UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB
(Mark One)
[ X ]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

[   ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
       For the Transition Period from ____________ to ____________

                         COMMISSION FILE NUMBER 0-28417

                                  ____________

                        KNOWLEDGE TRANSFER SYSTEMS, INC.
             (Exact Name of Registrant as Specified in its Charter)

                    NEVADA                          76-0599457
        (State or Other Jurisdiction of         (I.R.S. Employer
        Incorporation or Organization)         Identification No.)

                 110 BROADWAY
                  OAKLAND, CA                         94607
   (Address of Principal Executive Offices)        (Zip Code)


                                 (510) 251-6230
              (Registrant's Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities  Registered Pursuant to Section 12(g) of the Act: Common Stock, $.001
par value

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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 ______

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not 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. [ X ]

         The aggregate  market value of the voting and  non-voting  common stock
held by  non-affiliates  of the registrant as of May 15, 2003 was  approximately
$151,773.  The registrant had issued and  outstanding  50,743,208  shares of its
common stock on May 15, 2003.



<PAGE>


                     INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2001
<TABLE>
<CAPTION>
PART I
<S>               <C>                                                                                            <C>
     ITEM 1.      DESCRIPTION OF BUSINESS........................................................................1
     ITEM 2.      PROPERTIES.....................................................................................7
     ITEM 3.      LEGAL PROCEEDINGS..............................................................................7
     ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................7

PART II
     ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..........................7
     ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........8
     ITEM 7.      FINANCIAL STATEMENTS..........................................................................14
                  REPORT OF INDEPENDENT ACCOUNTANTS.............................................................16
                  CONSOLIDATED BALANCE SHEETS...................................................................17
                  CONSOLIDATED STATEMENTS OF OPERATIONS.........................................................18
                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY...............................................19
                  CONSOLIDATED STATEMENTS OF CASH FLOWS.........................................................20
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS....................................................21
     ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..........33

PART III
     ITEM 9.      DIRECTORS AND EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
                  EXCHANGE ACT..................................................................................33
     ITEM 10.     EXECUTIVE COMPENSATION........................................................................35
     ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT....................................................................................35
     ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................35
     ITEM 13.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
                  AND REPORTS ON FORM 8-K.......................................................................35
                  SIGNATURES....................................................................................36
                  EXHIBIT INDEX.................................................................................36
      ITEM 14.    CONTROLS AND PROCEDURES.......................................................................36
</TABLE>


<PAGE>


PART I

         This Report,  including all documents incorporated herein by reference,
includes certain "forward-looking statements" within the meaning of that term in
Section  13 or  15(d) of the  Securities  Act of 1934,  and  Section  21E of the
Exchange Act, including, among others, those statements preceded by, followed by
or  including  the  words  "believes,"   "expects,"   "anticipates"  or  similar
expressions.

         These  forward-looking  statements  are based  largely  on our  current
expectations and are subject to a number of risks and uncertainties.  Our actual
results  could  differ  materially  from these  forward-looking  statements.  In
addition to the other risks  described  in the "Factors  That May Affect  Future
Results"  discussion  under Item 6,  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations  in Part  II of this  Report,
important  factors to consider in  evaluating  such  forward-looking  statements
include:

         o        changes in our  business  strategy or an  inability to execute
                  our strategy due to unanticipated changes in the market,

         o        various competitive factors that may prevent us from competing
                  successfully in the marketplace, and

         o        changes  in  external  competitive  market  factors  or in our
                  internal  budgeting  process  which might impact trends in our
                  results of operations,

         o        our  ability to raise  sufficient  capital  to meet  operating
                  requirements.

In light of these risks and  uncertainties,  there can be no assurance  that the
events contemplated by the forward-looking  statements  contained in this Report
will, in fact, occur.

ITEM  1. BUSINESS

The Company designs, produces and markets e-learning courses and solutions. They
develop  high  quality,  engaging  courses that map to the  respective  industry
certifications  in the  information  technology  sector.  The Company is able to
develop highly  engaging  courses very cost  effectively,  due to unique content
sourcing  relationships  with  multiple  publishers  and an extremely  efficient
development process that utilizes  proprietary  development tools.  Products are
then  private   labeled  for  those   publishers  and  marketed   through  their
distribution  channels,  in  addition  to multiple  resellers,  integrators  and
e-learning   companies.   The  Company,   which  is  headquartered  in  Oakland,
California,  markets products through its resellers and distribution partners in
over 50 countries around the world.

GENERAL DEVELOPMENT OF BUSINESS

ORGANIZATION- On August 1, 1992,  Missaticum,  Inc. was  incorporated  under the
laws of the State of California. On October 4, 1996 the Company changed its name
to KT  Solutions,  Inc. It was formed for the purpose of  developing  technology
based training  solutions.  It creates software  programs that are used to teach
and train  individuals  how to operate  popular  business  and home use software
programs.

On June 1, 2000,  the former  shareholders  of the Company  entered into a stock
exchange agreement with enSurge,  Inc. (enSurge) whereby enSurge acquired all of
the outstanding common shares of KT Solutions, Inc. from its former shareholders
in exchange  for the issuance of 500,000  shares of  enSurge's  common stock and


                                       1
<PAGE>

options to purchase 250,000 shares of enSurge's common stock at $4.00 per share.
In addition,  enSurge issued  warrants to purchase 50,000 shares of common stock
at  $0.10  per  share  as a  finders'  fee.  As a  result,  the  Company  was  a
wholly-owned subsidiary of enSurge, Inc.

The  acquisition  of the KT  Solutions,  Inc. was recorded by enSurge  using the
purchase method of accounting.  The 500,000 common shares issued and the 300,000
options  issued  were  recorded at their fair  values of  $2,240,000  ($4.48 per
share) and  $1,120,000,  respectively.  The value of the options was  determined
using the  Black-Scholes  option  pricing model with the following  assumptions:
risk free interest rate of 6.0%,  expected  dividend yield of 0%,  volatility of
577% and expected life of 5 years.

For  financial  reporting  purposes,  KT  Solutions,  Inc. was  considered a new
reporting entity on June 1, 2000. The accompanying  financial statements reflect
the  operations of KT Solutions,  Inc. from June 1, 2000. The purchase price was
allocated to the assets and  liabilities at their fair value.  The excess of the
purchase price over the fair value of the net assets acquired was $4,342,278 and
was allocated to goodwill.  Goodwill is being  amortized  over five years by the
straight-line method.

REORGANIZATION  - On April  25,  2001,  enSurge,  consummated  a stock  exchange
agreement with GoThink!.com,  Inc., a publicly-held Nevada corporation,  whereby
enSurge  exchanged  all  of  the  1,368,387  outstanding  common  shares  of  KT
Solutions,  Inc. for 8,000,000 shares of  GoThink!.com,  Inc. common stock. As a
result  of  the  stock  exchange,  KT  Solutions,  Inc.  became  a  wholly-owned
subsidiary of GoThink!.com, Inc. GoThink!.com, Inc. had 248,247 shares of common
stock  outstanding  prior to the stock exchange,  but after a 1-for-100  reverse
stock split.

The stock exchange has been accounted for as the reorganization of KT Solutions,
Inc.  Accordingly,  the accompanying  financial statements have been restated to
reflect the effects of the 5.84-for-1  equivalent stock split that resulted from
8,000,000  shares of  GoThink!.com,  Inc. being issued in exchange for 1,368,387
previously outstanding shares of KT Solutions,  Inc.  GoThink!.com,  Inc. had no
assets or operations prior to or at the date of the reorganization. Accordingly,
the acquisition of GoThink!.com,  Inc. was not considered a business combination
but was  considered  the  issuance  of  248,247  shares of  common  stock for no
consideration.  The operations of  GoThink!.com,  Inc. have been included in the
accompanying financial statements from April 1, 2001 (which was the beginning of
the accounting period during which GoThink!.com, Inc. was purchased).

On April 23, 2001,  the articles of  incorporation  of  GoThink!.com,  Inc. were
amended to change its name to Knowledge Transfer Systems,  Inc. Through April 1,
2001,  KT  Solutions,  Inc.  is referred to as "the  Company,"  thereafter  that
reference refers to Knowledge Transfer Systems, Inc. and KT Solutions, Inc. on a
consolidated basis.

BUSINESS  CONDITION - The Company  incurred a net loss from  operations  for the
years ended December 31, 2002 and 2001 of $636,052 and $3,385,138, respectively,
and the Company  used  $401,922  and  $632,658 of cash in  operating  activities
during those same  periods.  As of December 31, 2002,  the Company had a working
capital deficit of $1,549,454.  These conditions raise doubt about the Company's
ability to continue as a going concern.  The Company needs to obtain  additional
financing to fund payment of  obligations  and to provide  working  capital.  In
addition, on April 3, 2003, the Company signed a definitive agreement to acquire
Corporate  Solutions,  Inc., (CSI) a Nevada  Corporation,  for 5,000,000 million
shares of the  Company's  common  stock  and  3,000,000  shares  of  convertible
preferred stock on a post reverse split basis.  The closing of this  acquisition
is  contingent  upon the  ability of the  companies  to meet  certain  terms and
conditions  precedent  to close.  Upon  closing and the release of the shares by
both  parties,  the Company  shall  receive  $75,000  that shall be used for the
payment of Company's obligations.  Management believes that this amount will not
be sufficient  to cover the Company's  obligations  and working  capital  needs.


                                       2
<PAGE>

Management is seeking additional  financing.  There is no assurance any of these
transactions will occur. The financial statements do not include any adjustments
relating to the  recoverability  and classification of asset carrying amounts or
the amount and  classification  of  liabilities  that  might  result  should the
Company be unable to continue as a going concern.

PRODUCTS AND SERVICES

         The Company's  main  products and services  revolve  around  e-learning
courses and solutions.  They provide high quality,  engaging courses that map to
the respective  industry  certifications in the information  technology  sector.
Courses within the product library include  desktop  applications  and operating
systems areas. The desktop application courses offered, include Microsoft Office
XP, Microsoft  Office 2000, 1998, and 1997.  Operating system courses offered by
the Company include Microsoft Windows 2000,  Microsoft Windows NT 4.0, Microsoft
Windows 98 and 95. In addition the company offers IT certification  courses such
as Cisco CCNA,  Java,  MCSE  Certification,  Oracle,  etc.  The Company  markets
products through its resellers and distribution partners in over 50 countries.

COMPETITIVE BUSINESS CONDITIONS

         The  markets  for our  services  are highly  competitive,  continuously
evolving and subject to rapid change,  technological  or otherwise.  Although we
believe our  solutions  currently  compete  favorably  with those offered by our
competitors,  the markets we serve are dynamic and changing rapidly.  We may not
be able to maintain  our  competitive  position  against  current and  potential
competitors,  especially those with significantly greater financial,  marketing,
service,  support,  technical and other resources.  Additional competition could
result in price reductions and loss of market share.

GOVERNMENT REGULATION

         The  products  we provide  over the  Internet  are  subject to foreign,
federal,  state  and  local  laws  and  regulations  governing  the  conduct  of
e-commerce and use of the Internet.  E-commerce is new and rapidly changing, and
government regulation relating to the Internet and e-commerce is still evolving.
Currently,  there are few laws and regulations  directly applicable to access of
the  Internet or conduct of  e-commerce  on the  Internet.  However,  due to the
increasing  popularity and use of the Internet and on-line  services,  many laws
relating to the Internet are being debated at the state and federal levels (both
in the U.S.  and abroad) and it is possible  that laws and  regulations  will be
adopted  with  respect  to the  Internet  and  online  services.  These laws and
regulations  could cover  issues such as user  privacy,  freedom of  expression,
pricing,  fraud,  content  and  quality  of  products  and  services,  taxation,
advertising,    intellectual   property   rights   and   information   security.
Additionally,  the rapid growth of  e-commerce  may trigger the  development  of
tougher  consumer  protection  laws.  The adoption of such laws and  regulations
could  reduce  the rate of  growth  of the  Internet,  which  could  potentially
decrease the usage of our products and could  otherwise have a material  adverse
effect on our business.

