persons may not exceed 25%
of  our  share  capital  unless  otherwise  provided  for  by  the  applicable
international  treaties  or  agreements,  including  the  Fourth Protocol of the
General  Agreement  on  Trade  in  Services (GATS), or authorized by the Spanish
government.  Pursuant  to  European Union directives, citizens of other European
Union  member  states,  including  entities domiciled in such countries, are not
considered  foreign  persons for the purposes of this provision.  However, under
Spanish  law  any  foreign  investment  by  non-European  Union  governments and
state-owned  and  state-controlled  entities  (regardless  of the amount of such
investment)  requires  the Council of Minister's prior approval unless otherwise
provided  for  in  the  applicable  treaties.  For purposes of computing the 25%
threshold,  only  holdings  of  capital  stock in excess of 5% and holdings that
would  entitle  the  foreign  investor  to  designate  a  member of our Board of
Directors  are  taken  into  account.  The  25%  threshold does not apply to our
subsidiaries  generally.  However,  certain  of  our subsidiaries may be subject
independently  to  similar  constraints.

     Telefonica  de  Espana  is  currently  the  only  significant  provider  of
comprehensive  local  service.  This  is  expected  to change gradually as other
cable  operators  develop  their  networks.  In  addition,  in  March  2000, the
government  issued  six new licenses (in addition to those previously awarded to
Retevision  and  Lince)  for  the  provision  of  local  multipoint distribution
services  (LMDS),  and  the  new  licensees have begun to deploy their networks.
These  new  licensees  compete  with  Telefonica  de  Espana in the local access
market.

     Pursuant  to  a Royal Decree adopted in December 2000, Telefonica de Espana
is  required  to  implement  local  loop  unbundling,  line sharing and sub loop
unbundling.  Local loop unbundling enables other telecommunications operators to
provide  telecommunications  services,  including  DSL-type  services,  to  end
customers  using  Telefonica  de  Espana's  existing  local  loop  (i.e.,  the
connections  between  the  customer's premises and the exchange) to connect with
their  customers.  Other  operators  may  install  their own equipment either in
Telefonica de Espana's exchanges or in nearby buildings to provide this service.
Telefonica  de Espana has offered local loop unbundling since January 2001. Line
sharing  similarly  enables  other  telecommunications  operators  to  provide
telecommunications  services  using  a  high  frequency portion of Telefonica de
Espana's  copper  loop  on  an  unbundled basis. Therefore, shared access to the
local  loop  enables a consumer to retain Telefonica de Espana for voice service
and  use a competing operator for high speed data services. Telefonica de Espana
introduced  line  sharing  in  January  2001.

     In  January  2001, Telefonica de Espana published its local loop unbundling
offer.  The  tariffs  were  initially  approved  by  the Delegate Commission for

                                       12
<PAGE>

Economic  Affairs  of  the  Spanish  government  and  later  revised  by  the
Telecommunications Market Commission in certain respects. The monthly tariff for
direct  access  to  the  local loop is 12.6 Euro, the monthly tariff for shared
access is 4.8 Euro and the monthly tariff for indirect access is between 22 and
90  Euro  depending  on  the  speed  of  the  connection.

     Competition  in  domestic  and  international  long-distance  services,
particularly  in  the  residential  segment,  is  based  on  access  through
interconnection with  Telefonica  de  Espana. Since 2001, Telefonica de Espana's
customers  have  been  able  to  select  alternative  providers  of domestic and
international  long-distance  services  without having to dial a designated code
prior  to  making  each  call.  Preselection  allows  customers  to choose their
preferred  local, long distance, international long-distance and fixed-to-mobile
carrier.

     Telefonica  de  Espana  faces  indirect  competition  in  international
long-distance  services  from  a  number  of  sources,  including calling cards,
call-back  services  and  call  rerouting  by other international operators.  In
addition, Telefonica de Espana competes with a number of international operators
for  the provision of closed user group communications services to multinational
and  large  corporate  customers  and  with  a  number  of  providers  of  data
transmission  services.

     Type  A  License.  The Company holds a Type A license for telecommunication
and  fixed-line  networks.  This  license authorizes the provision of fixed-line
public  voice  telephone  service  through  the use of third-party switching and
transmission  equipment  without  the  corresponding  obligation  or  right  to
establish  and  operate  a  network  as  in  the  case  of  a  Type  B  license.

     Regulation  in  the United States.  Our operations are in Spain and as such
are  not  currently  subject to regulation in the U.S., either at the federal or
state  level.

Employees
---------

     As  of  September  30, 2002, the Company had 22 full-time employees. Of the
total  number  of  employees, four were engaged in management, one in legal, two
were  in finance, five were technical employees and the remaining employees work
in  the  Call  Center  and  Administration.  None of the Company's employees are
represented  by  a  labor  union  with  respect  to his or her employment by the
Company.  The  Company also has approximately four independent agents who engage
in  sales  of  its  services,  particularly  in selling the calling cards of the
Company,  who  work  on  a  commission  basis.

     The  Company reduced its staff from over 100 to 22 employees due to changes
in  market  conditions  and  in order to adapt the cost structure of the Company
more  closely  to  its revenues.  In this lien, several small sales offices were
closed  in  other  Spanish  cities  with  only the original operations office in
Marbella,  Malaga  (South  of  Spain)  and  corporate  offices  in  Madrid being
retained.

     The  Company  has experienced no organized work stoppages and believes that
its  relationship  with  its  employees  is  good.  None  of  our  employees are
represented  by  a  union.  The Company believes that an important factor in its
future  success  will  be  its  ability  to  attract and retain highly qualified
personnel.  Competition  for such personnel in the industry in Spain is intense.
There  can  be no assurance that the Company will be successful in attracting or
retaining  such  personnel,  and the failure to attract or retain such personnel
could  have a  material  adverse effect on the Company's business and results of
operations.  In such competitive environment, ITS Europe, as a small reseller of

                                       13
<PAGE>

others  long-distance  telephone  service,  must  differentiate  itself  based
primarily  on good customer care, ease for the customer to work with us, clarity
on  the  invoices  and  quick response to service problems.  Since we cannot pay
high material  incentives  t  the  employees,  we consciously provide a healthy,
enjoyable  working environment where personal achievements and contributions are
recognized.


Banking  Arrangements
---------------------

     The  Company has no banking arrangements for a line of credit or other bank
borrowings  to  finance  the Company. The Company intends to rely primarily upon
equity  and  debt  financing  and  joint  ventures  to  finance  its operations.

Risk  Factors
-------------

     We  may  not  achieve  or sustain profitability in the Future  We are at an
early  stage of executing our new business plan implemented in May 2002. We have
incurred  operating  and net losses and negative cash flow from operations since
our  inception.  As  of  September  30,  2002,  we had an accumulated deficit of
$(4,063,000)  and  a  stockholders' deficit of $(1,082,000). For the years ended
September  30,  2001,  2000,  and  1999,  we  had  net  losses  of $(1,058,000),
$(27,000),  and  $(78,000),  respectively, and we had a net loss of $(1,248,000)
for  the  year  ended  September  30,  2002.  We  may  also  in the future incur
operating  and net losses and negative cash flow from operations, due in part to
anticipated  increases in expenses for  acquisitions of complementary businesses
and  expansion  of  our  sales and marketing capabilities. We may not be able to
achieve  or  maintain  profitability.

     If our telecommunications services do not become widely used in our market,
it  is  unlikely  that  we  will  be  profitable.

     In order to be successful, and to achieve our strategic objectives, we must
successfully,  timely  and cost-effectively expand the reach of our products and
service  offerings to other niche markets in Spain apart from the southern coast
where  we  primarily  operate.  We must also develop the right product/price mix
for  each  target  market.

     Going  Concern  Qualification by Auditors.  The accountants' reports of the
independent  certified  public  accountants of the Company for fiscal years 2001
and 2002 express a going concern qualification by the auditors.  The Company has
had  recurring  operating  losses  for  the  past  several  years  which  raises
substantial  doubts  about  its  ability  to  continue  as a going concern.  See
Independent Auditor's Report(s), Note 2 to the Consolidated Financial Statements
of  the Company, and Managements' Discussion and Analysis and Plan of Operations
-  Plan  of  Operations  and  -  Uncertainties.

     Information  Structure.  We  must  continue  to  develop  and  expand  our
information  systems  infrastructure as the number of our clients and the amount
of  information  they wish to access, as well as the number of services which we
offer,  increase.  The  development  of  our  Information  Systems  network
infrastructure  will  require  substantial financial, operational and management
resources.  We  may  not  be  able  to expand our network adequately to meet the
demand  for  increased  usage.  If  we  do not adapt our systems rapidly enough,
additional  stress may be placed on our network hardware, the traffic management
and  other  systems  and  operating  facilities.  Our  network  may be unable to
service  a  substantial  number  of  additional  clients  while maintaining high
performance  ,  timely  and  accurate  billing  and  high  level  customer care.

                                       14
<PAGE>

     Transmission  Availability.  A  variety  of  factors,  uncertainties  and
contingencies  that  are  beyond  our  control,  such  as  the  availability  of
transmission  capacity,  the  price  of  transmission  capacity, availability of
wireless  transmission  capacity  and  technologies,  local  regulations  and
availability  of  sales  representatives  or other third party sales and support
channels  will  affect  the  expansion  of  our  network.  A failure of adequate
transmission  facilities  in  certain  new  locations  as  we expand our service
coverage as planned may have a material adverse effect on our ability to service
our  clients  and  grow  our  business.

     Growth.  Our  negative  growth  has  placed  a  significant  strain  on our
management,  financial controls, operating and accounting systems, personnel and
other resources.   The fiscal year ended September 30, 2002 was spent retreating
from  areas  which  were  not  profitable  and  resizing  the  organization.  We
currently  rely on a relatively small core management team.  If we grow, we must
not  only  manage  demands  on this team but also increase management resources,
among  other  things,  to continue to expand, train and manage our employee base
and  maintain  close  coordination  among  our technical, accounting, financing,
marketing  and  sales staff.  In addition, our network infrastructure, technical
support,  applications,  and other resources may not be sufficient to facilitate
our  growth.  If  we  do not successfully manage our growth, we may be unable to
adequately  support  our  clients'  communications  needs  in  the  future.

     Our  challenge  is  to  expand  our services and increase our customer base
simultaneously  so  that both are increased in a proportional relationship which
allows them to mutually support each other.  Rapid expansion of our service area
or  technical  facilities and capacity, without the customer base to support it,
would  be  inefficient and result in a substantial decrease in financial return.
Likewise,  a substantial increase in our customer base which cannot be supported
by  our technical facilities and service area would impact the Company's ability
to service its customers in a detrimental way and might result in an unfavorable
sales  environment  and  inability  to  maintain  the  Company's  customer base.

     Customer  Retention.  Our  ability  to  retain our clients and provide them
with  new and innovative service offerings may suffer if we are not able to keep
up  with  the  rapid  technological developments in our industry and continue to
ensure competitive prices of our services.  In addition, even though the current
telecoms  market  conditions are weeding out many players, other new competitors
are  arising from large, solid companies traditionally dedicated to telecoms and
other  non-telecoms  business.

     Technological  Changes.  The  global  communications industry is subject to
rapid  and significant technological changes, such as continuing developments of
alternative  technologies  for  providing  high-speed  data  communications.  We
cannot  predict  the  effect  of technological changes on our business.  We will
rely  in  part on third parties, including some of our competitors and potential
competitors,  for the development of and access to communications and networking
technologies.  We  expect  that  new services and technologies applicable to our
market will emerge.  New products and technologies may be superior and/or render
obsolete  the  products  and  technologies  that we currently use to deliver our
services.  Our  future success will depend in part, on our ability to anticipate
and  adapt  to technological changes and evolving industry standards.  We may be
unable  to  obtain access to new technologies on acceptable terms or at all, and
we  may  be  unable to obtain access to new technologies and offer services in a
competitive  manner.  Any  new  products  and technologies may not be compatible
with  our  technologies  and  business  plan.  We  believe  that  the  global
communications  industry  should set standards to allow for the compatibility of
various  products and technologies.  The industry however, may not set standards
on a timely basis or at all.  As such, the Company is investing in launching new
services  in  Spain  based  on technologies which exist in the United States but
that  are  still  relatively new to Europe.  The intention is to make a name for
itself  as  an  innovative leader in the market even though these services today
will  not generate great revenues for the Company, such as the WIFI products and
services  of  ITS.

                                       15
<PAGE>

     Management  Changes.  If  members  of  our senior management team leave the
Company,  then  our  ability to operate our business may be negatively affected.

Our  future success depends to a significant extent on the continued services of
our  senior  management, particularly Gustavo Gomez, the President and Treasurer
of  the Company, and other employees of the new executive team.  The loss of the
services  of Mr. Gomez or any other present or future key employee, could have a
material  adverse  effect  on  the  management  of  our  business.  We  have  an
employment  agreement  with  Mr.  Gomez.  We  do  not maintain "key person" life
insurance  for  any  of  our  personnel.

     Competition  for  Employees.  Competition  for  highly-skilled personnel is
intense  and  the  success  of our business depends on our continuing ability to
attract  and retain highly-skilled employees.  As we  grow, we will need to hire
additional  personnel  in  all  areas.  Competition for personnel throughout the
data  and  voice  communications  industries  is  intense.  We  may be unable to
attract  or  retain  key  employees  or  other highly qualified employees in the
future.  We  have  from  time  to time in the past experienced, and we expect to
continue  to  experience  in  the  future,  difficulty  in  hiring and retaining
highly-skilled  employees with appropriate qualifications.  If we do not succeed
in  attracting  sufficient new personnel or retaining and motivating our current
personnel, our ability to provide our services could diminish.  To this end, the
Company has recently established an Employee Stock Option Plan which is expected
to  include  each  and  every  employee.  Toward  this  goal,  we established an
employee  Stock  Option,  SAR  and  Stock  Bonus Plan during fiscal 2002 for the
benefit  of  our  employees.