         In addition,  applicability  to the Internet of existing laws governing
issues such as intellectual  property issues,  taxation and personal property is
uncertain.  The vast  majority of these laws were adopted prior to the advent of
the Internet and related  technologies  and, as a result,  do not contemplate or
address  the  unique  issues  associated  with  operating  an   Internet-related
business.  Those  laws  that do  reference  the  Internet,  such as the  Digital
Millennium Copyright Act, are only beginning to be interpreted by the courts and
their applicability and scope are, therefore, uncertain.



                                       3
<PAGE>

         Several states have proposed  legislation  that would limit the uses of
personal  user  information  gathered  online  or  require  online  services  to
establish  privacy  policies.  The  Federal  Trade  Commission  also has settled
several  proceedings  regarding  the  manner in which  personal  information  is
collected from users and provided to third parties. Specific statues intended to
protect use privacy have been passed in many non-U.S. jurisdictions.  Changes to
existing  laws or the passage of new laws intended to address these issues could
directly  affect  the way we do  business  or could  create  uncertainty  on the
Internet. This could reduce demand for our services,  increase the cost of doing
business as a result of increased litigation costs or increased service delivery
costs, or otherwise harm our business.

RESEARCH AND DEVELOPMENT

         The Company has not incurred  any costs  associated  with  research and
development.  However, the Company does understand that technological innovation
is often a key to  success  in the  Technology  and  Internet  business  market.
Further, the pace of technological innovation in the Internet business market is
incredibly  rapid.  It can be daunting for a single  company to try to keep pace
with technological  change on all levels. Upon obtaining  additional capital, of
which  there can be no  assurance,  management  plans to  increase  expenditures
related to research and development.

EMPLOYEES

         As of December 31, 2002, the Company employed a total of 7 people. None
of our employees are  represented by a labor union.  We have not experienced any
work stoppage and consider relations with our employees to be good.




FACTORS THAT MAY AFFECT FUTURE RESULTS


RISKS RELATED TO OUR BUSINESS



We Incurred Operating Losses for the Current Year and Prior Year.

For the twelve  months ended  December 31, 2002 and 2001, we incurred a net loss
of $636,052 and  3,385,138,  respectively.  We have  incurred a net loss in each
year of our existence,  and have financed our operations primarily through sales
of equity securities.  The Company needs to obtain additional  financing to fund
payment of obligations and to provide working capital  Management  believes that
this amount will be sufficient to cover the  Company's  obligations  and working
capital needs. Management is seeking additional financing. There is no assurance
any of these  transactions  will occur. The financial  statements do not include
any  adjustments  relating to the  recoverability  and  classification  of asset
carrying  amounts or the amount and  classification  of  liabilities  that might
result should the Company be unable to continue as a going concern.



                                       4
<PAGE>

Our  Success  Will Be  Dependent  In Part On Our  Ability To  Develop  Strategic
Relationships With Other Businesses.

         One of our primary  goals is to increase  market  awareness  and market
penetration  of our  products.  This will  likely  require us to form  strategic
marketing  and sales  relationships  with  several  additional  companies  whose
resources  can be used to  supplement  and  expand our own,  with such  entities
either acting as  distributors  or resellers of our  products,  or including our
products as complements to or components of their own product offerings.

Our Quarterly Operating Results May Fluctuate.

         Based on our business and industry, we expect to experience significant
fluctuations  in our  future  quarterly  operating  results  due to a variety of
factors,  many of which are  outside our  control.  Factors  that may  adversely
affect our quarterly operating results include:

         o        our  ability to attract  new  customers  at a steady  rate and
                  maintain customer satisfaction,

         o        the demand for the products and services we intend to market,

         o        the amount and timing of capital  expenditures and other costs
                  relating to the expansion of our operations,

         o        the  introduction  of new or  enhanced  services  by us or our
                  competitors, and

         o        economic  conditions  specific  to the  Technology,  Internet,
                  e-commerce or all or a portion of the technology market.

As a Technology Based Company, We are in an Intensely Competitive Industry.

         The Internet and e-commerce industries are highly competitive, and have
few barriers to entry.  Although there are few competitors who offer the same or
similar  services  of the  type we  offer,  we can  provide  no  assurance  that
additional competitors will not enter markets that we intend to serve.

         We believe  that our ability to compete  depends on many  factors  both
within and beyond our control, including the following:

         o        the timing and market acceptance of our business model,

         o        our competitors' ability to gain market control,

         o        the success of our marketing efforts,

         o        acquisitions of companies with new technology,

         o        using  current  relations  to extend  all  business  sales and
                  marketing

We Depend on Certain Key Employees.

         Our future  performance  will  depend  significantly  on the  continued
service and performance of our key executive and officer,  Steve Burke. The loss
of the services of this individual could seriously impair our ability to operate
our business, compete in our industry and improve our tools and services.



                                       5
<PAGE>

The Volatility of Our Securities Prices May Increase.

         The market price of our common  stock has in the past been,  and may in
the future  continue to be,  volatile.  A variety of events may cause the market
price of our common stock to fluctuate significantly, including:

         o    quarter-to-quarter variations in operating results,

         o    adverse news announcements,

         o    the introduction of new products and services, and

         o    market  conditions in the  Internet-based  professional  marketing
              services, business, and business-to-business e-commerce.

         In  addition,   the  stock  market  in  recent  years  has  experienced
significant price and volume  fluctuations  that have particularly  affected the
market prices of equity  securities  of many  companies in our business and that
often have been unrelated to the operating performance of such companies.  These
market fluctuations may adversely affect the price of our common stock.

RISKS RELATED TO OUR INDUSTRY

We Are Dependent on Continued Growth in Internet Use and Infrastructure.

         One  important  aspect of our  business  relates to the  ability of our
company  to  generate  potential  sales  leads  through  the  Internet.  Another
important  aspect of our  business  relates to specific  aspects of our products
related to the  Internet.  Despite  significant  increases in Internet use, many
organizations  have been  reluctant  to  incorporate  the  Internet  into  their
businesses or activities for a number of reasons, including:

         o        inconsistent service quality resulting in part from inadequate
                  infrastructure     of     servers,     routers,      switches,
                  telecommunications links and other components

         o        lack  of  confidence  in the  security  and  privacy  of  data
                  transmitted over the Internet

         o        limited internal resources and technical expertise

         o        reluctance to dedicate  resources to an alternative  method of
                  communicating  that  may  render  substantial   personnel  and
                  infrastructure investments obsolete.

If the  infrastructure  of the  Internet  does not keep pace with the  growth of
Internet usage and if our targeted  customers do not grow comfortable  using the
Internet, our business will suffer.

We Must  Develop,  Produce and  Establish New Products and Services That Keep Up
With Rapid Technological Change.

         The market for Internet services and business-to-business e-commerce is
characterized  by  rapid  technological  changes,   frequent  software  changes,
frequent new products and service introductions and evolving industry standards.
The  introduction of services  embodying new processes and  technologies and the
emergence  of new  industry  standards  can  rapidly  render  existing  services
obsolete  and  unmarketable.  Our success in  adjusting  to rapid  technological
change will depend on our ability to:



                                       6
<PAGE>

         o        develop  and  introduce  new  services  that  keep  pace  with
                  technological  developments and emerging  industry  standards;
                  and

         o        address the  increasingly  sophisticated  and varied  needs of
                  customers.

         Due to inadequate technical expertise,  insufficient  finances or other
reasons,  we may be unable to accomplish these tasks.  Such failure would have a
material adverse effect on our operating results and financial condition.


ITEM 2.  PROPERTIES

         Our  corporate  headquarters  are  located  at 110  Broadway,  Oakland,
California  94607,  where the Company  leases an aggregate of 4,000 square feet.
The lease expires February 2005.

         On January 1, 2003,  the Company was in default under its current lease
obligation for certain office space.


ITEM 3.  LEGAL PROCEEDINGS


         ON JANUARY 1, 2003,  THE COMPANY WAS IN DEFAULT UNDER ITS CURRENT LEASE
OBLIGATION  FOR CERTAIN  OFFICE AND IS ATTEMPTING TO WORK OUT A SETTLEMENT  WITH
THE LANDLORD.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None



                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

         The Company's common stock is traded in the over-the-counter market and
quoted on the Nasdaq National Market under the trading symbol "KTSI". The common
stock  prices  reflect  inter-dealer  prices,  do not  include  retail  markups,
markdowns or commissions and do not necessarily represent actual transactions.








                                       7
<PAGE>

         The following table sets forth,  for the quarters  indicated,  the high
and low sales price per share for the  Company's  common  stock,  as reported by
Nasdaq:
<TABLE>
<CAPTION>
                                                                                    High               Low

YEAR ENDING DECEMBER 31, 2001:
<S>                                                                              <C>              <C>
                  First Quarter..................................................$       N/A          N/A
                  Second Quarter.................................................         2.00        0.05
                  Third Quarter..................................................         1.00        1.00
                  Fourth Quarter.................................................         1.15        0.11

YEAR ENDING DECEMBER 31, 2002:
                  First Quarter..................................................$        0.51        0.07
                  Second Quarter.................................................         0.20        0.03
                  Third Quarter..................................................         0.07        0.02
                  Fourth Quarter.................................................         0.04        0.02
</TABLE>

The closing price for the common stock on May 15, 2003 was $0.004. The Company's
Board of Directors authorized a 5.84-for-1  equivalent stock split that resulted
from  8,000,000  shares of  GoThink!.com,  Inc.  being  issued in  exchange  for
1,368,387 previously outstanding shares of KT Solutions,  Inc. This was affected
on April 25, 2001 to  stockholders  of record on the same date. We have restated
all share and per share amounts referred to in the financial statements,  notes,
and above table to reflect this stock split.

HOLDERS

         As of May 15, 2003,  the Company had approx.  2100 holders of record of
its common stock.

DIVIDENDS

         The  Company  does not  anticipate  paying  any cash  dividends  in the
foreseeable  future and intends to retain all working  capital and earnings,  if
any, for use in the Company's  operations  and in the expansion if its business.
Any future determination with respect to the payment of dividends will be at the
discretion of the Board of Directors  and will depend upon,  among other things,
the  Company's   results  of   operations,   financial   condition  and  capital
requirements,  general business conditions,  and such other factors as the Board
of Directors deems relevant.

RECENT SALES OF UNREGISTERED SECURITIES

None


ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

The  following  discussion  reviews the Company's  operations  for the two years
ended  December 31, 2002 and 2001,  and should be read in  conjunction  with the
Company's  consolidated  financial statements and related notes thereto included
elsewhere herein.



                                       8
<PAGE>

The following discussion includes statements that are forward looking in nature.
The accuracy of such statements  depends on a variety of factors that may affect
the  business  and  operations  of the  Company.  Certain of these  factors  are
discussed under "Business - Factors  Influencing  Future Results and Accuracy of
Forward-Looking Statements" included in Part 1 of this report.



PLAN OF OPERATION

The Company has incurred a net loss from operations for the years ended December
31, 2002 and 2001 of $636,052 and $3,385,138 respectively,  and the Company used
$401,922 and $632,658 of cash in operating activities during those same periods.
As  of  December  31,  2002,  the  Company  had a  working  capital  deficit  of
$1,549,454. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. The Company needs to obtain additional financing
to fund payment of obligations  and to provide  working  capital for operations.
Management is seeking additional  financing.  Upon obtaining additional capital,
of which there can be no  assurance,  management  plans to pay existing  Company
obligations.  There is no assurance any of these  transactions  will occur.  The
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.

When used in this discussion,  the words "expect(s)",  "feel(s)",  "believe(s)",
"will", "may",  "anticipate(s)" and similar expressions are intended to identify
forward-looking  statements.  Such  statements  are subject to certain risks and
uncertainties,  and actual results could differ materially from those projected.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements,  and  are  urged  to  carefully  review  and  consider  the  various
disclosures elsewhere in this Form 10-KSB.


CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations
are based upon the Company's consolidated financial statements,  which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported  amounts of
assets and  liabilities,  revenues  and  expenses,  and  related  disclosure  of
contingent  assets  and  liabilities  at the  date  of the  Company's  financial
statements.  Actual  results may differ  from these  estimates  under  different
assumptions or conditions.

Critical  accounting  policies  are  defined  as those  that are  reflective  of
significant  judgments and  uncertainties,  and potentially result in materially
different  results  under  different  assumptions  and  conditions.  The Company
believes that its critical  accounting  policies  include those described below.
For a  detailed  discussion  on the  application  of these and other  accounting
policies,  see  Note 1 in the  accompanying  consolidated  financial  statements
included in this  Company's  Form 10-KSB for the fiscal year ended  December 31,
2002.

GOODWILL AND INTANGIBLE ASSETS

Effective  January 1, 2002, the Company  adopted the provisions of SFAS No. 142,
Goodwill and Other  Intangible  Assets (SFAS 142).  This  statement  affects the


                                       9
<PAGE>

Company's  treatment  of goodwill and other  intangible  assets.  The  statement
requires that goodwill existing at the date of adoption be reviewed for possible
impairment and that  impairment  tests be periodically  repeated,  with impaired
assets  written  down  to  fair  value.  Additionally,   existing  goodwill  and
intangible  assets  must be  assessed  and  classified  within  the  statement's
criteria.  Intangible  assets  with  finite  useful  lives will  continue  to be
amortized over those  periods.  Amortization  of goodwill and intangible  assets
with indeterminable lives will cease.

During the second  quarter 2002 and within the first interim  period of adoption
of SFAS No. 142, the Company tested  goodwill for impairment and determined that
an impairment  charge was necessary as of June 30, 2002. This impairment  charge
was  recognized  as a change in  accounting  principle  and the income per share
effects of the accounting  change were separately  disclosed.  In addition,  the
financial

RESULTS OF OPERATIONS  FOR THE YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2001

REVENUES

Sales for the years ended December 31, 2002 and 2001 were $372,305 and $636,241,
respectively.  The  Company's  principal  source of revenue  for the years ended
December 31, 2002 and 2001,  respectively,  were from sales of  technology-based
software training  programs.  Sales for 2002, were comprised  primarily of sales
associated  with IT  curriculum  provider of $239,088 or 64%.  This  arrangement
provided the Company  with the right to sell and license  this  technology-based
training product without any on-going royalty obligation. Sales to one customer,
which is a national  franchise and had a license  agreement  with the Company in
2001,  accounted  for a  significant  portion  of  revenues  for the year  ended
December 31, 2001, approximately $356,300 or 56%. This license agreement expired
at the end of 2001.


COST OF SALES

         Cost of sales for the years  ended  December  31,  2002 were $3,799 and
$518,767,  respectively.  No significant  labor costs were incurred for the year
ended  December 31, 2002,  to develop the software  training  programs.  Cost of
sales for the year ended  December  31,  2001,  were  mainly the labor  costs to
develop the software training programs.

GENERAL AND ADMINISTRATIVE

         General and  administrative  expenses for the years ended  December 31,
2002 and 2001 were $889,628 and $2,265,796,  respectively. The Company's general
and  administration  expenses  during 2002  consisted  primarily of salaries and
wages of $306,367,  professional fees of $169,115,  outside services of $36,960,
rent of $93,872, travel expenses of $34,466, payroll taxes of $15,462, telephone
expenses of $10,550, and other general and administrative expenses of $222,836.

AMORTIZATION/GOODWILL

         For the years  ended  December  31,  2002 and  2001,  the  Company  had
amortization  expense of $0 and $868,456,  respectively.  This  amortization  is
carried forward from a previous  purchase on June 1, 2000. As prescribed by SFAS
No. 142, goodwill is no longer amortized,  but must be reviewed periodically for
impairment.  Accordingly,  no goodwill  amortization  is reflected for the three
months ended  September 30, 2002.  During the second quarter 2002 and within the
first interim  period of adoption of SFAS No. 142, the Company  tested  goodwill
for impairment and determined that an impairment charge was necessary as of June
30,  2002.  This  impairment  charge was  recognized  as a change in  accounting


                                       10
<PAGE>

principle  and the  income  per share  effects  of the  accounting  change  were
separately  disclosed.  In addition,  the financial  information  presented that
includes the periods that precede the period in which the transitional  goodwill
impairment  loss is measured was presented on a restated  basis.  The impairment
charge as of June 30, 2002 was 2,967,223.

INTEREST EXPENSE

         Interest  expense for the years ended  December  31, 2002 and 2001 were
$114,930  and  $368,360,  respectively.  These costs were  primarily  from notes
payable to related parties.


LIQUIDITY AND CAPITAL RESOURCES

     At  December  31,  2002,  cash  amounts to $419,  a decrease of $2,602 from
December  31,  2001.  Cash used in  operations  was  $401,922 for the year ended
December  31,  2002.  A  significant  reason  for the  decrease  in cash used in
operations for the year was  attributable  to the decreased  sales volume during
the year ended  December 31, 2002.  The primary  reason for the decreased  sales
volume in 2002 can be attributed to the loss of sales to one customer,  which is
a national franchise and had a license agreement with the Company.  This license
agreement expired at the end of 2001.

     The Company has had net losses annually since inception  (2000) and we have
incurred  net  losses  through  December  31,  2002.  The  Company's   financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States of America, which contemplates continuation of the
Company as a going concern.  The Company's  losses from  operations and negative
cash flows from operating activities raise substantial doubt about the Company's
ability to continue as a going  concern.  The Company's  continued  existence is
dependent upon its ability to obtain additional  financing.  Management's  plans
include securing financing from a variety of outside  resources.  The additional
financing  will be used  to make  payments  on  accounts  payable.  There  is no
assurance that additional financing will be realized.

     We had  negative  working  capital of  $1,549,454  on December  31, 2002 as
compared to  $1,431,955  at December  31,  2001.  The  direction  of the Company
continues to move toward  developing and enhancing its technology and delivering
it  to  its  customers.   The  Company's   working  capital  and  other  capital
requirements  for the  foreseeable  future  will vary based  upon the  Company's
ability to enhance its existing services,  develop new services,  and respond to
technological  advances and emerging industry standards.  The Company is working
to obtain  additional  funding from several  sources.  However,  there can be no
assurance that additional funding will become available.


      On  February  5, 2002,  the  Company  received  $72,440  through a private
placement  to  individual  investors.  This  capital  infusion was used to cover
operations and working capital requirements for the current quarter.

     On February  26,  2002,  the  Company  received  $25,000  through a private
placement to an  individual  investor.  This capital  infusion was used to cover
operations and working capital requirements for the current quarter.



                                       11
<PAGE>

     On March 6, 2002, the Company received $64,899 through a private  placement
to individual investors.  This capital infusion was used to cover operations and
working capital requirements for the current quarter.

     On March 26, 2002, the Company received $23,836 through a private placement
to individual investors.  This capital infusion was used to cover operations and
working capital requirements for the current quarter.

     On April 26, 2002, the Company issued 1,254,170 shares of common stock in a
private placement to individual investors for cash totaling $35,219.

      On April 26, 2002, the Company issued 500,000 shares in consideration  for
services provided. This resulted in an expense being recognized in 2002.

     On June 7, 2002, the Company issued  3,663,401  shares of common stock in a
private placement to individual investors for cash totaling $78,002.

     On June 30, 2002,  the Company  issued  500,000 shares of common stock at a
fair market value of  approximately  $0.06 for  professional  services  rendered
amounting to a charge to operations of $29,500.

     On July 11, 2002,  the Company  issued  774,318 shares of common stock in a
private placement to individual investors for cash totaling $9,684.

     On July 11, 2002, the Company issued  2,500,000 shares of common stock at a
fair market value of  approximately  $0.03 for  professional  services  rendered
amounting to a charge to operations of $82,500.

     On September 20, 2002,  the Company issued 50,000 shares of common stock at
a fair market value of approximately  $0.03 for professional  services  rendered
amounting to a charge to operations of $1,500.

     On September 20, 2002, the Company  cancelled  250,000 shares of its common
stock and the related note payable of $25,000.

       On September 23, 2002,  the Company  purchased  the Business  Development
Series,  e-learning content and software from Innovative Software  Technologies,
Inc.  (Innovative)  in exchange for 875,000 of the Company's  Series A preferred
shares  with a  stated  value of $1.00  per  share.  The  preferred  shares  are
convertible,  at the  discretion of Innovative to the Company's  common stock at
95% of the fair market value of the  Company's  common stock based on a five day
average  proceeding  the date of conversion.  The President and Chief  Executive
Officer of Innovative  software  Technologies,  Inc. is the former President and
Chief  Executive  Officer of Ensurge,  Inc.,  which was the parent company of KT
Solutions,  Inc. At the time of the sale of the Business  Development  Series to
Innovative  Software  Technologies,  Inc. for 875,000 of the Company's preferred
shares, there was no related party relationship between the companies and/or the
officers and directors of the companies at the time of the transaction.

      On September 27, 2002,  the Company  issued 300,000 shares of common stock
in a private placement to individual investors for cash totaling $2,625.

     Also, the Company is currently working on additional  private placements to
cover operations and working capital beyond this point.



                                       12
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

         The following  constitutes a list of Financial  Statements  included in
Part II of this Report beginning at page 14 of this Report:























                                       13
<PAGE>

                        KNOWLEDGE TRANSFER SYSTEMS, INC.










               REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                       AND
                        CONSOLIDATED FINANCIAL STATEMENTS






                           DECEMBER 31, 2002 AND 2001

















                                       14
<PAGE>




                        KNOWLEDGE TRANSFER SYSTEMS, INC.

                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                            PAGE
<S>                                                                                                         <C>
Report of Robison Hill, Independent Certified Public Accountants..........................................  16

Consolidated Balance Sheets  - December 31, 2002 and 2001.............................................      17

Consolidated Statements of Operations for the Years Ended December 31, 2002 and 2001......................  18

Consolidated Statements of Stockholder's Equity for the Years Ended
  December 31, 2002 and 2001..............................................................................  19

Consolidated Statements of Cash Flows for the Year Ended December 31, 2002 and 2001.......................  20

Notes to the Consolidated Financial Statements............................................................  21
</TABLE>


                                             __________________________



                                       15
<PAGE>


Robison, Hill & Co.
1366 Murray-Holladay Rd.
Salt Lake City, UT 84117


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and the Shareholders
  Knowledge Transfer Systems, Inc.

We have  audited  the  accompanying  consolidated  balance  sheet  of  Knowledge
Transfer  Systems,  Inc. (the Company) as of December 31, 2002 and 2001, and the
related consolidated  statements of operations,  stockholder's  equity, and cash
flows  for  the  years  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 audits.