     Sales  Relationships. If we are unable to maintain our sales representative
and  third-party  sales  channel  relationships,  then  our  ability to sell and
support  our  services  may  be  negatively  impacted.

     We  are  and  will  continue  to  be significantly dependent on a number of
third-party  relationships,  including  UNI2  (France  Telecom),  our  sales
representatives  and  partners, to market and support our services.  Many of our
arrangements  with third-party providers are not exclusive and may be terminated
at the convenience of either party.  We cannot provide any assurances that these
third  parties  regard  our  relationship  with  them  as important to their own
respective  businesses  and  operations,  that  they  will  not  reassess  their
commitment  to  us  at  any  time in the future, that they will meet their sales
targets  or  that  they  will  not  develop  their  own  competitive  services.

     We  may  not  be  able  to  maintain  our current relationships or form new
relationships  with  third  parties  that  supply  us  with clients, software or
related  products  that  are  important  to our success.  Accordingly, we cannot
provide  any  assurances  that  our  existing  or prospective relationships will
result  in  sustained  business  partnerships,  successful  offerings  or  the
generation  of  significant  revenues.

     We  rely  on  our  sales  representatives for some of the support and local
implementation necessary to deliver our services on a broad basis.  We also rely
on  these  sales  representatives  for  insights into local operating and market
conditions.  The  failure  of these sales representatives to perform their tasks
or  perform  their responsibilities effectively could, in turn, adversely affect
our  business.

     Regulatory  Approvals.  The Company directly assumes the responsibility for
obtaining  the  regulatory  approvals and licenses that it may need to offer our
communications  services  in  other  jurisdictions  and  provinces.

     Suppliers. Delays in receiving transmission capacity or delays in equipment
delivery  or  loss  of  our  equipment suppliers could impair the quality of our
services  and  our  growth.

     We  acquire,  by  lease  or  by purchase, transmission capacity from a wide
range of suppliers, both to connect client premises to our network and for other
network connections.  We have from time to time experienced short-term delays in
receiving  the  requisite  transmission  capacity  from suppliers.  There are no

                                       16
<PAGE>

assurances  that  we  will be able to obtain these services in the future within
the  time  frames  required  by  us at a reasonable cost.  Any failure to obtain
transmission capacity on a timely basis and at a reasonable cost in a particular
jurisdiction,  or  any  interruption  of  local  access  services, could have an
adverse  effect  on  our  service  levels  and  our  growth.

     The  autodialers,  computers,  routers and antennae used in our network are
provided primarily by various suppliers.  These suppliers also sell services and
products  to  our  competitors  and  may  become  competitors themselves. We may
experience  delays in receiving components from our suppliers or difficulties in
obtaining  their  products at commercially reasonable terms.  If we are required
to  seek  alternate  sources  of  the  mentioned  equipment,  we  are  likely to
experience  delays  in  obtaining  equipment  and  may be required to pay higher
prices  for that equipment, increasing the cost of expanding and maintaining our
services  and  network.

     Service Disruptions. If our network infrastructure is disrupted or security
breaches  occur,  we  may  lose  clients  or  incur  additional  liabilities.

     We  and  other service providers may in the future experience interruptions
in service as a result of fire, natural disasters, power loss, or the accidental
or  intentional  actions  of  service  users,  current  and former employees and
others.  Although  we continue to implement industry-standard disaster recovery,
security  and  service  continuity  protection  measures, including the physical
protection  of  our  offices  and  equipment, similar measures taken by us or by
others have been insufficient or circumvented in the past.  We cannot assure you
that  these measures will be sufficient or that they will not be circumvented in
the  future.  Unauthorized  use  of our network could potentially jeopardize the
security  of  confidential  information  stored  in  the  computer  systems  or
transmitted  by  our  clients.  Furthermore,  addressing  security  problems may
result  in interruptions, delays or cessation of services to our clients.  These
factors  may  result  in  liability  to  us  or  our  clients.

     Competition.  The  markets  we  serve  are  highly  competitive  and  our
competitors  may have much greater resources to commit to growth, new technology
or  marketing.

     Our  current and potential competitors include other companies that provide
voice  and  data  communications  services  to multinational businesses, systems
integrators,  national  and  regional  Internet  Service  Providers,  or  ISPs,
wireless,  cable television and satellite communications companies, software and
hardware  vendors,  and global, regional and local telecommunications companies.
In  addition,  we  expect  that  the  predicted  growth  of  the  voice and data
communications  market  will  attract  other  established and start-up companies
building global networks and beginning to offer voice and data communications as
part  of  a  comprehensive  communications services portfolio.  Our competitors,
which  may  operate  in  one  or  more of these areas, include companies such as
Telefonica  S.A.,  British  Telecommunications,  or  BT,  France  Telecom,  and
WorldCom,  Inc.  Our  sales  representatives  and  suppliers  could  also become
competitors  either  directly  or  through  strategic  relationships  with  our
competitors.

     Many of our competitors have substantially greater financial, technical and
marketing  resources,  larger  customer bases, greater name recognition and more
established  relationships  in  the  telecommunications industry than we do.  We
cannot  be  sure  that  we  will  have  the  resources  or  expertise to compete
successfully  in  the  future.  Our  competitors  may  be  able  to:

     *  develop  and  expand their network infrastructures and service offerings
        more  quickly;

     *  adapt  better to new or emerging technologies and changing client needs;

     *  take  advantage  of  acquisitions  and other opportunities more readily;

     *  devote greater resources to the marketing and sale of their services and
        products;  and

                                       17
<PAGE>

     *  adopt  more  aggressive  pricing  policies.

     Some of our competitors may also be able to provide clients with additional
benefits  at  lower  overall  costs.  We  cannot be sure that we will be able to
match  cost reductions of our competitors.  In addition, we believe it is likely
that  there will be additional consolidation in our market, which could increase
competition  in  ways  that  may  adversely  affect  our  business,  results  of
operations  and  financial  condition.

     Voting  Control.  Carnival  Enterprises  Ltd.  presently owns approximately
50.2%  of  our  Common  Stock.  This  stockholder  is presently able to exercise
control  over  all matters requiring approval by our stockholders, including the
election  of  directors and approval of significant corporate transactions. This
concentration  of ownership may also have the effect of delaying or preventing a
change  in  control  of  our  Company, should the need arise, which could have a
material  adverse  effect  on  our  stock  price.


     Variable Revenues and Operating Results. Our revenues and operating results
may  vary  significantly from quarter to quarter due to a number of factors, not
all  of  which  are  in  our  control.  These  factors  include:

     *  the  size  and  timing  of significant equipment and software purchases;

     *  the  timing  of  new  service  offerings;

     *  changes  in  our  pricing  policies  or  those  of  our  competitors;

     *  the  timing  and  completion  of  the expansion of our service offering;

     *  market acceptance of voice and data communications generally, and of new
        and  enhanced versions  of  our  services  in  particular;

     *  the  length  of  our  contract  cycles;  and

     *  our  success in expanding our sales force and expanding our distribution
        channels.

     In  addition,  a  relatively large portion of our expenses are fixed in the
short-term,  particularly  with  respect  to  global  communications  capacity,
depreciation,  office  lease  costs  and  interest  expenses  and personnel, and
therefore  our  results of operations are particularly sensitive to fluctuations
in  revenues.  Due  to the factors noted above and other risks discussed in this
section,  you  should not rely on period-to-period comparisons of our results of
operations.  Quarterly results are not necessarily meaningful and you should not
unduly rely on them as an indication of future performance.  It is possible that
in  some  future  periods our operating results may be below the expectations of
public  market  analysts  and investors.  In this event, the price of our Common
Stock  may  not  increase  or  may  fall. Please see Management's Discussion and
Analysis  of  Financial  Condition  or  Results  of  Operations.

     Governmental  Regulation.  We  face  uncertain  and  changing  regulatory
restrictions which could limit our operating flexibility and increase our costs.

     We  currently  hold  authorizations  for  international  telecommunications
services between  Spain  and  other countries based on a third party's networks.

                                       18
<PAGE>

Future  regulatory,  judicial  and  legislative  changes  in  Spain  may  impose
additional  costs  on us or restrict our activities.  In addition, regulators or
third  parties  may  raise  material  issues  with regard to our compliance with
applicable  regulations.  Failure  to comply with applicable laws or regulations
in  Spain  could  prevent  us  from carrying on our operations cost effectively.

     The law relating to the liability of online services companies and Internet
access  providers  for data and content carried on or disseminated through their
networks  is  currently unsettled and could expose us to unforeseen liabilities.

     It  is possible that claims could be made against online services companies
and  Internet  access  providers  under  the  laws  of  Spain  and/or EU law for
defamation,  negligence,  copyright or trademark infringement, or other theories
based  on  data  or  content disseminated through their networks, even if a user
independently originated this data or content.  Several private lawsuits seeking
to impose liability upon online services companies and Internet access providers
have  been filed in U.S. and foreign courts.  While the United States has passed
laws  protecting  Internet  access  providers  from  liability  for  actions  by
independent users in limited circumstances, this protection may not apply in any
particular  case at issue.  In addition, some countries, such as China, regulate
or  restrict the transport of voice and data traffic in their jurisdiction.  The
risk  to us, as an Internet access provider, of potential liability for data and
content  carried  on  or  disseminated  through  our  system could require us to
implement  measures  to reduce our exposure to this liability.  This may require
us  to expend substantial resources or to discontinue some of our services.  Our
ability  to  monitor,  censor or otherwise restrict the types of data or content
distributed  through  our  network  is  limited.  Failure  to  comply  with  any
applicable  laws  or  regulations  in  particular  jurisdictions could result in
fines,  penalties  or  the  suspension  or  termination of our services in these
jurisdictions.  The negative attention focused upon liability issues as a result
of these lawsuits and legislative proposals could adversely impact the growth of
public  Internet  use.  We  do  not  presently  have  any professional liability
insurance.  Our  professional  liability  insurance  in  the  future  may not be
adequate  to  compensate  or  may  not  cover  us  at  all in the event we incur
liability for damages due to data and content carried on or disseminated through
our  network.  Any  costs not covered by insurance that are incurred as a result
of  this liability or alleged liability, including any damages awarded and costs
of  litigation,  could  harm  our  business  and  prospects.

     Our  Success Will Depend on Our Ability to Attract and Retain Personnel Our
future  success  will  depend to a significant extent on our ability to attract,
retain  and  motivate  highly  skilled personnel. We presently have 22 full-time
employees  of  which 3 are technical and 7 are sales. Our officers and employees
are  "at  will" which means that they may resign at any time, and we may dismiss
them  at  any  time,  except  that  Gustavo  Gomez  and Martin-Luis Becerra have
employment  agreements with the Company. See "Management". We believe that there
is  a  shortage of, and significant competition for, technicians with the skills
and  experience  in  the sciences necessary to perform the WIFI installation and
engineering  services  we  offer.  We  compete with other companies and academic
institutions  for  new  personnel. In addition, our inability to hire additional
qualified  personnel  may  require an increase in the workload for both existing
and  new  personnel.  We  may not be successful in attracting new technicians or
sales  personnel  or  in  retaining  or  motivating  our  existing  personnel.

     Penny  Stock  Trading Rules. When the trading price of the Company's Common
Stock  is  below  $5.00  per  share, the Common Stock is considered to be "penny
stocks"  that  are  subject  to rules promulgated by the Securities and Exchange
Commission  (Rule 15-1 through 15g-9) under the Securities Exchange Act of 1934.
These  rules  impose  significant  requirements  on  brokers  under  these
circumstances,  including:  (a)  delivering  to  customers  the  Commission's
standardized  risk  disclosure  document; (b) providing to customers current bid
and  offers;  (c)  disclosing  to  customers  the  brokers-dealer  and  sales
representatives  compensation;  and  (d)  providing to customers monthly account
statements.

     Future  Sales  or  Our Common Stock May Depress Our Stock Price. The market
price  of  our  Common  Stock  could decline as a result of sales of substantial
amounts  of our Common Stock in the public market in the future. In addition, it
is  more  difficult  for  us  to  raise  funds  through  future  offerings  of

                                       19
<PAGE>

Common  Stock. There are 23,544,370 shares of Common Stock presently outstanding
as  "restricted  securities"  as defined in Rule 144 which will be available for
sale  in the future. These shares may be sold in the future without registration
under the Securities Act to the extent permitted by Rule 144 or other exemptions
under  the  Securities  Act.

     The  Company  has registered 2,000,000 shares of Common Stock which will be
reserved for issuance upon exercise of options or stock bonuses to be granted or
reserved  for grant under our 2002 Stock Option, SAR and  Stock Bonus Consultant
Plan.  Upon  issuance  of  these  shares, they can be sold in the public market,
subject  to  restrictions  under  the  securities  laws applicable to resales by
affiliates.  In addition, the Company has registered another 2,500,000 shares of
Common Stock which is reserved for our 2002 Employee Stock Option, SAR and Stock
Bonus  Plan.

Item  2.     Description  of  Property
             -------------------------

     In  June  2002,  the  Company  moved  its  principal  executive  offices to
C/Villanueva  16,  5th  Floor,  28001  Madrid,  Spain,  which  is  comprised  of
approximately  1,600  square feet, and is leased for 3,800 Euro per month.  The
lease  expires  on  April  29,  2004.

     The  Company also has an operations office at Edif, Marina Marbella, Severo
Ochoa  28, 3-A, 29600 Marbella, Spain, which is comprised of approximately 1,800
square  feet,  and  is  leased  for 3,515 Euro per month.  The lease expires on
September  30,  2003.

     These  facilities  are leased at commercial rates under standard commercial
leases  in  the  geographic  area.  We  believe  that  suitable  space for these
operations  is  generally  available on commercially reasonable terms as needed.

Item  3.     Legal  Proceedings
             ------------------

     There  are  no  current legal proceedings threatened or pending against the
Company  or  its  subsidiary,  ITS  Europe,  S.L.  as  of  September  30,  2002.

Item  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders
             -----------------------------------------------------------

     The  shareholders  of the Company held a special meeting by written consent
on  January  31,  2002,  and  shareholders representing approximately 57% of the
outstanding  common  stock of the Company approved the removal of Eulalia Palomo
as  a  director  and  Secretary  of  the  Company, and elected Lotta Beatrice A.
Persson as a director, and authorized the expansion of the Board of Directors to
five  members.  Mr.  Frederic  Cohen's  term  as  a  director  continued.

     On  March  15, 2002, the shareholders of the Company held a special meeting
of  stockholders  by  written  consent,  and  the  shareholders  representing
approximately  53%  of  the outstanding common stock of the Company approved the
removal  of Frederic Cohen as a director and elected Gustavo Gomez as a director
of  the  Company.

     The  shareholders  of the Company held a special meeting by written consent
on  June 10, 2002, and shareholders representing approximately 53% of the common
stock  of  the  Company adopted and approved the 2002 Employee Stock Option, SAR
and  Stock  Plan  of  the  Company.

                                    PART II

Item  5.     Market  Price of and Dividends on the Registrants Common Equity and
             -------------------------------------------------------------------
             Other  Shareholder  Matters
             ---------------------------

General
-------

                                       20
<PAGE>

     The  Common Stock of the Company is traded on the NASD  Electronic Bulletin
Board  over-the-counter  market,  and  is  quoted  under  the  symbol  ITSN.

Market  Price
-------------

     The following table sets forth the range of high and low closing bid prices
per  share  of  the  Common Stock of the Company (reflecting inter-dealer prices
without  retail  mark-up,  mark-down  or commission and may not represent actual
transactions)  as  reported by Pink Sheets (formerly known as National Quotation
Bureau,  L.L.C.)  for  the  periods  indicated.

<TABLE>
<CAPTION>
                                        HIGH  CLOSING(1)     LOW  CLOSING  (1)
YEAR  ENDED  DECEMBER  31,  2000           BID  PRICE            BID  PRICE
--------------------------------        ----------------     -----------------
<S>                                         <C>                   <C>
1st  Quarter                                $  4.00               $  2.00
2nd  Quarter                                $  4.00               $  3.875
3rd  Quarter                                $  4.00               $  4.00
4th  Quarter                                $  4.00               $  0.625

YEAR  ENDED  DECEMBER  31,  2001
--------------------------------
1st  Quarter                                $  3.375              $  0.78125
2nd  Quarter                                $  2.05               $  0.65
3rd  Quarter                                $  1.06               $  0.63
4th  Quarter                                $  1.07               $  0.60

YEAR  ENDED  DECEMBER  31,  2002
--------------------------------
1st  Quarter                                $0.75                 $0.40
2nd  Quarter                                $0.96                 $0.33
3rd  Quarter                                $0.52                 $0.31
4th  Quarter                                $0.60                 $0.30
</TABLE>

The closing sales price of the Common Stock of the Company on December 30, 2002,
was  $0.52  per  share.

Item  6.     Management's Discussion  and  Analysis  and  Plan  of  Operations
             -----------------------------------------------------------------

                                       21
<PAGE>

     You  should  read the following discussion and analysis in conjunction with
our  consolidated  financial  statements  and  related  notes included elsewhere
herein.

Forward  Looking  Statements
----------------------------

     When  used  in  this  annual report on Form 10-KSB and in our other filings
with  the  SEC,  in  our  press  releases  and  in oral statements made with the
approval of one of our authorized executive officers, the words or phrases "will
likely  result",  "plans",  "will  continue",  "is  anticipated",  "estimated",
"expect", "project" or "outlook" or similar expressions (including confirmations
by  one  of  our authorized executive officers of any such expressions made by a
third  party  with  respect  to  us)  are  intended to identify "forward-looking
statements"  within  the meaning of the Private Securities Litigation Reform Act
of  1995. We caution readers not to place undue reliance on any such statements,
each  of  which  speaks only as of the date made. Such statements are subject to
certain  risks  and  uncertainties,  including but not limited to our history of
losses,  our limited operating history, our need for additional financing, rapid
technological  change,  and an uncertain market, that could cause actual results
to differ materially from historical earnings and those presently anticipated or
projected. Factors that may cause actual results to differ materially from those
contemplated  by  such  forward-looking  statements  include,  among others, the
factors  described  below  and  in  the  Description of Business section of this
annual  report. We undertake no obligation to release publicly revisions we made
to  any  forward-looking statements to reflect events or circumstances occurring
after  the  date  of  such  statements.  All  written  and  oral forward-looking
statements  made  after the date of this annual report and/or attributable to us
or  persons  acting  on  our behalf are expressly qualified in their entirety by
this  discussion.

Significant  Accounting  Estimates  and  Policies
-------------------------------------------------

     The  discussion  and  analysis  of  our  financial condition and results of
operations  is  based upon our consolidated financial statements which have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States.  The  preparation  of  these financial statements requires us to
make  estimates  and  judgments  that  affect  the  reported  amounts of assets,
liabilities,  revenue  and expenses, and related disclosure of contingent assets
and liabilities.   On an on-going basis, we evaluate our estimates including the
allowance  for  doubtful  accounts,  the  saleability,  and  recoverability  of
inventory,  income  taxes and contingencies. We base our estimates on historical
experience  and  on  various  other assumptions that we believe to be reasonable
under  the  circumstances,  the  results  of  which  form  our  basis for making
judgments  about  the  carrying  values  of  assets and liabilities that are not
readily  apparent  from  other  sources.  Actual  results  may differ from these
estimates  under  different  assumptions  or  conditions.

     We  must  make  estimates of the collectability of accounts receivable.  We
analyze  historical  write-offs,  changes  in  our  internal credit policies and
customer  concentrations  when  evaluating  the  adequacy  of  our allowance for
doubtful  accounts.  Differences may result in the amount and timing of expenses
for  any  period  if  we  make  different judgments or use difference estimates.

     As  part of the process of preparing our consolidated financial statements,
we  are required to estimate our income taxes.  This process involves estimating
our current tax exposure together with assessing temporary differences resulting
from  differing  treatment  of  items  for  tax  and accounting purposes.  These
differences  result in deferred tax assets and liabilities.  We must then assess
the  likelihood  that  our  deferred  tax  assets  will be recovered from future
taxable  income,  and,  to the extent we believe that recovery is not likely, we
must  establish  a  valuation  allowance.  To  the  extent  that  we establish a
valuation  allowance  or  increase this allowance in a period, we must include a
tax provision or reduce our tax benefit in the statements of operations.  We use
our  judgment  to  determine our provision or benefit for income taxes, deferred
tax  assets and liabilities and any valuation allowance recorded against our net

                                       22
<PAGE>

deferred  tax  assets.  We  believe,  based  on  a  number  of factors including
historical  operating  losses, that we will not realize the future benefits of a
significant  portion  of  our  net  deferred  tax assets and we have accordingly
provided  a  full valuation allowance against our deferred tax assets.  However,
various  factors  may  cause  those  assumptions  to  change  in  the near term.

     We  cannot  predict  what  future laws and regulations might be passed that
could have a material effect on our results of operations.  We assess the impact
of significant changes in laws and regulations on a regular basis and update the
assumptions  and estimates used to prepare our financial statements when we deem
it  necessary.

     We  have  determined  the  significant principles by considering accounting
policies  that  involve the most complex or subjective decisions or assessments.
Our  most  significant  accounting  policies  are  those  related  to  revenue
recognition  and  accounting  for  stock-based  compensation.

     Revenue  Recognition.  Our  revenue  recognition  policies are based on the
requirements  of  SEC  Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial  Statements.

     Revenue  from  sales  of telecommunication services is generally recognized
during  the  period  when  the  services  are  rendered.

     Accounting  for  Stock-Based  Compensation.  We  have  elected to apply the
disclosure-only  provisions  of  SFAS  No.  123,  Accounting  for  Stock-Based
Compensation.  In  accordance  with  the  provisions  of  SFAS  123,  we  apply
Accounting  Principles  Board  Opinion  No.  25,  Accounting for Stock Issued to
Employees,  and  will use related interpretations in accounting for stock option
plans.  We  account  for  stock  issued  to non-employees in accordance with the
provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No.
96-18, Accounting for Equity Instruments That are Issued to Other Than Employees
for  Acquiring  or  in  Conjunction with Selling, Goods or Services.  Generally,
under  APB  25, if the option exercise price for a fixed award to an employee is
equal  to  the  fair  value  of the common stock at the date of the grant of the
stock  option,  no  compensation  expense  is recorded.  Under SFAS 123 and EITF
96-18, the amount of compensation expense that is recorded is based on an option
pricing  model  which  incorporates  such  factors as the expected volatility of
future movements in the price of the underlying stock, risk-free interest rates,
the  term  of  the  options and any dividends expected to be paid.  As a result,
under  SFAS  123  and  EITF 96-18, we would generally expect to record a greater
amount  of  compensation  expense  than  under  APB  25.

     Segment  Reporting.  We  have  adopted  SFAS  No.  131, "Disclosures  About
Segments of an Enterprise and Related Information".  SFAS 131 requires companies
to  disclose  certain  information  about  reportable  segments.  Based  on  the
criteria  within  SFAS  131,  we have determined that we currently have only one
reportable  segment,  telecommunications  systems  and  related  services.

Overview
--------

     We  derive  our  revenues  primarily  from  the  sale  of our long-distance
telecommunication  services.  Our  revenues and operating results have depended,
and will continue to depend, upon the continued adoption and use of our products
and  services  by  consumers  and  small  businesses.  The  rate  of adoption is
influenced

                                       23
<PAGE>

significantly  over the longer term by government laws and mandates, performance
and  pricing  of  our products/services, relationships with the public and other
factors.

     Our  quarterly revenues also may be impacted by other factors including the
length  of  our  sales  cycle,  the timing of sales orders, budget cycles of our
customers,  competition,  the  timing  and  introduction  of new versions of our
products,  the  loss  of,  or  difficulties  affecting,  key  personnel  and
distributors, changes in market dynamics or the timing of product development or
market  introductions.  These  factors have impacted our historical results to a
greater  extent  than  has  seasonality.  Combinations  of  these  factors  have
historically  influenced  our growth rate and profitability significantly in one
period  compared  to  another,  and are expected to continue to influence future
periods,  which  may  compromise  our  ability  to  make  accurate  forecasts.

     No  single  customer  accounted for more than 10% of our revenues during of
the  last  three  years.  Domestic  sales  in  Spain  accounted  for 100% of our
revenues  in  each  of  the  last  two  years.

     Cost of goods sold consists primarily of the costs associated with carriers
which  supply  the telecom services for the Company to resell.  We rely on third
parties  to  offer  the  majority  of  the  services  we  have in our portfolio.
Accordingly,  a  significant  portion  of  our  cost  of  goods sold consists of
payments  to  these  carriers.  Cost  of  goods  sold  revenues also consists of
customer  support  costs, training and professional services expenses, parts and
marketing compensation.

Our  gross  profit  has  been  and  will continue to be affected by a variety of
factors,  including competition, the mix and average selling prices of products,
maintenance  and  services,  new  versions  of  products, the cost of equipment,
component  shortages,  and  the  mix  of distribution channels through which our
products  are  sold.  Our  gross  profit  will  be  adversely  affected by price
declines  if  we are unable to reduce costs on existing products or to introduce
new  versions  of  products  with  higher  margins.

     Selling,  general and administrative expenses consist primarily of salaries
and  related  expenses  for  executive,  finance,  accounting,  legal  and human
resources  personnel,  professional  fees  and  corporate  expenses.  We  expect
general and administrative expenses to increase in absolute dollars as we employ
additional  personnel  and  incur  additional costs related to the growth of our
business  and  our  operation  as  a  public  company.  We  present  stock-based
compensation  as  a  part  of  general  and  administrative  expenses.

     Stock-based compensation charges are recorded when the exercise price of an
option  or  the  sales  price  of  stock  is  less  than  the  fair value of the
underlying  Common  Stock  for  awards to employees.  We also record stock-based
compensation  charges  when  options are granted to non-employees.  Compensation
charges  for  non-employees  are based on estimates of the underlying stock fair
values.  As  of  September  30,  2002,  the  Company  has  not granted any stock
options,  but  the  Company  has  issued  Common  Stock  to  consultants  and
professionals  in  exchange  for  services  to  the  Company.

                                       24
<PAGE>

Year  Ended  September  30,  2002,  Compared  to  September  30,  2001
----------------------------------------------------------------------

     The  following table sets forth certain operating information regarding the
Company,  including  its  subsidiary  ITS  Europe,  S.L.