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, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Knowledge Transfer
Systems,  Inc. as of December 31, 2002 and the results of their  operations  and
their  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.  As  discussed  in  Note 1 to the
consolidated  financial  statements,   the  Company  has  suffered  losses  from
operations  of $636,052 and has used  $401,922 of cash in  operating  activities
during the year ended  December 31, 2002.  As of December 31, 2002,  the Company
had a working  capital  deficit of $1,549,454.  These matters raise  substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans  regarding  these  matters  are also  described  in Note 1. The  financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of asset carrying  amounts or the amount and  classification  of
liabilities  that might  result  should the  Company be unable to  continue as a
going concern.


                                        Respectfully Submitted,



                                        /s/ ROBISON HILL & CO.
                                        ----------------------------
                                        Certified Public Accountants
Salt Lake City, Utah
May 15, 2003



                                       16
<PAGE>



                        KNOWLEDGE TRANSFER SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,
                                                                                  ------------------------------
                                                                                           2002             2001
                                                                                  -------------    -------------
                                                       ASSETS
CURRENT ASSETS
<S>                                                                               <C>              <C>
     Cash.........................................................................$         419    $       3,021
     Trade accounts receivable net of $70,285 and $59,961 allowance for
        Doubtful accounts, respectively...........................................            -           13,288
     Inventory....................................................................       37,952           56,115
                                                                                  -------------    -------------
         TOTAL CURRENT ASSETS                                                            38,371           72,424

PROPERTY AND EQUIPMENT, net of $109,306 and $22,677 accumulated
   depreciation, respectively                                                           809,728           21,377
DEPOSITS                                                                                  5,328           12,027
                                                                                  -------------    -------------
TOTAL ASSETS                                                                      $     853,427    $     105,828
                                                                                  =============    =============

                                      LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
     Trade accounts payable                                                       $     544,049    $     480,856
     Accrued liabilities                                                                299,465          130,365
     Deferred revenue                                                                    52,692          291,779
     Capital lease obligation - current portion                                           1,856           10,458
     Notes payable - current portion                                                    202,771          202,771
     Notes payable - related parties                                                    486,992          388,150
                                                                                  -------------    -------------
         TOTAL CURRENT LIABILITIES                                                    1,587,825        1,504,379
                                                                                  -------------    -------------

STOCKHOLDERS' DEFICIENCY
     Preferred stock - $0.001 par value; 10,000,000 shares authorized;  Series A
        preferred stock; 875,000 shares issued and
         outstanding; $1.00 stated value.........................................       875,000               -
     Common stock - $0.001 par value; 100,000,000 shares authorized;
        50,743,268 shares and 38,887,342 shares outstanding......................        50,743           38,887
     Additional paid-in capital..................................................     6,505,365        6,880,766
     Notes receivable from stockholders..........................................             -         (788,750)
     Accumulated deficit.........................................................    (8,165,506)      (7,529,454)
                                                                                  -------------    -------------
         TOTAL STOCKHOLDER'S DEFICIENCY..........................................      (734,398)      (1,398,551)
                                                                                  -------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY................................... $     853,427    $     105,828
                                                                                  =============    =============
</TABLE>

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



                                       17
<PAGE>


                        KNOWLEDGE TRANSFER SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
                                                                                           2002             2001
                                                                                  -------------    -------------
<S>                                                                               <C>              <C>
SALES.............................................................................$     372,305    $     636,241

COST OF SALES.....................................................................        3,799          518,767
                                                                                  -------------    -------------
GROSS PROFIT......................................................................      368,506          117,474
                                                                                  -------------    -------------
OPERATING EXPENSES
   General and administrative                                                           889,628        2,265,796
   Amortization of goodwill                                                                   -          868,456
   Interest expense                                                                     114,930          368,360
                                                                                  -------------    -------------
     TOTAL OPERATING EXPENSES                                                         1,004,558        3,502,612
                                                                                  -------------    -------------
INCOME (LOSS) FROM OPERATIONS                                                          (636,052)      (3,385,138)
                                                                                  -------------    -------------
INCOME (LOSS) BEFORE INCOME TAXES AND
   EFFECTIVE CHANGE IN
   ACCOUNTING PRINCIPLE..............................                                  (636,052)      (3,385,138)

INCOME TAX EXPENSE..................                                                          -                -
                                                                                  -------------    -------------
NET INCOME (LOSS) BEFORE EFFECTIVE
   CHANGE IN ACCOUNTING PRINCIPLE....................                                  (636,052)      (3,385,138)

EFFECTIVE CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX.....................                                         -          868,456
                                                                                  -------------    -------------
NET INCOME/(LOSS)....................................                             $    (636,052)   $  (2,516,682)
                                                                                  =============    =============
BASIC AND DILUTED INCOME (LOSS) PER
   SHARE BEFORE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE .............................                             $       (0.01)   $       (0.11)
                                                                                  =============    =============
EARNINGS PER SHARE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE ......................                             $       (0.00)   $        0.03
                                                                                  =============    =============
BASIC AND DILUTED INCOME (LOSS) PER
   SHARE AFTER EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE .............................                             $       (0.01)   $       (0.08)
                                                                                  =============    =============
WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES USED IN PER SHARE CALCULATION................                                46,275,056       30,387,778
                                                                                  =============    =============
</TABLE>


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


                                       18
<PAGE>

                        KNOWLEDGE TRANSFER SYSTEMS, INC.
          CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
                                                                                           Notes
                                                                           Additional    Receivable                        Total
                             Preferred Stock        Common Stock             Paid-In        From        Accumulated    Stockholders'
                             ---------------   -----------------------
                             Shares   Amount     Shares        Amount        Capital     Stockholders     Deficit         Equity
                             ------   ------   -----------    ---------    -----------    -----------    -----------    -----------
<S>                          <C>      <C>      <C>            <C>          <C>            <C>            <C>            <C>
Balance - January 1, 2001.....     -        -     6,628,575    $   6,628    $ 4,206,069    $      --      $(1,177,092)  $ 3,035,605
Expenses paid by shareholder..     -        -       548,543          549        348,073           --             --         348,622
Accounts payable and interest
  paid by shareholder ........     -        -       862,279          862        547,152           --             --         548,014
Assumption of note payable
   from shareholder ..........     -        -       (39,337)         (39)       (24,961)          --             --         (25,000)
Shares issued for services ...     -        -     4,000,000        4,000        196,000           --             --         200,000
Shares issued for notes
   receivable from stockholders,
   $0.05 per share............     -        -    23,050,000       23,050      1,129,450     (1,042,500)          --         110,000
Shares issued for notes
   receivable from stockholders,
   $0.10 per share............    -        -     2,515,000        2,515        248,985       (181,500)          --           70,000
Services received in satisfaction
  of notes receivable from
  stockholders................    -        -          --           --             --          360,000           --          360,000
Acquisition of GoThink!com ...    -        -       248,247          248           (248)          --             --             --
Private placement offering
  for cash....................    -        -       840,000          840        209,160           --             --          210,000
Foreign private placement
  offering for cash ..........    -        -       236,535          237         21,333           --             --           21,570
Cancellation of common stock and
  related note receivable ....    -        -        (2,500)          (3)          (247)           250           --             --
Cash received on notes receivable
   from stockholders .........    -        -          --           --             --           75,000           --           75,000
Net loss for the year ........    -        -          --           --             --             --       (3,385,139)    (3,385,139)
                             ------   ------   -----------    ---------    -----------    -----------    -----------    -----------

Balance - December 31, 2001 ..    -        -    38,887,342       38,887      6,880,766    $  (788,750)   $(4,562,231)   $ 1,568,672

Cumulative effect of change
in accounting principle.......    -        -             -            -              -              -     (2,967,223)    (2,967,223)
                             ------   ------   -----------    ---------    -----------    -----------    -----------    -----------
BALANCE - JANUARY 1, 2002
   (RESTATED).................    -        -    38,887,342       38,887      6,880,766       (788,750)    (7,529,454)    (1,398,551)

Issuance of common stock......    -        -     9,055,926        9,056        302,649              -              -        311,705

Issuance of common stock for
   services provided..........    -        -     3,050,000        3,050        110,450              -              -        113,500

Cancellation of common stock
   and related note receivable    -        -      (250,000)        (250)       (24,750)        25,000              -              -

Issuance of Series A preferred
    stock for software......875,000  875,000             -            -              -              -              -        875,000

Cancellation of note receivable
   from shareholders.........     -        -            -             -       (763,750)       763,750              -              -

Net income for the year ended
  December 31, 2002...........    -        -           -              -              -              -       (636,052)      (636,052)
                             ------ --------   -----------    ---------    -----------    -----------    -----------    -----------
BALANCE -
  DECEMBER 31, 2002.........875,000 $875,000    50,743,268    $  50,743    $ 6,505,365    $         -    $(8,165,506)   $  (734,398)
                            ======= ========   ===========    =========    ===========    ===========    ===========    ===========
</TABLE>

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

                                       19
<PAGE>


                        KNOWLEDGE TRANSFER SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
                                                                                           2002             2001
                                                                                  -------------    -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                               <C>              <C>
   Net loss...................................................................... $    (636,052)   $  (2,516,682)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation ...............................................................        86,649           15,131
     Bad debt expense ...........................................................             -           50,000
     Amortization of prepaid compensation........................................             -           57,075
     Shares issued for service...................................................       113,500          548,014
     (Gain) Loss on disposal of equipment........................................             -              (50)
     Write down of obsolete inventory............................................             -           56,114
     Expenses paid by shareholder................................................             -          348,622
     Services received in satisfaction of note receivable........................             -          360,000
     Deferred revenue............................................................      (239,087)         291,779
   Changes in assets and liabilities,
    Net of effects from purchase of KT Solutions, Inc:
     Trade accounts receivable...................................................        15,912           58,310
     Inventory...................................................................          (781)         (19,419)
     Deposits....................................................................         6,699                -
     Trade accounts payable......................................................        82,138           81,489
     Accrued liabilities.........................................................       169,100           36,960
                                                                                  -------------    -------------
     NET CASH USED IN OPERATING ACTIVITIES.......................................      (401,922)        (632,658)
                                                                                  -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowing under related party notes payable...................       151,042          249,124
   Proceeds received from on notes receivable from shareholders..................             -           75,000
   Principal payments on notes payable...........................................       (52,200)        (114,020)
   Proceeds from issuance of common stock........................................       309,080          411,570
     Principal payments under capital lease obligation...........................        (8,602)          (8,139)
                                                                                  -------------    -------------
     NET CASH PROVIDED BY FINANCING ACTIVITIES...................................       399,320          613,535
                                                                                  -------------    -------------
NET INCREASE / (DECREASE) IN CASH................................................        (2,602)         (19,123)
CASH AT BEGINNING OF PERIOD......................................................         3,021           22,144
                                                                                  -------------    -------------
CASH AT END OF PERIOD............................................................ $         419    $       3,021
                                                                                  =============    =============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
   Common stock issued in satisfaction of notes receivable....................... $           -    $     360,000
   Common stock redeemed upon the assumption of a note payable...................             -           25,000
   Common stock issued for services provided.....................................             -          200,000
   Common stock issued for subscription receivable...............................             -        1,224,000
   Sale of inventory held on consignment.........................................        19,277                -
     Cancellation of common stock and related note receivable....................        25,000                -
   Purchase of software in exchange for Series A preferred stock.................       875,000                -

INTEREST PAID
   Interest expense.............................................................. $      50,534    $      63,474
</TABLE>

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


                                       20
<PAGE>


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

ORGANIZATION- On August 1, 1992 Missaticum, Inc. dba QtrainCorp was incorporated
under the laws of the State of  California.  On October  4,  1996,  its name was
changed  to KT  Solutions,  Inc.  It was formed  for the  purpose of  developing
technology based training solutions.  It creates software programs that are used
to teach and train  individuals  how to operate  popular  business  and home use
software programs.