<TABLE>
<CAPTION>
                                   Year  Ended              Year  Ended
                                   September  30,  2001     September  30,  2002
                                   --------------------     --------------------
<S>                                   <C>                       <C>
Revenues                              $  2,381,000              $  2,186,000
Cost  of  goods  sold                 $  1,894,000              $  1,544,000
Selling, general and administrative   $  1,468,000              $  1,698,000
Depreciation                          $     45,000              $     52,000
Bad  Debt  Expense                    $      3,000              $    175,000
Net  Loss                             $ (1,058,000)             $ (1,284,000)
Net  Loss  Per  Share                 $       (.05)             $       (.06)
</TABLE>

Revenues
--------

     Revenues  for  the  year  ended September 30, 2002, declined to $2,186,000,
compared  to  $2,381,000 or 8.2% from the prior year revenues of $2,381,000. The
reduction  in  revenues  was due to the reductions in the Company's "Intelligent
Numbers"  line  of  business,  which  had  low  margins  and  required  a  high
administrative  workload.  Even though revenues from the Company's long-distance
prepaid business continue to increase at a very modest but steady rate, revenues
for  Intelligent  Numbers  have  consistently  declined.

     Our  revenues  during  the year ended September 30, 2002, were derived from
providing  a  broad  range  of  integrated  service  solutions  to  our clients:

     *  International  long  distance  calling  (postpaid);
     *  Prepaid  Fixed  line  long  distance  calling
     *  Prepaid  Calling  Cards
     *  Network  Services-includes  intranet,  Internet  and  IP-VPN  services;
     *  Applications  Services-includes  e-mail,  messaging,  collaboration, Web
        hosting  and  other  value-added  services;  and
     *  Other

Pricing  Policies
-----------------

     The  pricing  for  our services differs depending on the services provided,
the  speed of service, geographic location and capacity utilization. In the case
of  services  directed  at  foreign  residents  in  Spain  for them to call long
distance,  pricing is oriented to provide a significant discount compared to the
incumbent operator. It is not the intention of the Company to enter "price wars"
with  other similar companies.  The Company strives to differentiate itself with
the  quality  of  our  customer  care,  with the quality of the service, and the
accuracy  of  the billing.  For services directed at small and medium companies,
we  try  to  position  ourselves  to  provide  a  turnkey  solution  to  their
telecommunications  needs,  providing  voice  local  and  long distance calling,
access  to  the  internet,  email, web hosting, PBX supply and maintenance, etc.
With  our  prepaid calling card services, we have sought tourists that needed to
call  home but at cheaper prices than the hotel phone or local public phone.  In
addition,  we  are addressing internet users with the need for mobility (such as
at  the  harbor  on  a boat) with WIFI systems and flat rate economical tariffs.

Client  Contracts
-----------------

                                       25
<PAGE>

     Our  contracts  with  customers  generally  include  an  agreed-upon  price
schedule  that  details  both fixed and variable prices for contracted services.
The  client contracts generally have a term of one to three years, however, when
clients  implement  a  number  of  our  services,  they may choose to extend the
contracts  for a longer period of time. Our sales representatives can easily add
additional  services  to  existing  contracts,  enabling clients to increase the
number of locations through which they access our network, increase the speed of
that access, increase the sophistication of the services they use, or extend the
term  for  existing  services.

     Cost of goods sold for the year ended September 30, 2002 were $1,544,000, a
decrease  of  $350,000 or 18.5% from the prior year cost of sales of $1,894,000.
This  decrease  was  due  in  part  to  an  8.2%  decrease  in sales and an 8.9%
improvement  in  the  gross profit margin for the year ended September 30, 2002.
The  Company focused on a more profitable line of business, which resulted in an
improvement in the gross margin as a percentage of revenues from 20.5% to 29.4%.
Management  consciously  selected clients that were advantageous to the business
bottom  line  while  simultaneously cutting services to customers which produced
more  cost  than  profit to the Company.  As market conditions are becoming more
competitive, management  has  tightened  its  selection criteria for "profitable
clients".

Selling,  General  and  Administrative

     Selling,  general  and administrative expenses for the year ended September
30, 2002 were $1,698,000, an increase of $230,000 or 15.7% from the prior year's
operating  expenses  of $1,468,000.  The principal reasons for the increase were
(1)  costs  incurred to move its home office to Madrid, (2) reinforcement of the
management  team with additional managers from the telecom section, and (3) the
use  of external professional services in order to develop and implement the new
business  and  financial  strategy  of  the  Company.

Depreciation  Expense

     Depreciation  expense for the year ended September 30, 2002 was $52,000, an
increase  of  $7,000  or  15.6%  from  the  prior  years depreciation expense of
$45,000.  This  increase  is  due  primarily  to property additions during 2002.

Bad  Debt  Expense

     Bad  debt  expense  for  the year ended September 30, 2002 was $175,000, an
increase  of  $172,000  from  the  prior  year's bad debt expense of $3,000. The
principal  reason for the increase was due to the write-off of past due accounts
incurred  due  to  past  less  stringent  credit  policies. Credit policies were
tightened  following  the  change  in  management  of the Company in April 2002.

Net  Loss

     The  net  loss  of  the Company increased to $(1,284,000) during the fiscal
year  ended  September  30, 2002 compared to $(1,058,000) during the fiscal year
ended  September  30,  2001, an increase of approximately 21.4%. The increase in
the  net  loss  of  the  Company is attributable primarily to an increase in its
operating costs, marketing costs, and its selling and general and administrative
expenses  of  the  Company  during  the  fiscal  year  ended September 30, 2002.

Liquidity  and  Capital  Resources

     At  September  30,  2002,  the  Company  had  negative  working  capital of
approximately  $(1,387,000),  compared to negative working capital of $(470,000)
at  September  30,  2001.

     The  ability  of the Company to satisfy its obligations will depend in part
upon  its  ability  to  raise funds through the sale of additional shares of its
Common  Stock,  increasing  borrowings,  and in part upon its ability to reach a
profitable  level  of  operations.

                                       26
<PAGE>

     The  Company's capital  resources  have  been provided primarily by capital
contributions from stockholders, stockholders loans, the exchange of outstanding
debt  into  Common  Stock  of the Company, and services rendered in exchange for
Common  Stock.

     The  Company entered into an Equity Line of Credit Agreement dated June 18,
2002  (the  "Agreement")  with  Cornell  Capital  Partners, LP ("Cornell").  The
Agreement  provides  for  Cornell  to  commit  to purchase up to an aggregate of
$10,000,000 (U.S.) of the Common Stock of the Company, not to exceed 9.9% of the
then  total  issued  and  outstanding  shares of Common Stock of the Company, as
requested  from  time  to  time by the Company as its equity capital needs arise
during the term of the Agreement.  Upon written notice from the Company, Cornell
is  committed  to purchase Common Stock of the Company at a purchase price equal
to  95%  of the then current market closing bid prices.  Market price is defined
to  mean  the  lowest  bid  price for the Common Stock during the five preceding
trading  days  during  a  pricing period (the date following the notice from the
Company)  to Cornell. On September 27, 2002, the Company issued 1,026,316 shares
of  Common  Stock  for  syndication  fees  for  this  equity  line of credit. In
addition,  in  connection  with  the  Equity Line of Credit Agreement, we issued
26,316  shares  of our Common Stock to Westrock Advisors, Inc. ("Westrock") as a
placement  agent fee. For financial reporting purposes, these shares were valued
at  $418,000, which were treated as additional paid in capital with an offset to
a contra additional paid in capital account. No capital was raised in the fiscal
year  ended September 30, 2002. As of December 20, 2002, this line of credit has
not become available as the shares covered under this equity line of credit have
not  been  registered  with  the Security and Exchange Commission. The shares of
Common  Stock  and  warrants  of  the  Company  to  be  issued  to  Cornell  and
underwriters  are  covered  by  a  Registration  Rights  Agreement requiring the
Company  to  file a registration statement with the U.S. Securities and Exchange
Commission  to  register  such securities under the Securities Act of 1933 (File
No.  333-100549).

     With respect to the Equity Line of Credit, the Company expects to draw down
approximately  $1,000,000  during  2003, representing the issue of approximately
2,000,000  shares  of  non-restricted  common  stock.

     On  September  5,  2002,  the  Company acquired Teleconnect Comunicaciones,
S.A.,("Teleconnect")  a  company formed under the laws of Spain which operates a
pre-paid telephone card business in Spain. The Company agreed to issue 3,000,000
shares  of  its  restricted  common  stock to the shareholders of Teleconnect in
reliance  upon  Regulation  S under the Securities Act of 1933. The Company also
agreed  to  loan  Teleconnect  2,200,000  euro  which  will  be  used  to cancel
approximately  5,500,000  eruo  of  existing  debt.  In  order  to  pay  this
approximately  2,200,000  euro,  the  Company  intends  to sell its common stock
and/or  borrow additional funds from investors to procure up to 3 million to pay
such  debts  and  for  working capital. However, there is no assurance that such
capital  will  be  raised,  and  the  Company  may seek bank financing and other
sources  of  financing  to  pay  the  debts  of  Teleconnect.

     As of the date  of  this  filing, 2,500,000 euro has been injected into the
Company  for  procurement  of  Teleconnect.  The  funds  have been received from
private  investors  and  have  initially  been  treated  as  loans.

Contractual  Obligations  and  Commercial  Commitments

     The  following table is a recap of the Company's contractual obligations as
of  September  30,  2002.


                                       27
<PAGE>
<TABLE>
<CAPTION>
                                       Payments  Due  by  Period
                                       -------------------------
                            Total     Less  than  One  Year     1-3  Years
                            -----     ---------------------     ----------
<S>                       <C>               <C>                 <C>
Long-Term  Debt           $1,010,000        $1,010,000          $         0

Operating  Leases            199,000           141,000               58,000
                          ------------------------------------------------
Total  Contractual
  Cash  Obligations       $1,209,000        $1,151,000           $   58,000
                          =================================================
</TABLE>

Net  Loss
---------

     The  net  loss  of  the Company increased to $(1,284,000) during the fiscal
year  ended  September  30, 2002 compared to $(1,058,000) during the fiscal year
ended  September  30,  2001, an increase of approximately 21.4%. The increase in
the  net loss of the Company is attributable primarily to an increase in its bad
debts  and selling and general and administrative expenses of the Company during
the  fiscal  year  ended  September  30,  2002.

Plan  of  Operations
--------------------

     Because  of the costs of development of its WIFI systems, E-mail system and
other  telecommunication services and other products, corporate acquisitions and
the  continuing  costs  of  expanding its marketing, the Company expects that it
will  incur  a  loss  during  its  fiscal  year  ending  September  30,  2003.

     The  Company will be offering to sell its Common Stock and other securities
to further capitalize the Company, and will also borrow from banks and others to
the  extent  necessary  to  provide  liquidity  for  its  operations.

     The  Company  has  maintained  its  telecommunications  activities  and the
associated  costs consistent with its plan of operations in order to develop its
telephone  and  other  communications  services  and  products  for  proposed
residential and commercial use.  The Company expects to continue the development
of  its  telephone and other communications products and services to incorporate
technical  changes  and  improvements. In addition, as the Company increases its
marketing activities, the Company will incur additional operating and equipments
costs.

Uncertainties:
--------------

Achieving  Profitable  Level  of  Operations
--------------------------------------------

     There is no assurance that the Company's activities will be profitable. The
likelihood of the success of the Company must also be considered in light of the
problems,  expenses, difficulties, complications, delays and all of the inherent
risks  frequently encountered in the formation and operation of a relatively new
business.

Costs  of  Conducting  Business
-------------------------------

     The  Company  will  be  required  to  incur substantial costs for corporate
acquisitions,  purchasing  new  equipment,  increasing marketing operations, and
related  costs. A substantial portion of those costs must be paid whether or not

                                       28
<PAGE>

any  of  its  telephone  and  communication  services  prove  to be commercially
successful  on  a  broad  scale. The ability to generate a profit depends, among
other  factors,  on  the  amount  of  acquisition  costs incurred, the amount of
revenues  from  the sale of its telecommunication services and other products by
the  Company,  and  its  operating  costs.

Competition
-----------

     The  telecommunication  business  is  highly  competitive. Companies in the
industry  have  substantially  greater  financial,  marketing,  and  technical
resources  than  the  Company.  Further,  the  entry into this industry does not
necessarily  require  a  large  capital  expenditure and, accordingly, it can be
expected  that  additional  competitors may enter the industry in the future. It
may  be  particularly  difficult  for  a relatively small independent company to
compete  with larger companies which have significantly greater resources. There
can  be  no  assurance  that the Company will be able to successfully compete in
such  environment.

Technological  Change
---------------------

     The  Company  expects that new technologies and products will be introduced
in  the  telecommunication  industry.  The Company's  success will depend, among
other  things,  on  its  ability  to develop and maintain a competitive position
technologically.  There can be no assurance that the Company will have access to
subsequently  developed technology by other persons. Technological advances by a
competitor  may  result  in  the  Company's present  or future products becoming
noncompetitive  or obsolete. The Company cannot be assured that competitors will
not  develop functionally similar or superior services and products, which event
could  have  an  adverse  effect  on  the  Company's  business.

Raw  Materials
--------------

     The  basic  raw materials and components for the telecommunication services
and  other  products  being  developed by the Company are readily available. The
Company does not expect to experience any significant delays in obtaining timely
delivery  of  its  telecommunication  equipment  and  components.

Seasonality
-----------

     The  Company  expects  to  experience  seasonal  variations in revenues and
operating  costs  because  sales  activity  for  its  services  and products may
increase  in  the summer season which is expected to cause the operations of the
Company  to  increase  during  such  period.

Foreign  Exchange  Risk
-----------------------

     We conduct our operations primarily in Spain in Euro.  For this reason, we
have  not  historically  used  derivatives  to  hedge  foreign  exchange  risk.

     We  are  not  subject  to  transactional  risks  because  all  our  Spanish
operations,  both  revenues and expenses, are denominated in the local currency,
Euro.  We  are  primarily  exposed  to translational risk, considering that our
financial  statements  are  in U.S. dollars and that the currency of our Spanish
subsidiary  is  the  Euro,  which  requires  conversion  for financial statement
purposes.

                                       29
<PAGE>

Recent  Accounting  Pronouncements
----------------------------------

     SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
became  effective  January  1,  2001.  This statement establishes accounting and
reporting  standards  requiring  that  every  derivative  instrument,  including
certain  derivative  instruments imbedded in other contracts, be recorded in the
balance  sheet  as  either an asset or liability measured at its fair value. The
statement  also  requires  that  changes  in  the  derivative's  fair  value  be
recognized  in  earnings  unless  specific hedge accounting criteria are met. We
believe  the  adoption  of SFAS No. 133 will not have an effect on our financial
statements  because  we  do  not  engage  in  derivative  or hedging activities.

     In  December  1999,  the  Securities and Exchange Commission released Staff
Accounting  Bulletin No. 101, Revenue Recognition in Financial Statements, which
provides  guidance  on  the  recognition, presentation and disclosure of revenue
having  a  material  impact  on  our  financial  statements.

Item  7.     Financial  Statements
             ---------------------

     The  consolidated  financial statements of the Company for its fiscal years
ended  September  30,  2002  and  2001,  are  provided  with  this  Form 10-KSB.





                                       30
<PAGE>



                          Independent Auditor's Report


To  the  Board  of  Directors
ITS  Networks,  Inc.

We  have  audited  the  consolidated  balance  sheet  of  ITS  Networks Inc. and
subsidiary  as of September 30, 2002, and the related consolidated statements of
operations,  stockholders'  deficit,  and  cash  flows  for the year then ended.
These  financial  statements are the responsibility of the Company's management.
Our  responsibility is to express an opinion on these financial statements based
on  our  audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audit  provides  a
reasonable  basis  for  our  opinion.

In  our  opinion,  based  on  our  audit,  the consolidated financial statements
referred  to  above  present  fairly,  in  all  material respects, the financial
position  of  ITS Networks Inc. as of September 30, 2002, and the results of its
operations  and  its  cash  flows  for  the  year  then ended in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going concern.  Since inception, the Company has
incurred  operating losses in each reporting period as shown in the accompanying
financial  statements.  The  Company incurred a net loss of $(1,284,000) for the
year  ended September 30, 2002. The Company used cash in operations of  $571,000
during  this  period.  As  of  September  30, 2002, the Company has a deficit in
working capital of  $(1,387,000) and a deficit net worth of $(1,082,000).  These
factors,  and  others  discussed  in  Note  2, raise substantial doubt about the
Company's  ability  to continue as a going concern.  The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded  assets, or the amounts and classification of liabilities that might be
necessary  in  the  event  the  Company  cannot  continue  in  existence.

                              GRAY & NORTHCUTT PLLC
Oklahoma  City,  Oklahoma
December  20,  2002


                                      F-1
<PAGE>


                         Report of Independent Auditors

To  the  Board  of  Directors  and  Stockholders
ITS  Networks,  Inc.

We  have   audited  the   accompanying   consolidated   statements   of  income,
stockholders'  deficit,  and  cash flows of ITS Networks Inc. and its subsidiary
for  the  year  ended  September 30, 2001.  These financial   statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  consolidated  financial  statements  based  on  our  audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the audit to obtain reasonable assurance about whether the consolidated
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An  audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as  evaluating  the  overall  consolidated  financial statement presentation. We
believe  that  our  audit  provides  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the consolidated results of operations and
cash  flows  of  ITS  Networks,  Inc. and its subsidiary for the year then ended
September  30,  2001 in conformity with accounting principles generally accepted
in  the  United  States  of  America.

The  accompanying  consolidated financial statements have been prepared assuming
that  the Company will continue as a going concern. As shown in the consolidated
financial statements and discussed in Note 2, the Company incurred a net loss of
$1,058,000  and used cash in operations of $924,000 for the year ended September
30,  2001  and,  as  of that date, had a working capital deficiency of $470,000.
These conditions raise substantial doubt about the Company's ability to continue
as  a  going  concern.  Management's  plans  in regard to these matters are also
discussed  in Note 2. These consolidated financial statements do not include any
adjustments  that  might  result  from  the  outcome  of  this  uncertainty.


New  York,  NY
December  14,  2001

MOORE  STEPHENS,  P.C.



                                      F-2
<PAGE>


                                ITS NETWORKS INC.
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2002

                                     ASSETS
<TABLE>
<CAPTION>
CURRENT  ASSETS:
<S>                                                                 <C>
  Cash  and  cash  equivalents                                      $    48,000
  Accounts  receivable,  net  of  allowance
    for  doubtful  accounts  of  $177,000                               308,000
  Prepaid  expenses                                                      16,000
                                                                    -----------
    Total  current  assets                                              372,000
                                                                    -----------

PROPERTY AND EQUIPMENT, NET                                             219,000
                                                                    -----------
OTHER  ASSETS:
  Vendor  deposits                                                       94,000
                                                                    -----------

                                                                    $   685,000
                                                                    ===========

                    LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT  LIABILITIES:
  Accounts  payable  and  accrued  expenses                         $   623,000
  Other  current  liabilities                                           126,000
  Loans from related parties                                          1,010,000
                                                                    -----------

    Total  current  liabilities                                       1,759,000
                                                                    -----------

LONG-TERM  DEBT:
  Guarantees  and  deposits  received                                     8,000
                                                                    -----------

    Total  long-term  debt                                                8,000
                                                                    -----------

STOCKHOLDERS'  DEFICIT:
  Preferred stock; par value of $0.001, 5,000,000 shares
    authorized,  no  shares  outstanding                                      -
  Common  stock;  par  value  of  $0.001,  50,000,000  shares
    authorized,  25,013,870  shares  outstanding                         25,000
  Additional  paid-in  capital                                        3,496,000
  Less: Prepaid syndication fees                                       (418,000)
  Accumulated  (deficit)                                             (4,063,000)
  Effect  of  cumulative  translation  adjustment                      (122,000)
                                                                    -----------

    Total  stockholders'  (deficit)                                  (1,082,000)
                                                                    -----------

                                                                    $   685,000
                                                                    ===========
</TABLE>



    The accompanying notes are an integral part of these financial statement.

                                      F-3
<PAGE>
                                ITS NETWORKS INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001

<TABLE>
<CAPTION>
                                                         2002           2001
                                                    ------------   ------------
<S>                                                 <C>            <C>
SALES                                               $  2,186,000   $  2,381,000

COST OF GOODS SOLD                                     1,544,000      1,894,000
                                                    ------------   ------------

GROSS  PROFIT                                            642,000        487,000
                                                    ------------   ------------

OPERATING  EXPENSES:
  Selling, general and administrative expenses         1,698,000      1,468,000
  Depreciation                                            52,000         45,000
  Bad  debt  expense                                     175,000          3,000
                                                    ------------   ------------

    Total  operating  expenses                         1,925,000      1,516,000
                                                    ------------   ------------

(LOSS)  FROM  OPERATIONS                             (1,283,000)     (1,029,000)
                                                    ------------   ------------

OTHER  INCOME  (EXPENSES):
  Interest  expense                                      (1,000)        (23,000)
  Other  expense                                              -          (6,000)
                                                    ------------   ------------

                                                         (1,000)        (29,000)
                                                    ------------   ------------

(LOSS)  BEFORE  INCOME  TAXES                       $(1,284,000)   $(1,058,000)

PROVISION  FOR  INCOME  TAXES                                 -              -
                                                    ------------   ------------

NET  (LOSS)                                         $(1,284,000)   $(1,058,000)
                                                    ===========    ===========

BASIC  EARNINGS  PER  SHARE                         $     (0.06)   $     (0.05)
                                                    ===========    ===========

AVERAGE  COMMON  AND  COMMON
  EQUIVALENT  SHARES  OUTSTANDING                    22,999,786     21,316,677
                                                    ===========    ===========

THE  COMPONENTS  OF  COMPREHENSIVE  LOSS:
  Net  (loss)                                       $(1,284,000)   $(1,058,000)
  Foreign currency translation adjustment              (131,000)         9,000
                                                    -----------    -----------

COMPREHENSIVE  (LOSS)                               $(1,415,000)   $(1,049,000)
                                                    ===========    ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>
                                ITS NETWORKS INC.
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001

<TABLE>
<CAPTION>
                                    Common Stock                                              Accumulated
                                 ------------------
                                  Number    $0.001   Additional     Prepaid                      Other          Total
                                    of        par     Paid-In     Syndication  Accumulated    Comprehensive  Stockholders'
                                  Shares     Value    Capital         Fees       Deficit          Loss          Deficit
                                 ---------  -------  -----------  ----------   -------------  -------------  --------------
<S>                             <C>         <C>      <C>          <C>          <C>            <C>            <C>
Recapitalization as a result
  of Technology Systems
  International, Inc. ("TSYN")
  merger December 22, 2000      16,866,667  $17,000  $ 1,314,000  $        -   $ (1,721,000)  $        -     $   (390,000)
Equity of shell in stock
  acquisition of TSYN            4,450,000    4,000        2,000           -              -            -            6,000
Foreign currency translation
  adjustment, September 30,
  2001                                   -        -            -           -              -        9,000            9,000
Net loss for the year ended
  September 30, 2001                     -        -            -           -     (1,058,000)           -       (1,058,000)
                                ----------  -------  -----------  ----------   ------------   ----------     ------------

Balance, September 30, 2001     21,316,667   21,000  1,316,000             -     (2,779,000)       9,000       (1,433,000)
Common shares issued upon
  exercise  of  warrants            20,000        -     16,000             -              -            -           16,000
Common stock issued for
  conversion of debt to
  equity                         2,372,080    2,000  1,463,000             -              -            -        1,465,000
Common shares issued for
  services, April  2002             19,500        -     11,000             -              -            -           11,000
Common shares issued for
  services                         483,000     1,000   194,000             -              -            -          195,000
Common stock options issed
  for advertising,
  September  2002                        -         -    84,000             -              -            -           84,000
Common shares issued for
  syndication  costs,
  September  2002                1,052,623     1,000   417,000      (418,000)             -            -                -
Common shares repurchased
  and  retired                    (250,000)        -    (5,000)            -              -            -           (5,000)
Foreign currency translation
  adjustment, September 30,
  2002                                   -         -         -             -              -     (131,000)        (131,000)
Net (loss) for the year
  ended September 30, 2002               -         -         -             -    (1,284,000)           -        (1,284,000)
                                ----------  -------  -----------  ----------   ------------   ----------     ------------

Balance, September 30, 2002     25,013,870  $25,000  $3,496,000   $ (418,000)  $(4,063,000)   $ (122,000)    $ (1,082,000)
                                ==========  =======  ==========   ==========   ===========    ==========     ============
</TABLE>


    The accompanying notes are an integral part of these financial statement.

                                      F-5
<PAGE>

                                ITS NETWORKS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001
                                  Page 1 of 2

<TABLE>
<CAPTION>
                                                          2002          2001
                                                      ------------  ------------
CASH  FLOWS  FROM  OPERATING  ACTIVITIES:
<S>                                                   <C>           <C>
  Net  (loss)                                         $(1,284,000)  $(1,058,000)
  Adjustments  to  reconcile  net  (loss)  to
  net  cash  used  in  operating  activities:
    Depreciation                                           52,000        45,000
    Noncash expenditures paid with common stock           708,000             -
    Bad  debt  expense                                    175,000         3,000
    Loss on write down and sale of fixed assets                 -         6,000
  Decrease  (increase)  in  operating  assets:
    Accounts  receivable                                  (98,000)     (186,000)
    Prepaid  expenses                                     (16,000)        6,000
    Short-term  investments                                     -       173,000
    Vendor  and  other  deposits                          (24,000)      (54,000)
  Increase  (decrease)  in  operating  liabilities:
    Accounts  payable  and  accrued  liabilities          (92,000)      141,000
    Guarantees  and  deposits  received                     8,000             -
                                                      ------------  ------------

    Net  cash  (used  in)  operating  activities         (571,000)     (924,000)
                                                      ------------  ------------

CASH  FLOWS  FROM  INVESTING  ACTIVITIES:
  Cash proceeds from the sale of fixed assets                   -         3,000
  Purchase  of  property  and  equipment                 (107,000)      (24,000)
                                                      ------------  ------------

    Net cash (used in) investing activities              (107,000)      (21,000)
                                                      ------------  ------------

CASH  FLOWS  FROM  FINANCING  ACTIVITIES:
  Loan  proceeds                                        1,010,000     1,027,000
  Loan  principal  payments                            (1,223,000)      (94,000)
  Proceeds  from  sale  of  common  stock               1,063,000             -
  Cash  paid  for  treasury  stock                         (5,000)            -
                                                      ------------  ------------

    Net  cash  provided  by  financing  activities        845,000       933,000
                                                      ------------  ------------

EFFECT  OF EXCHANGE RATE                                 (131,000)        9,000
                                                      ------------  ------------

NET  INCREASE  (DECREASE)  IN  CASH  AND
  CASH  EQUIVALENTS                                        36,000        (3,000)

CASH  AND  CASH  EQUIVALENTS,
  BEGINNING  OF  YEAR                                      12,000        15,000
                                                      ------------  ------------

CASH  AND  CASH  EQUIVALENTS,
  END  OF  YEAR                                       $    48,000   $    12,000
                                                      ===========   ===========
</TABLE>


    The accompany notes are an integral part of these financial statements.