On June 1, 2000, the former  shareholders of KT Solutions,  Inc.  entered into a
stock exchange  agreement with enSurge,  Inc. (enSurge) whereby enSurge acquired
all of the  outstanding  common  shares of KT  Solutions,  Inc.  from its former
shareholders in exchange for the issuance of 500,000 shares of enSurge's  common
stock and options to purchase  250,000 shares of enSurge's common stock at $4.00
per share.  In addition,  enSurge issued  warrants to purchase  50,000 shares of
common  stock at $0.10 per share as a finder's  fee.  As a result,  the  Company
became a wholly-owned subsidiary of enSurge, Inc.

The acquisition of KT Solutions, Inc. was recorded by enSurge using the purchase
method of accounting.  The 500,000 common shares issued and the 300,000  options
issued were  recorded at their fair values of  $2,240,000  ($4.48 per share) and
$1,120,000,  respectively.  The value of the  options was  determined  using the
Black-Scholes  option  pricing model with the following  assumptions:  risk free
interest rate of 6.0%,  expected  dividend  yield of 0%,  volatility of 577% and
expected life of 5 years.

For  financial  reporting  purposes,  KT  Solutions,  Inc. was  considered a new
reporting entity on June 1, 2000. The accompanying  financial statements reflect
the  operations of KT Solutions,  Inc. from June 1, 2000. The purchase price was
allocated to the assets and  liabilities at their fair value.  The excess of the
purchase price over the fair value of the net assets acquired was $4,342,278 and
was allocated to goodwill.  Goodwill was being  amortized over five years by the
straight-line method.

REORGANIZATION - On April 25, 2001, enSurge,  Inc.  consummated a stock exchange
agreement with GoThink!.com,  Inc., a publicly held Nevada corporation,  whereby
all of the  1,368,387  outstanding  common  shares of KT  Solutions,  Inc.  were
transferred  to   GoThink!.com   Inc.  in  exchange  for  8,000,000   shares  of
GoThink!.com,  Inc.  common  stock.  As a  result  of  the  stock  exchange,  KT
Solutions,   Inc.  became  a  wholly-owned  subsidiary  of  GoThink!.com,   Inc.
GoThink!.com,  Inc. had 248,239 shares of common stock  outstanding prior to the
stock exchange but after a 1-for-100 reverse stock split.

The stock exchange has been accounted for as the reorganization of KT Solutions,
Inc.  Accordingly,  the accompanying  financial statements have been restated to
reflect the effects of the 5.84-for-1  equivalent stock split that resulted from
8,000,000  shares of  GoThink!.com,  Inc. being issued in exchange for 1,368,387
previously outstanding shares of KT Solutions,  Inc.  GoThink!.com,  Inc. had no
assets or operations prior to or at the date of the reorganization. Accordingly,
the acquisition of GoThink!.com,  Inc. was not considered a business combination
but was  considered  the issuance of common stock in exchange for the assumption
of  liabilities.  The  248,239  common  shares  held by the  GoThink!.com,  Inc.
shareholders  that remained  outstanding were recorded as issued in exchange for
the assumption of $57,560 of accounts  payable.  The operations of GoThink!.com,
Inc. have been included in the accompanying  financial  statements from April 1,
2001  (which  was  the   beginning  of  the   accounting   period  during  which
GoThink!.com, Inc. was purchased).



                                       21
<PAGE>

On April 23, 2001,  the articles of  incorporation  of  GoThink!.com,  Inc. were
amended  to change  its name to  Knowledge  Transfer  Systems,  Inc.  (hereafter
referred to as the Company) and to modify the authorized capital for the Company
such that the Company is  authorized  to issue  10,000,000  shares of  preferred
stock  having a par value of $0.001 per share and  100,000,000  shares of common
stock  having a par  value of  $0.001  per  share.  The  accompanying  financial
statements have been adjusted to reflect the change in the authorized capital.

RECENT  ACCOUNTING   PRONOUNCEMENTS--In  June  2001,  the  Financial  Accounting
Standards  Board ("FASB")  issued  Statement of Financial  Accounting  Standards
("SFAS")  141,  Business  Combinations,  and SFAS 142,  Goodwill and  Intangible
Assets. SFAS 141 is effective for all business combinations completed after June
30, 2001.  SFAS 142 is effective for fiscal years  beginning  after December 15,
2001; however,  certain provisions of this Statement apply to goodwill and other
intangible  assets acquired  between July 1, 2001 and the effective date of SFAS
142.  Major  provisions of these  Statements and their  effective  dates for the
Company are as follows:

o        All business  combinations  initiated  after June 30, 2001 must use the
         purchase  method of  accounting.  The  pooling of  interests  method of
         accounting is prohibited except for transactions  initiated before July
         1, 2001.
o        Intangible  assets acquired in a business  combination must be recorded
         separately from goodwill if they arise from  contractual or other legal
         rights  or are  separable  from the  acquired  entity  and can be sold,
         transferred,  licensed, rented or exchanged,  either individually or as
         part of a related contract, asset or liability.
o        Goodwill,  as well as intangible assets with indefinite lives, acquired
         after June 30,  2001,  will not be  amortized.  o Effective  January 1,
         2002, all  previously  recognized  goodwill and intangible  assets with
         indefinite lives will no longer be subject to amortization.
o        Effective  January  1,  2002,   goodwill  and  intangible  assets  with
         indefinite  lives will be tested for  impairment  annually and whenever
         there is an impairment indicator.
o        All acquired  goodwill must be assigned to reporting units for purposes
         of impairment testing and segment reporting.

On January 1, 2002,  the Company  adopted SFAS 142 and as required  discontinued
amortization  of  goodwill  and certain  intangible  assets  determined  to have
indefinite  useful lives  acquired  prior to July 1, 2001.  This  statement also
required that within the first interim period of adoption, the intangible assets
with  indefinite  lives  should  be  tested  for  impairment  as of the  date of
adoption,  and that if any  impairment  results,  it should be  recognized  as a
change in accounting principle. Additionally, SFAS 142 requires that, within six
months of adoption,  goodwill be tested for  impairment  at the  reporting  unit
level as of the date of adoption. If any impairment is indicated to have existed
upon adoption,  it should be measured and recorded before the end of the year of
adoption.  SFAS 142 requires that any goodwill  impairment  loss recognized as a
result  of  initial  application  be  reported  in the first  interim  period of
adoption  as a change in  accounting  principle  and that the  income  per share
effects of the accounting change be separately disclosed.

During the second  quarter 2002 and within the first interim  period of adoption
of SFAS No. 142, the Company tested  goodwill for impairment and determined that
an impairment  charge was necessary as of June 30, 2002. This impairment  charge
was  recognized  as a change in  accounting  principle  and the income per share


                                       22
<PAGE>

effects of the accounting  change were separately  disclosed.  In addition,  the
financial  information  presented  that  includes  the periods  that precede the
period  in which the  transitional  goodwill  impairment  loss is  measured  was
presented on a restated  basis.  The  impairment  charge as of June 30, 2002 was
$2,967,223.

In August  2001,  the FASB  issued  SFAS 143,  Accounting  for Asset  Retirement
Obligations.   SFAS  143  applies  to  all  entities,  including  rate-regulated
entities,  that have  legal  obligations  associated  with the  retirement  of a
tangible  long-lived  asset  that  result  from  acquisition,  constructions  or
development and (or) normal  operations of the long-lived asset. The application
of this Statement is not limited to certain specialized industries,  such as the
extractive or nuclear industries. This Statement also applies, for example, to a
company that  operates a  manufacturing  facility and has a legal  obligation to
dismantle the manufacturing plant and restore the underlying land when it ceases
operation of that plant. A liability for an asset retirement  obligation  should
be recognized if the  obligation  meets the definition of a liability and can be
reasonable estimated. The initial recording should be at fair value. SFAS 143 is
effective for financial  statements issued for fiscal years beginning after June
15, 2002, with earlier application  encouraged.  The provisions of the Statement
are not expected to have a material impact on the financial condition or results
of operations of the Company.

In August  2001,  the FASB issued SFAS 144,  Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets.  SFAS 144 retains the existing  requirements  to
recognize and measure the impairment of long-lived assets to be held and used or
to be  disposed  of by sale.  However,  SFAS 144 makes  changes to the scope and
certain measurement  requirements of existing accounting guidance. SFAS 144 also
changes  the  requirements  relating to  reporting  the effects of a disposal or
discontinuation of a segment of a business.  SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001 and interim
periods within those fiscal years. The adoption of this Statement did not have a
significant  impact on the  financial  condition or results of operations of the
Company.

In April 2002,  the FASB  issued  SFAS No. 145 (SFAS  145).  Any gain or loss on
extinguishment  of debt that was  classified as an  extraordinary  item in prior
periods  presented that does not meet the criteria in APB 30 for  classification
as an extraordinary  item shall be  reclassified.  SFAS 145 also amends SFAS 13,
Accounting for Leases as well as other existing authoritative  pronouncements to
make  various  technical  corrections,   clarify  meanings,  or  describe  their
applicability  under  changed  conditions.  Certain  provisions  of SFAS 145 are
effective  for  transactions  occurring  after  May 15,  2002  while  other  are
effective for fiscal years  beginning  after May 15, 2002.  The Company does not
expect SFAS 145 to have a material effect on its financial  condition or results
of operations.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities" (SFAS 146). This standard addresses financial
accounting and reporting for costs associated with exit or disposal  activities.
SFAS 146 requires that a liability for costs associated with an exit or disposal
activity be recognized  when the liability is incurred.  The  provisions of SFAS
146 are  effective  for exit or disposal  activities  that are  initiated by the
Company after  December 31, 2002. The Company does not expect SFAS 146 to have a
material effect on its financial condition or results of operations.

In  October  2002,  the FASB  issued  SFAS No.  147,  "Acquisitions  of  Certain
Financial  Institutions" (SFAS 147). This standard relates to the application of
the purchase method of accounting to all acquisitions of financial institutions,
except transactions  between two or more mutual enterprises.  This standard also
relates   to   the    application    of   SFAS   144   to   certain    long-term


                                       23
<PAGE>

customer-relationship  intangible  assets  recognized  in  an  acquisition  of a
financial  institution,  including those acquired in transactions between mutual
enterprises.  SFAS 147 is  effective  on October 1, 2002.  The Company  does not
expect SFAS 147 to have a material effect on its financial  condition or results
of operations.

In  December  2002,  the FASB  issued SFAS No. 148  Accounting  for  Stock-Based
Compensation--Transition  and Disclosure  (SFAS 148).  This standard  amends the
disclosure  and  certain  transition  provisions  of SFAS  123,  Accounting  for
Stock-Based  Compensation.  Its  disclosure  provisions  are  effective for 2002
annual financial  statements for calendar year-end  companies.  The Company does
not  expect  that  adoption  of SFAS  148 will  have a  material  impact  on its
financial condition or results of operations.

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 these estimates.

BUSINESS  CONDITION-The  Company has incurred a net loss from operations for the
years ended December 31, 2002 and 2001 of $636,052 and $3,385,138, respectively.
In  addition,  the Company  used  $401,922  and  $632,658  of cash in  operating
activities  for the year ended December 31, 2002 and 2001,  respectively.  As of
December  31, 2002,  the Company had a working  capital  deficit of  $1,549,454.
These conditions raise substantial doubt about the Company's ability to continue
as a going  concern.  The Company needs to obtain  additional  financing to fund
payment of obligations and to provide working capital for operations. Management
is seeking additional  financing.  Upon obtaining  additional  capital, of which
there can be no assurance, management plans to pay the Company's obligations and
to provide working  capital for  operations.  There is no assurance any of these
transactions will occur. The financial statements do not include any adjustments
relating to the  recoverability  and classification of asset carrying amounts or
the amount and  classification  of  liabilities  that  might  result  should the
Company be unable to continue as a going concern.