                                      F-6
<PAGE>

                               ITS NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001
                                  Page 2 of 2

<TABLE>
<CAPTION>
                                                          2002          2001
                                                      ------------  ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<S>                                                   <C>           <C>
  Cash  paid  during  the  year  for:
      Interest                                        $    (1,000)  $         -


SUPPLEMENTAL  DISCLOSURE  OF  NONCASH  TRANSACTIONS:
  Common  stock  issued  for  services  received      $   708,000   $         -
  Long-term  debt  converted  to  common  stock       $ 1,465,000   $         -
</TABLE>









   The accompanying notes are an integral part of these financial statements.


















                                      F-7
<PAGE>

                               ITS NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


1.  THE  COMPANY

ITS  Networks  Inc.  (the "Company") was incorporated in the State of Florida on
November 23, 1998. On December 22, 2000, the Company issued 16,866,667 shares of
common stock in exchange for 100% of the outstanding common stock of ITS Europe,
S.L.  ("ITS  Europe"),  a  Spanish  telecommunications  company.  For accounting
purposes, the acquisition has been recorded as a recapitalization of ITS Europe,
with  ITS  Europe  as  the acquirer. The 16,866,677 shares issued are treated as
issued  by  ITS  Europe  for  cash.

The consolidated financial statements include the accounts of ITS Europe and the
Company.  The  Company  is  a provider of various telecommunication services and
products within Spain.  Significant inter-company balances and transactions have
been  eliminated  on  consolidation.


2.  GOING  CONCERN

Since  inception,  the  Company  has incurred operating losses in each reporting
period as shown in the accompanying financial statements. The Company incurred a
net loss of $(1,284,000) and $(1,058,000) for the years ended September 30, 2002
and  2001,  respectively.  The  Company  used cash in operations of $571,000 and
$924,000  during  these periods.  As of September 30, 2002 and 2001, the Company
has  deficits  in  working capital of $(1,387,000) and $(470,000), respectively,
and  a deficit net worth of $(1,082,000) as of September 30, 2002. These factors
raise  substantial  doubt  about  the  Company's  ability to continue as a going
concern.

A  new  business  plan  was  developed  by  the  company  during  this year, and
management  is  implementing  its  plan  to obtain additional debt and/or equity
financing,  restructure  current  debt,  increase  revenues  as  well as improve
operating  margins.  The current shareholders have shown their commitment to the
Company  by  financially  supporting  the  operations.  During  the  year  ended
September  30,  2002,  $1,465,000  of  debt  was  converted  to  equity.

The  ability of the Company to continue as a going concern is dependent upon the
Company's  ability  to  attain  a satisfactory level of profitability and obtain
suitable  and  adequate  financing.  There can be no assurance that management's
plan  will  be  successful.  The  financial  statements  do  not  include  any
adjustments  that  might  result  from  the  outcome  of  this  uncertainty.


                                      F-8
<PAGE>

3.  SIGNIFICANT  ACCOUNTING  POLICIES

Cash  and Cash Equivalents - The Company considers all highly liquid investments
with  maturities  of three months or less when purchased to be cash equivalents.
There  are  no  cash  equivalents  at  September  30,  2002.

Property  and  Equipment  -  Property   and  equipment   are  stated   at  cost.
Depreciation  is  provided  primarily  by  the  straight-line  method  over  the
estimated  useful  lives  of  the  assets.

Impairment of Long-lived Assets - The Company evaluates its long-lived assets to
determine  whether  later  events and circumstances warrant revised estimates of
useful  lives  or  a  reduction  in  carrying  value  due  to  impairment.

Income  Taxes  -  The  Company  accounts  for  income  taxes  in accordance with
Statement  of  Financial  Accounting  Standards  No. 109, "Accounting for Income
Taxes", which requires an asset and liability approach to determine deferred tax
assets  and  liabilities.  Deferred  tax  assets  and liabilities are determined
based  upon  the differences between financial reporting and tax bases of assets
and  liabilities  and are measured using the enacted tax rates and laws that are
expected  to  be  in  effect  when  the  differences  are  assumed  to  reverse.

Loss  per  Share - Loss per common and common equivalent share is computed based
on  the  weighted  average  number  of  common  shares  outstanding.

Use  of  Estimates  - The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities  and  disclosure  of contingent assets and
liabilities  at the date of the financial statements and the reported amounts of
revenues  and expenses during the reporting period.  Actual results could differ
from  those  estimates.

Foreign  Currency  Translation/Transactions  - The assets and liabilities of ITS
Europe,  S.L.,  whose functional currency is the Euro (formerly the Peseta), are
generally  translated  into  US  dollars  at  the  September  30, 2002  exchange
rate.  The  revenues and expenses are translated at average exchange   rates for
the  period.    Resulting  translation adjustments are accumulated and reflected
as  a  separate  component  of  stockholders'  equity.

Transaction  gains  and  losses  that  arise  from exchange rate fluctuations on
transactions  denominated  in  a currency other than the functional currency are
included in the results of operations as incurred. Foreign transaction gains and
losses  in  the  functional  currencies  are  immaterial.

                                      F-9
<PAGE>

4.  PROPERTY  AND  EQUIPMENT

Property  and  equipment  at  September  30,  2002  are  comprised  as  follows:
<TABLE>
<CAPTION>
<S>                                     <C>
    Computers  and  systems             $  144,000
    Motor  vehicles                         13,000
    Furniture  and  fixtures                69,000
    Dialers                                131,000
                                        ----------

    Total  at  Cost                        357,000
    Less:  accumulated  depreciation      (138,000)
                                        ----------

    Net  Property  and  Equipment       $  219,000
                                        ==========
</TABLE>


5.  INCOME  TAXES

The  Company's  wholly-owned  subsidiary,  ITS  Europe,  S.L.,  files its income
taxes  on  a  calendar  year  basis.  Statutory  tax  laws  of  Spain  allow net
losses  from  operations  to  be  carried  forward for a period of 10 years. For
the  year  ended  September  30,  2002,  the  available  tax loss ITS Europe has
accumulated  is  $2,744,000  which  may be used to offset future taxable income.
The  utilization  of  the  loss  expires  in  years  from  2005  to  2011.  The
US  parent  company  has net operating loss carryforwards totaling approximately
$197,000,  which  is available to offset future parent company taxable income in
years  2021  to  2022.

The  Company  has  a  deferred  tax  asset principally due to net operating loss
carryforwards.  This  deferred  tax  asset  has  been  offset  in  full  by  a
valuation  allowance,  as  the  Company  cannot  be assured at this time that it
will  be  able  to  utilize  these  loss  carryforwards.

The  Spanish  carryforward  expiration  years  and  amounts  are  as  follows:
<TABLE>
<CAPTION>
                Year       Amount
                ----       ------
<S>                     <C>
                2005    $   11,000
                2006        26,000
                2007        63,000
                2008        76,000
                2009       729,000
                2010     1,067,000
                2011       772,000
                        ----------
                        $2,744,000
                        ==========
</TABLE>


                                      F-10
<PAGE>


The  US  carryforward  expiration  years  and  amounts  are  as  follows:
<TABLE>
<CAPTION>
                Year       Amount
                ----       ------
<S>                     <C>
                2021    $    6,000
                2022       191,000
                        ----------
                        $  197,000
                        ==========
</TABLE>

6.  LITIGATION

In  the  normal course of its operations, the Company may, from time to time, be
named  in  legal  actions  seeking  monetary damages. While the outcome of these
matters  cannot  be  estimated with certainty, management does not expect, based
upon  consultation  with legal counsel, that they will have a material effect on
the  Company's  business  or  financial  condition  or  results  of  operations.

7.  LOANS  FROM  RELATED  PARTIES

At  September  30,  2002,  the  Company  has short-term loans payable to related
parties  totaling  $1,010,000.  These  loans have no maturity dates or repayment
terms  and  are  interest  free.

8.  CREDIT  RISK

The  Company  operates  principally  in Spain.  The Company grants credit to its
customers  after  it performs certain credit evaluation procedures.  The Company
believes that credit risk is limited because it routinely assesses the financial
strength of its customers, and based upon factors surrounding the credit risk of
its  customers,  establishes  an  allowance  for uncollectible accounts which at
September  30,  2002  is  $177,000.  The Company believes any credit risk beyond
this  amount  would  be  negligible.

The  Company  does not require collateral or other security to support financial
instruments  that  are  subject  to  credit  risk.

As  of September 30, 2002, no customer accounted for 10% of accounts receivable.
For  the  year ended September 30, 2002, no customer accounted for more than 10%
of  total  sales.

9.  INFLATION

The Company believes that inflation has not had a material impact on its results
of  operations  for  the  year  ended  September  30,  2002.

10.  PREFERRED  STOCK

The Company has 5,000,000 shares of authorized and unissued Preferred Stock with
par  value  of  $0.001,  which  is  noncumulative  and  nonparticipating.

                                      F-11
<PAGE>

11.     STOCK  TRANSACTIONS

During  the  year  ended September 30, 2002, $1,465,000 of debt was converted to
2,372,071 shares of Common Stock.  In addition the Company issued 272,500 shares
of  Common  Stock  for  legal  and  advertising  services.

During  the  year ended September 30, 2002, the Company issued 250,000 shares of
Common Stock as agreed upon in the employment contract with the president of the
Company.

During  the  year  ended  September 30, 2002, the Company entered into an equity
line  of  credit  with Cornell Capital Partners, L.P.  ("Cornell").  Pursuant to
the  equity  line  of  credit  agreement,  the  Company, at its discretion, will
periodically  sell  to Cornell shares of Common Stock for a total purchase price
of up to $10,000,000.  For each share of common stock purchased under the equity
line  of  credit,  Cornell  will  pay 95% of the lowest closing bid price on the
Over-the-Counter  Electronic  Bulletin  Board or other principal market on which
our  Common  Stock  is  traded for the five consecutive trading days immediately
following  the  notice date. On September 27, 2002, the Company issued 1,026,316
shares  of Common Stock for syndication fees for this equity line of credit.  In
addition,  in  connection  with  the  Equity Line of Credit Agreement, we issued
26,316  shares  of our Common Stock to Westrock Advisors, Inc. ("Westrock") as a
placement  agent  fee.  As  of  December  20,  2002, this line of credit has not
become available as the shares covered under this equity line of credit have not
been  registered  with  the Securities and Exchange Commission. Therefore, as of
December  20,  2002  no  funds  have  been  raised utilizing this equity line of
credit.  The  Company expects to draw down approximately $1,000,000 during 2003,
representing  the  issue  of  approximately  2,000,000 registered common shares.

During the year ended September 30, 2002, the Company repurchased 250,000 shares
of  Common  Stock  from  the former president for $5,000.  These treasury shares
were  treated  as  retired.

12.  STOCK  WARRANTS  AND  OPTIONS

As  of  September  30,  2002,  the  Company has warrants outstanding to purchase
880,000  shares  of Common Stock at the exercise price of $1.00 per share, which
expire  on or before December 24, 2004.  Each of the warrants contain provisions
for  the  adjustment  of  the  exercise price and the aggregate number of shares
issuable  upon  the  exercise  of  the warrants in the event of stock dividends,
stock  splits,  reorganization  and  reclassifications  and  consolidations.

As  of  September  30,  2002,  the  Company has issued outstanding stock options
covering  631,579  shares  of  Common  Stock exercisable at $.10 per share until
March  27,  2007  for  advertising  services  rendered.  For financial reporting
purposes,  these  options  were  valued  at  $84,000,  which  were  treated  as
advertising  expense  with  an  offset  to  additional  paid  in  capital.

                                      F-12
<PAGE>

13.  STOCK  OPTION  PLANS

During  the year ended September 30, 2002, the Company adopted an Employee Stock
Option, SAR and Stock Bonus Plan (the "Employee Plan"), which reserves 2,500,000
shares  of  Common  Stock for issuance under the Plan.  The Employee Plan allows
the  Company  to issue awards of incentive or non-qualified stock options, stock
appreciation  rights,  and  stock bonuses, which may be subject to restrictions.

During  the  year  ended September 30, 2002, the Company adopted a Stock Option,
SAR  and  Stock  Bonus  Consultant  Plan (the "Consultant Plan"), which reserves
2,000,000  shares  of  Common Stock for issuance under the Plan.  The Consultant
Plan  allows  the  Company  to  issue awards of incentive or non-qualified stock
options,  stock  appreciation rights, and stock bonuses, which may be subject to
restrictions.

No  awards  of  stock  options, stock appreciation rights, or stock bonuses have
been  granted to employees or consultants as of September 30, 2002, except for a
stock  bonus  of  a  net  19,500  shares  of  common  stock.

14.     EARNINGS  (LOSS)  PER  SHARE

Basic  earnings  per  share  amounts  are computed based on the weighted average
number  of  shares  outstanding on that date during the applicable periods.  The
numbers  of  shares  used  in  the  computations  were  22,999,786  in  2002 and
21,316,677  in  2001.