NATURE OF  OPERATION-The  Company is  involved  in  developing  technology-based
training  products and marketing those products.  The products are used to teach
and train  individuals  how to operate  popular  business  and home use software
programs.  The Company has acquired the rights to certain training materials and
has  entered  into  royalty  agreements  for the  rights to use  other  training
materials.  The  Company  has or is in the  process of  modifying  its  training
materials  and  converting  them into the  Company's  technology-based  training
products.  Those products are sold or licensed to customers through the Internet
and through other channels. The Company has entered into various agreements with
resellers and distributors to market the Company's technology-based products.

FINANCIAL   INSTRUMENTS-The   carrying  amounts  reported  in  the  accompanying
financial  statements  for  cash,  trade  accounts  receivable,  trade  accounts
payable,  accrued  liabilities,  capital  lease  obligations  and notes  payable
approximate their fair values because of the immediate or short-term  maturities
of these financial instruments.

INVENTORY-Inventory  is  stated  at the  lower  of  cost  (using  the  first-in,
first-out  method) or market  value.  Inventory  consists of  produced  software
products available for sale.



                                       24
<PAGE>

PROPERTY AND  EQUIPMENT-Property and equipment are stated at cost and consist of
furniture & fixtures, computer equipment, and capitalized software.  Maintenance
and repairs are charged to operations while major  improvements are capitalized.
Upon  retirement,   sale,  or  other  disposition,   the  cost  and  accumulated
depreciation  are eliminated from the accounts and a gain or loss is included in
operations.  Depreciation  is computed using the  straight-line  method over the
estimated  useful lives of the  furniture & fixtures,  computer  equipment,  and
capitalized software, which are three to seven years.

REVENUE  RECOGNITION-Revenue from the sale of technology-based training products
is recognized upon delivery,  acceptance and the  determination  that payment by
the customer is likely.  Payments  collected from customers prior to recognition
of the related sales are deferred as deferred revenue.

Impairment and Long-lived  Assets -The Company will regularly perform reviews to
determine if the carrying  values of our  long-lived  assets are  impaired.  The
reviews take into account facts or  circumstances,  either internal or external,
which indicate that the carrying value of the asset cannot be recovered.

TECHNOLOGY-BASED  TRAINING  PRODUCTS - Costs  incurred  to design,  develop  and
create new  training  materials  to be sold,  leased or  otherwise  marketed are
expensed as incurred. Costs incurred to acquire rights to training materials and
convert the materials into the Company's  technology-based training products are
expensed as incurred.

ROYALTIES - During  2001,  the Company  paid  $325,000  for the right to use the
Information  Technology  (IT) curriculum  produced by IT provider.  This payment
provided the Company  with the right to sell and license  this  technology-based
training  product without any on-going royalty  obligation.  The cost to acquire
the rights to the training materials was expensed when incurred.

The  Company  has  entered  into  various  agreements  to acquire  the rights to
training materials for many computer software  applications.  Under the terms of
these related agreements,  the Company is obligated to pay a royalty when resold
or licensed.

NOTE 2 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,     DECEMBER 31,
                                                                                         2002             2001
                                                                                -------------    -------------
<S>                                                                             <C>             <C>
         Furniture and fixtures.................................................$       2,500   $        2,500
         Computer equipment.....................................................       41,534           41,534
         Capitalized software...................................................      875,000                -
                                                                                -------------    -------------
         Total Property and Equipment...........................................$     919,034   $       44,034
                                                                                =============   ==============
</TABLE>

Depreciation and  amortization  expense for the year ended December 31, 2002 and
2001 was $86,649 and $15,131, respectively.





                                       25
<PAGE>


NOTE 3 - NOTES PAYABLE
<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,     DECEMBER 31,
                                                                                           2002             2001
                                                                                  -------------    -------------
Notes Payable
     Non-interest bearing royalty obligations, due $11,000 per month,
<S>                                     <C>                                       <C>              <C>
         unsecured, interest accrued at 10% due to being in default               $     202,771    $     202,771
RELATED PARTY NOTES PAYABLE

     15% Note payable to a relative of an officer, due on demand,
        unsecured................................................................ $      20,000    $      20,000
     Note payable to an officer, due on demand, unsecured........................        45,647           12,000
     12% Note payable to an officer, due on demand, unsecured....................         3,000            3,000
     12% Note payable to an officer, due on demand, unsecured....................        30,000               --
     12% Note payable to an officer, due on demand, unsecured....................        32,500               --
     12% Note payable to an officer, due on demand, unsecured....................        12,500               --
     24% Note payable to an officer, due on demand, unsecured....................       200,000          216,125
     Note payable, due on demand, unsecured....................................          40,000           20,000
     20% Note payable, due on demand, unsecured..............................            75,000           75,000
     8% Note payable, due on demand, unsecured................................           28,345           42,025
                                                                                  -------------    -------------
     NOTES PAYABLE - RELATED PARTY                                                $     486,992    $     388,150
                                                                                  =============    =============
</TABLE>

NOTE 4 - LEASE OBLIGATIONS

OPERATING LEASE - The Company  conducts its operations in a building leased from
an unrelated  third party,  which lease expires in February  2005.  Rent expense
under this lease was $76,383 and $48,660 for the years ended  December  31, 2002
and 2001. The following is a schedule by years of future minimum rental payments
as of December 31, 2002:

         YEARS ENDING DECEMBER 31:
                  2003.........................................          84,540
                  2004.........................................          84,540
                  2005.........................................          14,090
                  2006.........................................               -
                                                                  -------------
                  TOTAL                                           $     183,170
                                                                  =============


                                       26
<PAGE>

CAPITAL  LEASE  - In  June  2000,  the  Company  entered  into a  capital  lease
obligation  for  computer  equipment.  This  lease  expires  in  December  2002.
Equipment under the capital lease was as follows:
<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,     DECEMBER 31,
                                                                                           2002             2001
                                                                                  -------------    -------------
<S>                                                                               <C>              <C>
         Equipment............................................................... $      22,841    $      22,841
         Less: Accumulated depreciation..........................................        22,841           13,704
                                                                                  -------------    -------------
         NET COST................................................................ $           -    $       9,137
                                                                                  =============    =============
</TABLE>

The  following is a schedule by years of future  minimum  lease  payments  under
capital  leases  together  with  the  present  value  of the net  minimum  lease
payments:
<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,     DECEMBER 31,
                                                                                           2002             2001
                                                                                  -------------    -------------
          YEARS ENDING DECEMBER 31:
<S>                                                                               <C>             <C>
         2003....................................................................         1,882           11,292
                                                                                  -------------    -------------
         Total minimum lease payments............................................         1,882           11,292
         Less: Amount representing executory costs                                            -             (864)
                                                                                  -------------    -------------
         Net minimum lease payments                                                       1,882           10,428
         Less: Amount representing interest                                                 (26)            (834)
                                                                                  -------------    -------------
         Present value of net minimum lease payments                                      1,856            9,594
         Less: Current portion                                                            1,856            9,594
                                                                                  -------------    -------------
         Capital Lease Obligation - Long Term                                     $          --    $          --
                                                                                  =============    =============
</TABLE>

NOTE 5-STOCKHOLDER'S EQUITY

On April 23,  2001,  the  Company's  articles of  incorporation  were amended to
change the par value of its capital  stock from $0.01 to $0.001 per share and to
change  the  authorized  capital  to  100,000,000  shares  of  common  stock and
10,000,000  shares of preferred  stock. The Board of Directors are authorized to
designate  classes and series of the preferred  stock,  including  designations,
preferences,  conversion rights, cumulative, relative, participating,  optional,
voting or other rights,  and  qualifications,  limitations or restrictions.  The
Board of Directors has not designated any preferred stock for issuance.

On April 25, 2001,  enSurge,  Inc. was issued  8,000,000  common shares upon the
reorganization of KT Solutions, Inc. into GoThink!.com,  Inc. KT Solutions, Inc.
was considered the accounting  acquirer in the reorganization and the historical
equity transactions of KT Solutions,  Inc. have been restated for the effects of
the  reorganization  on a retroactive basis similar to a 5.84-for-1 stock split.
Each equity  transaction with enSurge prior to April 25, 2001 has been allocated
a pro rata number of the 8,000,000 common shares issued and each transaction has
been valued based on the fair value of the enSurge  shares  issued,  as follows:
During  February and March 2001,  548,543 shares were issued for services valued
at  $348,622,  or $0.70 per share.  On February 14,  2001,  862,279  shares were
issued to creditors of the Company in satisfaction of $243,128 of trade accounts
payable but recorded at the fair value of the shares issued  $548,014,  or $0.63
per share. The excess fair value of $304,886 was recognized as interest expense.
On March 27,  2001,  39,337  shares  were  redeemed  at $0.64 per share  from an
officer in exchange for the assumption of a $25,000 note payable to the officer.
The shares redeemed were valued at $25,000.  There were no unstated rights given
to the officer in the transaction.



                                       27
<PAGE>

On March 1, 2001, the Company agreed to issue  4,000,000  shares of common stock
to officers,  employees and consultants of KT Solutions,  Inc. for services. The
common stock was issued on April 25, 2001 and was valued at  $200,000,  or $0.05
per share,  based on an  assessment  of the fair  value of the  common  stock of
Knowledge Transfer Systems, Inc. on March 1, 2001, as determined by the Board of
Directors.

On March 1, 2001,  the  Company  agreed to issue and on April 25, 2001 it issued
23,050,000  shares of common stock at $0.05 per share to employees,  consultants
and other investors in exchange for cash in the amount of $110,000 and for notes
receivable totaling $1,042,500.  On April 25, 2001, the Company issued 2,515,000
shares of common stock at $0.10 in exchange to employees and other investors for
cash in the amount of $70,000 and for notes receivable  totaling  $181,500.  The
notes   receivable  are  partial   recourse  notes  in  that  each  investor  is
unconditionally  obligated to pay 10% of the amount of their note in addition to
the return of the shares of common stock in the event of default under the terms
of the notes. The notes bear interest at 6% and are due on December 31, 2003 and
December  31,  2005.  As of December  31,  2001,  the Company had  accepted  the
services of four  individuals in satisfaction of $360,000 of the notes that were
received upon the issuance of common stock at $0.05 per share and has recognized
compensation expense during 2001 of $360,000.

In connection with the  reorganization of KT Solutions,  Inc. into GoThink!.com,
Inc., 248,247 shares of GoThink!.com,  Inc. remained outstanding.  For financial
reporting  purposes,  these shares were  accounted  for as having been issued on
April 25, 2001 to acquire the net monetary assets of GoThink!com,  Inc. Since no
monetary  assets were  received nor were any  liabilities  assumed,  the 248,247
common shares were recorded at zero value.

On April 25, 2001, the Company entered into an agreement with a public relations
firm whereby the Company issued  3,000,000  shares of common stock to the public
relations  firm for  investor  relations  services to be rendered to the Company
over a period of two years following the Company's  common stock being listed on
the OTB Electronic  Bulletin  Board.  The agreement was formalized on August 15,
2001. The 3,000,000 common shares issued were originally  value at $300,000,  or
$0.10 per share,  based on the assessed  fair value of the common stock on April
25, 2001,  as determined  by the Board of  Directors.  On December 3, 2001,  the
agreement was terminated  and the 3,000,000  shares were returned to the Company
and cancelled.  As a result, the expense previously  recognized was reversed and
resulted in no expense being recognized during 2001 from the agreement. On April
26, 2002, the Company agreed to reissue 500,000 shares in consideration for work
performed  during the year based on the assessed  fair value of the common stock
on April 25,  2002,  or $0.06 per  share.  This  resulted  in an  expense  being
recognized in 2002 for services provided.

On August 27,  2001,  the Company  issued  840,000  shares of common  stock in a
private placement offering for cash totaling $210,000, or $0.25 per share.

On December 4, 2001,  the Company  issued  236,535  shares of common  stock in a
foreign  private  placement  offering for cash  totaling  $21,570,  or $0.09 per
share.

During the year ended  December 31, 2001,  the Company  received  $25,000 on its
outstanding subscription receivable.

                                       28
<PAGE>

On February 5, 2002,  the Company issued  1,503,095  shares of common stock in a
private placement to individual investors for cash totaling $72,440.

On February 26, 2002,  the Company  issued  380,000  shares of common stock in a
private placement to an individual investor for cash totaling $25,000.

On March 6, 2002, the Company issued 384,924 shares of common stock in a private
placement to individual investors for cash totaling $64,899.

On March 26,  2002,  the  Company  issued  796,018  shares of common  stock in a
private placement to individual investors for cash totaling $23,836.

On April 26,  2002,  the Company  issued  1,254,170  shares of common stock in a
private placement to individual investors for cash totaling $35,219.

On June 7,  2002,  the  Company  issued  3,663,401  shares of common  stock in a
private placement to individual investors for cash totaling $78,002.

On June 30, 2002,  the Company  issued  500,000 shares of common stock at a fair
market value of approximately $0.06 for professional services rendered amounting
to a charge to operations of $29,500.

On July 11, 2002, the Company issued 774,318 shares of common stock in a private
placement to individual investors for cash totaling $9,684.

On July 11, 2002, the Company issued  2,500,000 shares of common stock at a fair
market value of approximately $0.03 for professional services rendered amounting
to a charge to operations of $82,500.

On September  20, 2002,  the Company  issued  50,000 shares of common stock at a
fair market value of  approximately  $0.03 for  professional  services  rendered
amounting to a charge to operations of $1,500.

On September 20, 2002, the Company  cancelled 250,000 shares of its common stock
and the related note payable of $25,000.

       On September 23, 2002,  the Company  purchased  the Business  Development
Series,  e-learning content and software from Innovative Software  Technologies,
Inc.  (Innovative)  in exchange for 875,000 of the Company's  Series A preferred
shares  with a  stated  value of $1.00  per  share.  The  preferred  shares  are
convertible,  at the  discretion of Innovative to the Company's  common stock at
95% of the fair market value of the  Company's  common stock based on a five day
average  proceeding  the date of conversion.  The President and Chief  Executive
Officer of Innovative is the former  President  and Chief  Executive  Officer of
Ensurge, Inc., which was the parent company of KT Solutions, Inc. At the time of
the sale of the Business Development Series to Innovative Software Technologies,
Inc. for 875,000 of the Company's  preferred shares,  there was no related party
relationship  between the  companies  and/or the officers  and  directors of the
companies at the time of the transaction.

On September 27, 2002,  the Company  issued  300,000 shares of common stock in a
private placement to individual investors for cash totaling $2,625.



                                       29
<PAGE>

NOTE 6 - STOCK OPTIONS

The  Company  accounts  for stock  options  issued to  directors,  officers  and
employees  under  Accounting   Principles  Board  Opinion  No.  25  and  related
interpretations. Under APB 25, compensation expense is recognized if an option's
exercise price on the measurement  date is below the fair value of the Company's
common stock.  For options that provide for cashless  exercise or that have been
modified,  the measurement date is considered the date the options are exercised
or expire. Those options are accounted for as variable options with compensation
adjusted  each period  based on the  difference  between the market value of the
common stock and the exercise price of the options at the end of the period. The
Company  accounts for options and warrants issued to non-employees at their fair
value in accordance  with  Statement of Financial  Accounting  Standard No. 123,
"Accounting for Stock-Based Compensation."

On August 3, 2001,  the Board of  Directors  adopted the 2001 Stock Option Plan,
which  authorized the Company to grant incentive stock options or  non-qualified
options to eligible  employees  for the  purchase of up to  1,500,000  shares of
common stock.  Options  granted under the plan must be exercisable at prices not
less than 100% of the market  value of the  underlying  common stock on the date
granted  (110% if granted to a holder of 10% or more of the  outstanding  common
stock of the Company) and may be exercisable for up to ten years.

Effective  June 1, 2001, the Board of Directors  adopted the 2001  Non-Qualified
Stock Option and Incentive Plan, which authorized the Company to grant employees
and directors of the Company and its  subsidiaries,  as well as consultants  and
other  persons  rendering  services  to the  Company  options to  purchase up to
3,500,000  shares of  common  stock.  If  options  granted  are  intended  to be
incentive options,  they must be exercisable at prices not less than 100% of the
market value of the underlying common stock on the date granted (110% if granted
to a holder  of 10% or more of the  outstanding  common  stock of the  Company).
Options granted may be exercisable for up to ten years.

A summary of the status of the  Company's  two stock option plans as of December
31, 2001 and 2002 and changes during the years then ended is presented below:
<TABLE>
<CAPTION>

                                                                          NUMBER OF        WEIGHTED-AVERAGE
                                                                            OPTIONS       EXERCISE PRICE
                                                                          ---------       ----------------
<S>                                                                       <C>             <C>
     Balance Outstanding, December 31, 2000......................                -            $          -
     Granted                                                              3,598,000                   0.11
     Forfeited                                                             (125,000)                  0.18
                                                                          ---------
     Balance Outstanding, December 31, 2001                               3,473,000                   0.11
                                                                          =========
     Balance Exercisable, December 31, 2001                                      -                       -
                                                                          =========
     Weighted-average fair value of options granted
       during the year                                                        $0.38
</TABLE>

                                       30
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                       <C>             <C>
Balance Outstanding, December 31, 2001...........................         3,473,000           $      -
     Granted                                                                      -                  -
     Cancelled                                                           (3,473,000)                 -
     Forfeited                                                                    -                  -
                                                                          ---------
     Balance Outstanding, December 31, 2002                                       -                  -
                                                                          =========
     Balance Exercisable, December 31, 2002                                       -                  -
                                                                          =========
     Weighted-average fair value of options granted
       during the year                                                        $0.00
</TABLE>

The following table summarizes  information  about stock options at December 31,
2001:
<TABLE>
<CAPTION>

                                                 OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE
                                                     WEIGHTED-           WEIGHTED                        WEIGHTED-
     RANGE OF                                          AVERAGE            AVERAGE                        AVERAGE
     EXERCISE                 NUMBER                 REMAINING           EXERCISE          NUMBER       EXERCISE
      PRICES             OUTSTANDING          CONTRACTUAL LIFE              PRICE     EXERCISABLE          PRICE

<S>                      <C>                  <C>                        <C>          <C>               <C>
      $  0.10              1,450,000                 5.0 years              $  0.10            -        $     -
         0.11              2,000,000                 5.0 years                  0.11           -              -
         0.18                 23,000                 5.0 years                  0.18           -              -
                           ---------                                                  ----------
   $0.10 - $0.18           3,473,000                 5.0 years                  0.11           -              -
                           =========                                                  ==========
</TABLE>

No compensation  expense was recognized  during the year ended December 31, 2001
relating  to stock  options.  Had  compensation  expense for the  Company's  two
stock-based  compensation  plans been determined  based on the fair value at the
grant dates for options granted under those plans  consistent with the method of
FASB  Statement  123, the  Company's net loss and loss per share would have been
increased to the pro forma amounts  indicated below.  The Company  estimated the
fair  value of the stock  options  at the  grant  date  using the  Black-Scholes
option-pricing  model. The following  weighted-average  assumptions were used in
the Black-Scholes model for the year ended December 31, 2001: risk-free interest
rate of 4.1%,  dividend  yield of 0%,  volatility of 332%, and expected lives of
5.0 years.

         Net loss, as reported..................................$    (3,385,138)
         Net loss, pro forma                                         (2,538,399)
         Basic and diluted loss per share, as reported                    (0.11)
         Basic and diluted loss per share, pro forma                      (0.09)

All stock options were cancelled in 2002. In addition,  no compensation  expense
was recognized during the year ended December 31, 2002.



                                       31
<PAGE>

NOTE 7 - SUBSEQUENT EVENTS

On  January  1,  2003,  the  Company  was in  default  under its  current  lease
obligation for certain office space and is trying to work out a settlement  with
the landlord.

On April 3, 2003, the Company signed a definitive agreement to acquire Corporate
Solutions, Inc., (CSI) a Nevada Corporation, for 5,000,000 million shares of the
Company's common stock and 3,000,000 shares of convertible  preferred stock. The
closing of this  acquisition is contingent  upon the ability of the companies to
meet  certain  terms and  conditions  precedent  to close.  Upon closing and the
release of the shares by both parties,  the Company  shall receive  $75,000 that
shall be used for the payment of the Company's obligations.













                                       32
<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None

                                    PART III

ITEM  9.  DIRECTORS,   EXECUTIVE  OFFICERS,   PROMOTERS,  AND  CONTROL  PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.



  Name                              Age



Steven K. Burke.............        (49)            President, Ceo, and Chairman

Gail Burke..................        (42)            Secretary

Chris Ryan..................        (48)            Vp of Sales and Marketing

David Manovich..............        (51)             Director

Mark Coulter................        (48)            Director



All of the  Company's  directors  serve for terms of one year each  until  their
successors are elected and qualified.

STEVE K. BURKE - Chairman and Chief Executive Officer

Mr. Burke brings more than 25 years  experience  in  Marketing,  operations  and
information  technology  to  Knowledge  Transfer  Systems,  Inc.  In his role as
chairman  and CEO, he has been  focused on guiding the company to be a leader in
the  eLearning  market.  During his  tenure,  Mr.  Burke has  implemented  a new
corporate  identity and company  strategy.  His  leadership  has  positioned the
company for rapid growth in the industry. Prior to joining KTSI, Mr. Burke was a
principal  partner at Emerson  Capital  Corporation,  a business  brokerage  and
investment firm in San Francisco.  In addition, he has held several senior sales
and marketing  management  positions over the years.  Mr. Burke graduated with a
bachelor's degree in Business  Administration  and a masters in Finance from the
University of Wyoming.



GAIL BURKE - Secretary

Mrs. Burke has 25 years of management and P & L  responsibilities  in Commercial
property  management.  Currently,  she is General Manager of One market Plaza in
San Francisco, California. A premier two million square foot, class A commercial
property. Mrs Burke has a B.S. degree from San Jose State University.



CHRIS RYAN - Vice President, Sales and Marketing

Mr.  Ryan  has  over 25  years  of Sales  and  Marketing  experience  with  high
technology  hardware and software  companies,  including 8 years in the training
industry. Most recently, he set up and ran North American sales for WBT Systems,
an eLearning  infrastructure  company.  Prior to WBT, Mr. Ryan was at SmartForce
(CBT Systems) in various sales and sales  management  roles and  participated in
the growth  from $11  million  to over $125  million in sales and the first ever
eLearning  initial  public  offering.  Mr. Ryan graduated from UCLA with a BA in
Economics.





                                       33
<PAGE>

DAVID MANOVICH - Member, Knowledge Transfer Systems Board of Directors

Mr. Manovich has held several senior management positions in the high technology
industry  during his career.  Most recently as Senior Vice  President and COO of
@Road.   Prior  to  joining  @Road,   Mr.   Manovich  was  with  the  Investment
Banking/Consulting  firm of  Union  Atlantic  where he  assisted  a  variety  of
hardware/software  and internet  related  companies with their  development  and
growth.