Diluted  earnings  per share was not disclosed as of September 30, 2002 and 2001
because  the effect would be antidilutive.

15.     LEASES

The  Company  leases  offices  under non-cancelable operating leases expiring in
various  years  through  2004.

Minimum  future  rental  payments  under  non-cancelable operating leases having
remaining  terms in excess of one year as of September 30, 2002        for  each
of  the  next  five  years  and  in  the  aggregate  are:
<TABLE>
<CAPTION>
                                     AMOUNT
                                     ------
<S>                                <C>
          2003                     $ 141,000
          2004                        58,100
          2005                             -
          2006                             -
          2007                             -
          Thereafter                       -
                                   ---------

                                   $ 199,000
                                   =========
</TABLE>

16.     SUBSEQUENT  EVENTS

On  December  5,  2002,  the  Company acquired Teleconnect Comunicaciones, S.A.,
("Teleconnect")  a  company  formed  under  the  laws  of Spain which operates a
pre-paid  telephone  card  business  in  Spain.  The  Company  agreed  to  issue
3,000,000  shares  of  its  restricted  common  stock  to  the  stockholders  of
Teleconnect in reliance upon Regulation S under the Securities Act of 1933.  The
Company  also  agreed to loan Teleconnect 2,200,000 Euro, which will be used to

                                      F-13
<PAGE>

cancel  approximately 5,500,000 Euro of existing debt.     In order to pay this
approximately  2,200,000  Euro,  the  Company  intends to sell its common stock
and/or  borrow  additional funds from investors to procure up to 3,000,000 Euro
to  pay such debts and for working capital.  However, there is no assurance that
all  of such capital will be raised, and the Company may seek bank financing and
other  sources  of  financing  to  pay  the  debts  of  Teleconnect.

As  of  the  date  of  December  20, 2002, 2,500,000 Euro has been committed by
private  investors  for  the  acquisition  of  Teleconnect.

























                                      F-14
<PAGE>

Item  8.     Changes  in  and  Disagreements  with Accountants on Accounting and
             -------------------------------------------------------------------
             Financial  Disclosure
             ---------------------

     There  have  been  no  disagreements  regarding  accounting  and  financial
disclosure  matters  with  the  independent  certified public accountants of the
Company.

     For  the  fiscal  year ended September 30, 2001, and the subsequent interim
period  ended  December  31,  2001,  and  through  April 18, 2002, there were no
disagreements  between  the  Company  and  Moore Stephens, P.C. on any matter of
accounting  principles  or practice, financial statement disclosure, or auditing
scope  or practices which if not resolved to the satisfaction of Moore Stephens,
P.C.  would  have  caused  Moore Stephens, P.C. to make reference to the subject
matter  of  the disagreement in connection with its reports.  On April 18, 2002,
Moore  Stephens, P.C., the independent certified public accountants and auditors
of  the  Company  for  fiscal  2001 were dismissed by the Company from the audit
engagement  with  the  Company.  The  dismissal  was  approved  by  the Board of
Directors  of the Company.  During the fiscal year ended September 30, 2001, the
consolidated  financial  statements  of  the  Company did not contain an adverse
opinion  or  a  disclaimer of opinion, nor were they qualified or modified as to
any uncertainty, audit scope, or accounting principles, except that their report
dated  December  14, 2001 of Moore Stephens, P.C. for such fiscal year indicated
conditions  which  raised  substantial  doubt  about  the  Company's  ability to
continue  as  a  going  concern.

     On August 12, 2002, Gray & Northcutt, PLLC located at 2601 N.W. Expressway,
Suite  800  East,  Oklahoma  City,  Oklahoma 73112 was engaged by the Company to
audit  the  consolidated financial statements of the Company as of September 30,
2002,  and the related statements of income, stockholders equity, and cash flows
for  the  year  then  ending.  During  the  two  most recent fiscal years or any
subsequent  interim  period, the new independent accountant had not been engaged
as  either  the  principal  accountant  of  the  Company  to audit its financial
statements  or of any significant subsidiary, nor has the Company consulted with
it  regarding  any  accounting  issue,  auditing  or  financial  reporting issue
regarding  such  financial  statements  or  reportable  event.

                                       31
<PAGE>

                                    PART III

Item  9.     Directors,  Executive  Officers,  Promoters  and  Control  Persons;
             -------------------------------------------------------------------
             Compliance  with  Section  16(a)  of  the  Exchange  Act
             --------------------------------------------------------

     The  directors  and  officers  of  the  Company  are  as  follows:
<TABLE>
<CAPTION>
     Name                      Age     Position
     ----------                ---     --------
<S>                             <C>    <C>
     Gustavo  A.  Gomez         39     Director,  President  and  Treasurer
     Martin-Luis  Becerra       50     Chief  Financial  Officer  and  Secretary
</TABLE>

The  background  and  principal  occupations of each director and officer of the
Company  are  as  follows:

     Mr.  Gomez became a director, the President, Secretary and Treasurer of the
Company on March 6, 2002.  From May 2001 to the present, he has been the founder
and  operator  of OpenVia S.L., a European telecommunication consulting company.
From  January 2000 to April 2001, he was the co-founder and Managing Director of
Broadband  Optical  Access  S.A.,  a  carrier  engaged in the European broadband
access  market.  From  January  1998  to January 2000, Mr. Gomez was its Account
Director in Spain with Nortel Networks Corp. and previously was Nortel's Manager
GSM  products in Spain until September 1998. From April 1997 to January 1998, he
was  the  Director of Marketing of Retevision. From February 1996 to April 1997,
Mr.  Gomez  was the Deputy Commercial Director of Telefonica S.A's international
business  unit.  Mr.  Gomez received a Bachelor of Electrical Engineering degree
from  McGill University in 1986, and received a MBA degree from the Instituto de
Empresa  (Madrid  Business  School)  in  1997.

     On  March  16,  2002,  the Company entered into a contract for professional
services with Mr. Gomez which provides for annual compensation of 121,000 Euro,
and  bonuses  based upon the performance of his services to the Company and was
issued  250,000  shares  of  restricted  Common  Stock.

     Mr. Becerra became the Chief Financial Officer and Secretary of the Company
on  September  11,  2002.  From  April  2002  to  August 30, 2002, he served the
Company  as  an accounting consultant.  From February 1989 to March 2002, he was
employed  as  a  Senior Manager and management consultant with PWC Consulting, a
division  of  PriceWaterhouseCoopers,  in  Madrid,  Spain.  From  July  1987  to
December  1988,  he  was  Director  of  Finance  of  Sans  S.A. in Buenos Aires,
Argentina.  From July 1984 to June 1987, Mr. Becerra was the Director of Finance
of  Criadero  SPS  S.A.  in  Buenos  Aires,  Argentina.  Mr.  Becerra received a
Bachelors of Business Economics from Universidad Nacional de Tucuman (Argentina)
in 1973 and received a Masters of Business Administration from IESE de Barcelona
of  the  Universidad  de  Navarra  in  1983.

     On  April  1,  2002,  the  Company entered into a contract for professional
services  with  Mr.  Becerra  which  provides for annual compensation of 102,000
Euro,  and  bonuses  based upon the performance of his services to the Company,
and  for  stock options which have not been determined or granted as of the date
of  this  annual  report.

Item  10.  Executive  Compensation
           -----------------------

     All  executive  officers,  for  services  in all capacities to the Company,
received  the  following compensation during the fiscal year ended September 30,
2002.

                                       32
<PAGE>
<TABLE>
<CAPTION>
                             Annual  compensation(1)          Long-Term  Compensation(2)
----------------------------------------------------------------------------------------------------
                                                            Awards                Payouts
-----------------------------------------------------------------------------------------------------
Name  and                                      Other                                        All
Principal                                      Annual     Restricted  Securities            Other
Position                Year   Salary  Bonus   Compen     Stock       Underlying   LTIP     Compen-
                                               -sation    Awards(3)   Options/SAR  Payouts  sation
---------               ----   ------  -----   -------    ----------  -----------  -------  --------
Gustavo  Gomez
President and
<S>                     <C>   <C>       <C>    <C>         <C>           <C>        <C>      <C>
Treasurer               2002  $91,000   $ 0    $    0      $101,250      $   0      $   0    $   0

Martin-Luis Becerra
Chief  Financial
Officer and Secretary   2002  $77,000   $ 0    $    0      $      0      $   0      $   0    $   0

Frederic  Cohen
Former President and
Treasurer(4)            2002  $30,900   $ 0    $    0      $      0      $   0      $   0    $   0

Eulalia  Palomo
Former  Secretary(5)    2002  $     0   $ 0    $    0      $      0      $   0      $   0    $   0

Lotta  Beatrice
A.  Persson
Former Secretary(6)     2002  $     0   $ 0    $    0      $      0      $   0      $   0    $   0


     All  executive  officers  as  a  group  (5  persons)                $          $
     ----------------------------
</TABLE>
     (1)  Personal  benefits  received  by the  Company's executive officers are
          valued below the levels which would otherwise require disclosure under
          the  rules  of  the U.S.  Securities  and  Exchange  Commission.
     (2)  The Company  does  not  currently  provide any  contingent or deferred
          forms of compensation arrangements, annuities, pension  or  retirement
          benefits.
     (3)  Represents  stock bonuses  of shares of Common Stock that were awarded
          by the  Board  of  Directors  as  compensation.
     (4)  Mr. Cohen was  a  previous  director,  President  and Treasurer of the
          Company  who  was  removed  effective  March  19,  2002.
     (5)  Ms. Palomo  was  removed  as  Secretary of  the Company on February 1,
          2002.

                                       33
<PAGE>

     (6)  Ms. Persson resigned  as  a  director and the Secretary of the Company
          effective  April  1,  2002.

Committees  of  the  Board  of  Directors
-----------------------------------------

     The  Company  does  not  have  an  audit committee, compensation committee,
nominating  committee, or an executive committee of the Board of Directors.  The
Company  does  have  a Stock Option Plan Committee which has been established to
administer  the  stock  option,  SAR  and stock bonus plans of the Company.  The
Board  of  Directors  plans  to  establish  various  committees  in  the future.


Compliance  with  Section  16(a)  of  the  Securities  Exchange  Act
--------------------------------------------------------------------

     Section 16(a) of the Exchange Act requires the Company's executive officers
and  directors,  and  persons  who beneficially own more than ten percent of the
Company's  equity  securities,  to  file  reports  of  ownership  and changes in
ownership  with  the Securities and Exchange Commission. Officers, directors and
greater  than 10% percent shareholders are required by SEC regulation to furnish
the  Company  with  copies  of  all  Section  16(a)  forms  they  file.

     Based on its review of the copies of such forms received by it, the Company
believes  that  during  the  year  ended  September  30,  2002,  all such filing
requirements  applicable  to  its  officers  and  directors  were complied with.
However,  Volim  Holdings,  B.V., a greater than 5% stockholder, has not filed a
Form  3  or  Schedule  13D  with  the  Commission.

2002  Employee  Stock  Option,  SAR  and  Stock  Bonus  Plan
------------------------------------------------------------

     Effective June 10, 2002, the Company adopted and approved its 2002 Employee
Stock  Option,  SAR  and  Stock Bonus Plan ("the Plan") which reserves 2,500,000
shares of Common Stock for issuance under the Plan.  The Plan allows us to issue
awards  of  incentive or non-qualified stock options, stock appreciation rights,
and  stock  bonuses  which  may  be subject to restrictions.  No awards of stock
options,  stock  appreciation  rights,  or  stock  bonuses  have been granted to
employees  as  of  September  30,  2002.

Stock  Option,  SAR  and  Stock  Bonus  Consultant  Plan
--------------------------------------------------------

     Effective  March  27, 2002, the Company adopted and approved its 2002 Stock
Option,  SAR and Stock Bonus Consultant Plan (the Plan) which reserved 2,000,000
shares of Common Stock for issuance under the Plan.  The Plan allows us to issue
awards of incentive non-qualified stock options, stock appreciations rights, and
stock  bonuses  which  may  be  subject  to  restrictions.

Benefit  Plans
--------------

                                       34
<PAGE>

          The  Company  does not have any pension plan, profit sharing plan,  or
similar plans for the benefit of its officers, directors or employees.  However,
the  Company  may  establish  such  plans  in  the  future.

Board  Compensation
-------------------

          Each  non-employee  director  will  receive 1,500 Euro for each Board
meeting  attended,  and  for  each committee meeting attended on days other than
those  on  which  the  Board  meets,  and  will  receive reimbursement of travel
expenses.  Directors  of the Company have not received any compensation in their
capacity  as  directors  as  of  the  date  hereof.

Director  and  Officer  Indemnification  and  Limitations  on  Liability
------------------------------------------------------------------------

     Article  X  of  our  Articles of Incorporation and Article VI of our Bylaws
limit  the  liability of directors, officers and employees to the fullest extent
permitted  by  Florida  law.  Consequently, our directors will not be personally
liable  for  monetary damages for breach of their fiduciary duties as directors,
except  in  the  following  circumstances:

     *  A  violation of the criminal law, unless the director, officer, employee
        or agent  had  reasonable  cause  to  believe  his  conduct  was  lawful
        or had no reasonable  cause  to  believe  his  conduct  was  unlawful;

     *  A  transaction  from  which  the  director,  officer, employee, or agent
        derived an  improper  personal  benefit;

     *  In  the  case  of  a  director, a circumstance under which the liability
        provisions  of Section 607.0834 under the Florida Business Corporation
        Act  are applicable;  or

     * Willful misconduct or a conscious disregard for the best interests of the
       corporation  in  a proceeding by or in the right of the corporation to
       procure  a judgment  in  its favor on in a proceeding by or in the  right
       of a shareholder.

     This  limitation  of  liability  does  not  apply  arising  under  federal
securities  laws and does not affect the availability of equitable remedies such
as  injunctive  relief  or  rescission.

     Insofar as indemnification for liabilities arising under the Securities Act
may  be permitted to directors, officers, and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that  in  the  opinion of the Commission such indemnifications is against public
policy  as  expressed  in  the Securities Act and, is, therefore, unenforceable.

                                       35
<PAGE>

     We  have  no  indemnification  agreements  with  persons who are directors,
officers  or  employees  of  the  Company.

Item  11.  Security  Ownership  of  Certain  Beneficial  Owners  and  Management
           ---------------------------------------------------------------------

     The  total  number  of  shares  of Common Stock of the Company beneficially
owned  by  each  of  the  officers  and directors, and all of such directors and
officers as a group, and their percentage ownership of the outstanding shares of
Common  Stock  of  the  Company  as  of  September  30,  2002,  are  as follows:
<TABLE>
<CAPTION>
                                                    Shares
     Management                                     Beneficially  Percent  of
     Shareholders  (1)                              Owned  (1)    Common  Stock
     -----------------                              ------------   -------------
<S>                                                   <C>             <C>
     Gustavo  A.  Gomez                               250,000         1.0%

     Directors  and  officers  as  a  group
       (2 persons, including the above person)        250,000         1.0%
-------------------
</TABLE>

(1)  Except  as  otherwise  noted,  it  is  believed  by the Company that all
     persons  have  full  voting and investment power with respect to the shares
     indicated.  Under  the  rules  of the Securities and Exchange Commission, a
     person  (or  group  of  persons)  is deemed to be a "beneficial owner" of a
     security  if  he or she, directly or indirectly, has or shares the power to
     vote  or  to direct the voting of such security, or the power to dispose of
     or  to  direct the disposition of such security. Accordingly, more than one
     person  may  be  deemed  to  be  a beneficial owner of the same security. A
     person  is  also deemed to be a beneficial owner of any security which that
     person has the right to acquire within 60 days, such as options or warrants
     to  purchase  the  Common  Stock  of  the  Company.

     The  following  table sets forth information with respect to the beneficial
ownership  of  the  Company's  Common Stock by each shareholder who beneficially
owns  more  than  five percent (5%) of the Company's Common Stock, the number of
shares beneficially owned by each and the percent of outstanding Common Stock so
owned of record as of September 30, 2002. It is believed by the Company that all
persons  listed  have  sole  voting  and  investment power with respect to their
shares,  except  as  otherwise  indicated.

                                       36
<PAGE>
<TABLE>
<CAPTION>
                                                 Shares  of         Percent
                                  Title  of      Outstanding        Beneficially
Names  and  Addresses             Class          Common  Stock      Owned
---------------------             ---------      -------------      ------------
<S>                                <C>             <C>                 <C>
Carnival  Enterprises Ltd.         Common          12,693,480          50.7%
Suite  4,  4  Giros  Passage
Gibralter,  Spain

Geeris Holding Nederland B.V.      Common           4,314,126          17.1%
Helvoirtseweg 146, 5263,
EH  Vught
Postbus 317, 5260, AH Vught
The  Netherlands

Volim  Holding  B.V.               Common           2,353,728           9.3%
Zandpad  55
3621  NE  Breukelen
The  Netherlands
---------------------------
</TABLE>

Item  12.  Certain  Relationships  and  Related  Transactions
           --------------------------------------------------

     During  December  2000,  there  was  a  change  in  control of the Company.
Effective December 22, 2000, the Company entered into a Share Exchange Agreement
(the "Agreement")  with  the  shareholders  of  ITS  Europe,  S.L.,  a  Spanish
telecommunications  company.  Under  the  terms  of  the  Agreement, the Company
issued  16 866,667 shares of its Common Stock in exchange for all of the issued
and  outstanding  Common  Stock  of ITS Europe, S.L. which became a wholly owned
subsidiary  of  the  Company.  In  addition  to  the  Agreement,  certain former
shareholders of the Company sold 3,810,500 shares of their personal Common Stock
of  the  Company  to  the  former  shareholders  of  ITS  Europe, S.L. and their
designees  for  $250,000  (U.S.),  effective  December 22, 2000, through a Stock
Purchase  Agreement.

     As  a  result  of  the  Stock  Exchange  Agreement  and  the Stock Purchase
Agreement between the Company and ITS Europe, S.L. in December 2000, there was a
change  in  control of the Company.  The former shareholders of ITS Europe, S.L.
and  their  designees  acquired  20,677,167  shares  of  the Common Stock of the
Company  of  the  total  of  21,  336,667  shares  of  Common Stock outstanding.

     In  connection  with  the  change  in the principal line of business of the
Company  to  telecommunications,  the Company sold and transferred all rights to
its  Smart  Shopper  technology,  in  consideration of the payment of all of the
current liabilities of the Company, to Stephen A. Beloyan, a former director and
the former President of the Company.  This obligation was partially satisfied by
the  exercise  of  a  warrant  to  purchase  20,000 shares of Common Stock at an
exercise  price  of $1.00 per share by Mr. Beloyan, and the balance paid in cash
by  Mr.  Beloyan,  for  a  total  of  $20,000.

The following is a recap of loans to the Company from various stockholders.



                                       37
<PAGE>

Item  13.  Exhibits  and  Reports  on  Form  8-K
           -------------------------------------

     (A)  Reports  on  Form  8-K

     A current report was filed on Form 8-K on November 11, 2002, concerning the
Company's  acquisition  of  Teleconnect  Communicaciones,  S.A.

     (B)  Exhibits

Exhibit                            Description
-------                            -----------

(i)   Articles  of Incorporation   The Articles of Incorporation of the Company
      of the Company               are incorporated  herein by reference to
                                   Exhibit 3.1 to the Form SB-2  registration
                                   statement  of  the  Company  (File  No.
                                   333-93583)

(ii)  Amendment to Articles        The Amendment to the Articles of
      of  Incorporation            of  Incorporation of the Company is
                                   incorporated  herein by reference to
                                   Exhibit 99.1 to the Form 8-K current report
                                   of the Company dated January 29, 2001.

(iii) By-Laws  of  the  Company    The  By-Laws  of the Company are incorporated
                                   herein  by  reference to Exhibit 3.2 to the
                                   Form SB-2 registration statement  of  the
                                   Company  (File  No.  333-93583)

10.  Material  Contracts

     10(a)                         Share  Exchange Agreement dated December 22,
                                   2000, is  incorporated  by reference to
                                   Exhibit 99.1 to the Form 8-K Current Report
                                   of the  Company  dated  January  5,  2001.

     10(b)                         Stock  Purchase Agreement dated December 22,
                                   2000, is  incorporated  by reference to
                                   Exhibit 99.2 to the Form 8-K Current Report
                                   of the  Company  dated  January  5,  2001.

     10(c)                         Agreement  dated  September 27, 2000, with
                                   Melanie Griffith  is  incorporated  herein
                                   by  reference  to  Exhibit 10(c) to the Form
                                   10-KSB  of  the  Company  for  its  fiscal
                                   year  ended  September  30,  2001.

     10(d)                         Agreement  dated  February 14, 2000, with
                                   SGEL, SA is incorporated  herein by reference
                                   to Exhibit 10(d) to the Form 10-KSB of the
                                   Company  for  its  fiscal  year  ended
                                   September  30,  2001.

     10(e)                         Agreement  dated  July  15, 2001, with
                                   Telecor, SA is  incorporated  herein by
                                   reference to Exhibit 10(e) to the Form 10-KSB
                                   of the Company  for  its  fiscal  year  ended
                                   September  30,  2001.

                                       38
<PAGE>

     10(f)                         Agreement  dated  July  1,  2000,  with LINCE
                                   Telecommunications is  incorporated herein by
                                   reference to Exhibit 10(f) to the Form 10-KSB
                                   of  the  Company  for  its  fiscal year ended
                                   September 30,  2001.

     10(g)                         Equity Line of Credit Agreement dated
                                   June 18, 2002, with Cornell Capital Partners,
                                   L.P. incorporated herein by reference to
                                   Exhibit  10.1  to  the Form 10-QSB of the
                                   Company for the quarter ended June 30, 2002.

     10(h)                         Registration Rights Agreement dated June 18,
                                   2002, with Cornell Capital Partners, L.P.
                                   incorporated herein by reference to Exhibit
                                   10.2  to  the  Form  10-QSB of the Company
                                   for the quarter ended June 30,  2002.

     10(i)                         Employment  Agreement  dated March 16, 2002,
                                   with Gustavo  Gomez  incorporated  herein
                                   by  reference  to Exhibit 10.3 to the Form
                                   10-QSB  of  the  Company for the  quarter
                                   ended  June  30,  2002.

     10(j)                         Lease  Agreement  dated  April  29,  2001,
                                   for executive  offices in Madrid, Spain
                                   incorporated herein by reference to Exhibit
                                   10.4  to  the  Form  10-QSB of the Company
                                   for its fiscal quarter ended June 30, 2002.

     10(k)                         Letter  of  Moore  Stephens,  P.C.  dated
                                   July 10, 2002,  regarding  change  in
                                   certifying  accountant incorporated  herein
                                   by  reference to Exhibit 16 to the Form 8-K
                                   of the Company filed  on  July  17,  2002.

     10(l)                         Placement  Agent Agreement with Westrock
                                   Advisors, Inc.  dated June 18, 2002,
                                   incorporated herein by reference to Exhibit 1
                                   to the Form  SB-2  registration  statement of
                                   the  Company  (333-100549).

     10(m)                         Escrow Agreement among the Company, Cornell
                                   Capital Partners,  L.P., Butler Gonzales LLP,
                                   and Wachovia, N.A. dated June 18, 2002,
                                   incorporated  herein  by  reference  to
                                   Exhibit  10(k)  to the Form SB-2 registration
                                   statement  of  the  Company  (333-100549)

     10(n)                         Employment  Agreement with Martin L. Becerra
                                   dated April  1,  2002,  incorporated  herein
                                   by reference to Exhibit 10(l) to the Form
                                   SB-2  registration  statement  of  the
                                   Company  (333-100549).

                                       39
<PAGE>

     10(o)                         Private  Stock  Swap Agreement dated November
                                   11, 2002, regarding acquisition of Teleconnet
                                   Communications  is incorporated  herein
                                   by  reference to Exhibit 10.1 to the Form 8-K
                                   current report of the Company dated  November
                                   11,  2002.

     10(p)                         Consulting  Agreement  with City Telecom
                                   Services Limited dated November 20, 2002.

     10(q)                         Consulting Agreement with OLACAPITAL, S.L.
                                   dated November 18, 2002.

11.  Statement re:  computation    Reference is made to the Consolidated
     of  per  share earnings       Statements of Operations of the  Consolidated
                                   Financial Statements which are incorporated
                                   by reference  herein.

21.  A  description of the         Description  of  the  subsidiary  of  the
     subsidiary  of  the           Company.
     Company

23.1 Consent of Moore              Consent of Moore Stephens, P.C.
     Stephens,  P.C.
     independent  auditor

23.2 Consent of  Gray  &           Consent of Gray & Northcutt, PLLC
     Northcutt, PLLC
    independent  auditor

27. Financial  Data  Schedule      Not  applicable.





                                       40
<PAGE>


                                   SIGNATURES

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


January  13,  2003                         ITS  Networks  Inc.


                                           By:/s/  Gustavo  Gomez
                                              ----------------------------------
                                              Gustavo  Gomez
                                              Director, President and  Treasurer


                                           By:/s/  Martin-Luis  Becerra
                                              ----------------------------------
                                              Chief  Financial  Officer
                                              and Principal  Accounting  Officer

     In  accordance  with the Exchange Act, this report has been signed below by
the  following  persons on behalf of the registrant and in the capacities and on
the  dates  indicated.


January 13, 2003                               By:/s/  Gustavo  Gomez
                                               ---------------------------------
                                               Gustavo  Gomez
                                               Director, President and Treasurer


January 13, 2003                               By:/s/  Martin  Becerra
                                               ---------------------------------
                                               Martin  Becerra
                                               Chief  Financial  Officer
                                               and Principal Accounting  Officer







                                       41
<PAGE>
                                  EXHIBIT INDEX

10.  Material  Contracts:

          10(p)                         Consulting  Agreement  dated  January 2,
                                        2003 with City Telecom Services  Limited

          10(q)                         Consulting Agreement  with OLACAPITAL,
                                        S.L. dated Novembe4 18, 2002.

21.   A  description of the
      subsidiary  of  the
      Company                           Description  of the  subsidiary  of  the
                                        Company.

23.1  Consent of Moore Stephens, P.C.
      independent  auditor*             Consent  of  Moore  Stephens,  P.C.

23.2  Consent of Gray &
      Northcutt, PLLC
      independent  auditor*             Consent of Gray & Northcutt, PLLC

99.1  Certification of Gustavo Gomez

99.2  Certification of Martin-Luis Becerra

99.3  Certification of Gustavo Gomez
      and  Martin-Luis  Becerra


     *  Previously  filed  with  the  Registration Statements on Form S-8 of ITS
        Networks,  Inc.  (Commission  File  Nos.  333-85292  and  333-90846);
        incorporated herein.




















                                       42