Mr.  Manovich spent over 11 years with Apple  Computer,  where he held executive
positions in the USA and Europe.  His most resent  position was  Executive  Vice
President  Worldwide Sales and Service.  During his tenure at Apple, the company
grew from  $1.8B in annual  revenue  to over $11B.  Mr.  Manovich  was also Vice
President of Sales for Fujitsu PC  Corporation  during their  initial entry into
the US marketplace. Fujitsu PC grew from zero to over $150M in its first year of
operation.

During his  career,  Mr.  Manovich  was also a CPA with the  accounting  firm of
Deloitte,  Haskins  and Sells and holds an MBA in Finance  and a BS in  Business
Administration from the University of Montana.

MARK COULTER - Member, Knowledge Transfer Systems Board of Directors

Mark Coulter has over 25 years of experience in the direct mail/direct marketing
Industry,  with  specific  strengths  in the  training,  development  and career
enhancement  market  segments.  Mr.  Coulter  established  himself  as a  direct
marketing and mail specialist while with Kansas City based,  Fred Pryor Seminars
from 1980 to 1988.  Mr. Coulter  successfully  directed the growth of the direct
marketing  division  to  a  national  level.  He  created  and  implemented  the
industry's  first and largest  database  marketing  prospect  list  system.  Mr.
Coulter was integral in the  company's  growth from $2M to $20M in Annual sales.
He was  also  directly  involved  in  overseeing  Fred  Pryor  Seminar's  target
marketing, program development and new product development divisions.

In 1988,  Mr. Coulter  founded List Emporium,  Inc., a direct mail database list
management  and brokerage  firm.  Mr. Coulter grew the List Emporium into one of
the nation's largest firms, specializing in training and development direct mail
marketing.

As  President  of The List  Emporium,  Mr.  Coulter has  established  offices in
Annapolis,  MD, Boulder,  CO,  Asheville,  NC and the  Netherlands.  He has also
assisted  clients in  developing  marketing  programs  in the Pacific  Rim.  Mr.
Coulter still maintains his specialty is "providing  opportunities  for smaller,
upstart  companies  to  grow  quickly,   efficiently  and  effectively."   Other
successful entities Mr. Coulter has created include:

ListMart - a rapidly growing consumer list brokerage firm.

Danielle, McKenzie and Alexander - A consulting firm specializing in direct mail
marketing programs.

E-Mail  Trends - an entity  that is  addressing  the  future  of the  successful
creation of internet direct mail marketing.

Mr. Coulter is active in a variety of charitable organizations.  Most notably as
a founding  member of Social  Venture  Partners,  an  organization  dedicated to
raising venture capital for charitable  fundraising causes. He is also an active
supporter  of  "Challenge   Aspen",  an  organization   dedicated  to  providing
challenging, yet stimulating outdoor activities for the physically disabled. Mr.
Coulter  received a business  degree  from the  University  of Missouri - Kansas
City, in 1980. He is married and has one daughter.





                                       34
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

Steve K. Burke served as CEO of Knowledge Transfer Systems, Inc. during 2002 and
was not compensated by the Company during that time period.  No other officer of
the company was compensated in excess of $100,000 during 2002.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
                           Name and Address          Amount and Nature          Percent
         Title of Class    of Beneficial Owner       of Beneficial Owner        of Class

<S>                        <C>                       <C>                        <C>
         Common stock      Steven K. Burke           12,000,000 shares          23.7%
                           62 Crestmont Drive        President, CEO
                           Parkville, MO 64152       and Director

         Common stock      Gail Burke                50,000 shares               0.1%
                           62 Crestmont Drive        Secretary
                           Parkville, MO 64152

         Common stock      Chris Ryan                500,000 shares               1.0%
                           7605 N. Crest Road        VP Sales and Marketing
                           Eagle Mtn., Utah 84043

         Common stock      enSurge, Inc.             2,600,000 shares             5.1%
                           435 West Universal Circle Investor
                           Sandy, UT 84043

         Common stock      David Manovich            250,000 shares               0.5%
                           1616 Chapin Avenue        Outside Director
                           Burlingame, CA 94010
</TABLE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of December 31, 2002 and 2001,  notes payable to related parties  amounted to
$486,992 and $388,150, respectively.

ITEM 13.  EXHIBITS AND REPORTS ON 8-K

(a) Exhibits.

                  99-1 - CEO Certification
                  99-2 - CFO Certification

(b). Reports on Form 8-K:

               None



                                       35
<PAGE>

ITEM 14.  CONTROLS AND PROCEDURES

        Based on their  evaluation,  as of a date  within 90 days of the  filing
date of this  Form  10-KSB,  our Chief  Executive  Officer  and Chief  Financial
Officer have concluded  that our disclosure  controls and procedures (as defined
in Rule 13a-14(c) and 15d-14(c)  under the  Securities  Exchange Act of 1934, as
amended)  are  effective.  There have been no  significant  changes in  internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to the date of their  evaluation,  including any  corrective  actions
with regard to significant deficiencies and material weaknesses.


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                          KNOWLEDGE TRANSFER SYSTEMS, INC.

DATE:        May 15, 2003                 /s/ Steve K. Burke
                                          Steve K. Burke
                                          President and Chief Executive Officer


                                       36
<PAGE>

                      CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Steven K. Burke,  President and Chief Executive Officer of Knowledge Transfer
Systems, Inc., certify that:

 1.        I have  reviewed  this  Annual  Report on Form  10-QSB  of  Knowledge
           Transfer Systems, Inc. (the "Registrant");

 2.        Based on my  knowledge,  this  Quarterly  Report does not contain any
           untrue  statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the  circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this Quarterly Report;

 3.        Based on my knowledge, the financial statements,  and other financial
           information  included in this Annual  Report,  fairly  present in all
           material respects the financial condition,  results of operations and
           cash flows of the Registrant as of, and for, the periods presented in
           this Annual Report;

 4.        The Registrant's other certifying  officers and I are responsible for
           establishing and maintaining  disclosure  controls and procedures (as
           defined in Exchange Act Rules  13a-14 and 15d-14) for the  Registrant
           and have:

 a)        designed  such  disclosure  controls  and  procedures  to ensure that
           material  information  relating  to  the  Registrant,  including  its
           consolidated subsidiaries, is made known to us by others within those
           entities,  particularly during the period in which this Annual Report
           is being prepared;

 b)        evaluated the effectiveness of the Registrant's  disclosure  controls
           and  procedures  as of a date within 90 days prior to the filing date
           of this Annual Report (the "Evaluation Date"); and

 c)        presented   in  this  Annual   Report  our   conclusions   about  the
           effectiveness of the disclosure  controls and procedures based on our
           evaluation as of the Evaluation Date;

 5.        The  Registrant's  other  certifying  officers and I have  disclosed,
           based on our most recent evaluation, to the Registrant's auditors and
           the audit  committee of  Registrant's  board of directors (or persons
           performing the equivalent functions):

 a)        all  significant  deficiencies in the design or operation of internal
           controls which could  adversely  affect the  Registrant's  ability to
           record,  process,  summarize  and  report  financial  data  and  have
           identified for the Registrant's  auditors any material  weaknesses in
           internal controls; and

 b)        any fraud, whether or not material, that involves management or other
           employees who have a significant  role in the  Registrant's  internal
           controls; and

    6.   The registrant's other certifying officers and I have indicated in this
         Annual Report whether or not there were significant changes in internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.




       Date: May 15, 2003                    /s/ Steve K. Burke
                                             ----------------------------------
                                             Steve K. Burke
                                             President & Chief Executive Officer
                                             (Principal Executive Officer)


                                       37
<PAGE>

                      CHIEF FINANCIAL OFFICER CERTIFICATION

I, Steve K. Burke, Chief Financial Officer of Knowledge Transfer Systems,  Inc.,
certify that:

 1.                I  have  reviewed  this  Annual  Report  on  Form  10-KSB  of
                   Knowledge Transfer Systems, Inc. (the "Registrant");

 2.                Based on my  knowledge,  this Annual  Report does not contain
                   any untrue  statement  of a material  fact or omit to state a
                   material fact necessary to make the statements made, in light
                   of the  circumstances  under which such statements were made,
                   not  misleading  with  respect to the period  covered by this
                   Annual Report;

 3.                Based on my knowledge,  the financial  statements,  and other
                   financial  information included in this Annual Report, fairly
                   present in all  material  respects the  financial  condition,
                   results of operations and cash flows of the Registrant as of,
                   and for, the periods presented in this Annual Report;

 4.                The  Registrant's   other  certifying   officers  and  I  are
                   responsible  for  establishing  and  maintaining   disclosure
                   controls  and  procedures  (as defined in Exchange  Act Rules
                   13a-14 and 15d-14) for the Registrant and have:

 a)                designed such  disclosure  controls and  procedures to ensure
                   that  material   information   relating  to  the  Registrant,
                   including its consolidated subsidiaries,  is made known to us
                   by others  within  those  entities,  particularly  during the
                   period in which this Annual Report is being prepared;

 b)                evaluated the  effectiveness of the  Registrant's  disclosure
                   controls and  procedures as of a date within 90 days prior to
                   the  filing  date  of this  Annual  Report  (the  "Evaluation
                   Date"); and

 c)                presented  in this Annual  Report our  conclusions  about the
                   effectiveness of the disclosure controls and procedures based
                   on our evaluation as of the Evaluation Date;

    5.    The Registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the Registrant's  auditors and the
          audit  committee  of  Registrant's  board  of  directors  (or  persons
          performing the equivalent functions):


 a)                all  significant  deficiencies  in the design or operation of
                   internal   controls   which   could   adversely   affect  the
                   Registrant's ability to record, process, summarize and report
                   financial  data  and  have  identified  for the  Registrant's
                   auditors any material weaknesses in internal controls; and

 b)                any fraud, whether or not material,  that involves management
                   or  other  employees  who  have  a  significant  role  in the
                   Registrant's internal controls; and



    6.   The registrant's other certifying officers and I have indicated in this
         Annual Report whether or not there were significant changes in internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.






          Date: May 15, 2003        /s/ Steve K. Burke
                                    -------------------------------------------
                                    Steve K. Burke
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       38
<PAGE>


EXHIBIT 99-1


                            CERTIFICATION PURSUANT TO
                               18 U.S.C. SS. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection  with the Annual Report of Knowledge  Transfer  Systems,  Inc (the
"Company") on Form 10-KSB for the period ending December 31, 2002, as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Steve K. Burke, Chief Executive Officer of the Company,  certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to the best of my knowledge and belief:

         (1)      the Report fully  complies  with the  requirements  of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)      the information  contained in the Report fairly  presents,  in
                  all material respects,  the financial  condition and result of
                  operations of the Company.


/s/ Steve K. Burke
Steve K. Burke
President and Chief Executive Officer
May 15, 2003



                                       39
<PAGE>
EXHIBIT 99-2


                            CERTIFICATION PURSUANT TO
                               18 U.S.C. SS. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Knowledge  Transfer  Systems,  Inc. (the
"Company") on Form 10-KSB for the period ending December 31, 2002, as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Steve K. Burke, Chief Financial Officer of the Company,  certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to the best of my knowledge and belief:

                  (1) the Report fully complies with the requirements of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934; and

                  (2) the information  contained in the Report fairly  presents,
                  in all material respects,  the financial  condition and result
                  of operations of the Company.



/s/ Steve K. Burke
Steve K. Burke
President and Chief Financial Officer
May 15, 2003



                                       40