EXHIBIT 10.12

                           MEMORANDUM OF UNDERSTANDING
                                SEPTEMBER 8, 1998


OBJECTIVE

Establish a mutually acceptable definitive Agreement (Agreement) in which Ms.
Shelley Duvall (Duvall) will serve as an independent consultant to GK
Intelligent Systems, Inc. (GKIS) in the creation, development, and distribution
of children's and family-oriented intelligent learning products.


DESCRIPTION OF DUTIES

Duvall will use her best effort to assist GKIS in establishing a new Children's
Learning Division. Duvall and/or a person under her direction and control will
help:

o   Create marketable product themes addressing the Children's and family
    education markets

o   Submit project proposals

o   Write project plans

o   Develop budgets

o   Assemble multimedia production teams

o   Cast and select acting talent

o   Produce the multimedia components of approved GKIS intelligent learning
    products

o   Assist in product distribution and branding. Duvall will, whenever possible,
    use her contacts and knowledge of appropriate distribution channels to help
    facilitate distribution of the products she helps produce. Duvall will also
    assist and lend the "Shelley Duvall" name to the products she produces to
    facilitate branding of GKIS SMART ONE(TM) and other relevant GKIS brands.
  
o   Assist in public relations related to GKIS and its children/family products.
    Duvall will, within reason and subject to her advance approval and general
    availability, make personal appearances and provide personal interviews to
    the press, television, and public media to assist in creating a favorable
    image for GKIS and its children/family products.

o   Assist in the establishment of a Children's/family learning division within
    GKIS.

o   Assist GKIS in establishing outside entities such as advisory boards and
    foundations in the areas of human and Children's learning. 

o   Introduce GKIS to key business contacts.


DESCRIPTION OF PROJECTS

o   Children's preschool education and development 

o   Children's elementary education 

o   Family learning


COMPENSATION AND PAYMENT TERMS

o   $500,000 for use of name rights, payable as follows: $150,000 paid upon
    execution of this Memorandum; $50,000 no later than 30 days thereafter and
    $50,000 per month to term starting January 1st, 1999. 

o   10% of sales revenues (less only distribution fees) from products produced
    by or bearing the Duvall name. The method of distribution and all associated
    distribution costs shall be subject to the mutual consent of Duvall and
    GKIS. 

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o   5% of sales revenues (less only distribution fees) of products produced by
    3rd parties introduced by Duvall to GKIS, but not bearing the production
    influence or name of Duvall.

o   A minimum of 8% of the total production cost (including but not limited to
    the cost of scripting, talent, shooting, editing, animation, graphics and
    software coding) of each product. A production committee at GKIS will
    approve the expenditure for each product in advance. If Duvall completes a
    product at or below budget, GKIS agrees to consider and approve performance
    bonuses for Duvall (at its discretion). If, during multimedia production, a
    project appears to be over budget, Duvall agrees to notify GKIS of the
    situation on a timely basis to seek reasonable alternatives and to minimize
    the overage. 

o   120,000 stock options (qualified to the extent possible) vesting over a 3
    year period. The stock will vest monthly on a schedule of 1/36th per month
    (3,300 shares). The option price will be the closing price at the close of
    trading on the date of execution (i.e., $2.50). The stock will be subject to
    SEC Rule 144 provisions.


RIGHTS TO THE USE OF THE NAME "SHELLEY DUVALL"

o   Duvall grants to GKIS the non-exclusive right to use the name "Shelley
    Duvall" only for those products produced in conjunction with Duvall and in
    connection with related mutually approved public relations activities. All
    press releases bearing the name "Shelley Duvall" must be approved prior to
    release by Duvall. The grant is for the term of the Agreement.


RIGHTS TO INTELLECTUAL PROPERTY

o   Each time a product is submitted by Duvall to GKIS for approval, and that
    product is approved by GKIS to move forward into development and production,
    upon payment to Duvall of a license fee (to be determined and mutually
    agreed upon by GKIS and Duvall in each instance a product is submitted and
    approved), the CD-ROM, Internet, multimedia and electronic games rights (The
    Markets) will be deemed licensed by Duvall to GKIS, and GKIS will be
    automatically granted the exclusive right to develop, produce and distribute
    such approved product in The Markets for a license period of ten (10)
    consecutive years from the date of payment of such license fee to Duvall.
    Duvall retains sole ownership of all other rights, including but not limited
    to, the copyright to the intellectual property encompassed in the product,
    including but not limited to the characters, ideas, artwork, story, concept
    and information, in all media and markets throughout the universe (Other
    Rights) whether then known or thereafter invented, in perpetuity, unless and
    until Duvall, at her sole discretion, may elect to sell or license those
    rights to a third party. GKIS shall be granted a right of first refusal or
    negotiation to purchase or license such Other Rights in the intellectual
    property encompassed within such product to other markets and/or media. If a
    product has been submitted to GKIS for approval and such approval is
    withheld, all rights with respect to such product will remain with Duvall,
    and GKIS will have no claim to the intellectual property or the product.

o   When a Third Party Property (TPP) is submitted by Duvall to GKIS, and GKIS
    approves the production and development of such TPP, Duvall shall use her
    best efforts to assist GKIS in obtaining the necessary rights and/or license
    to such TPP. If negotiation with the TPP is concluded and the necessary
    rights are obtained, Duvall and GKIS will begin research and development
    with respect to such TPP.


TERM OF AGREEMENT

The Agreement will be for a period of 3 years and will self-renew thereafter on
an annual basis unless terminated under one of the conditions defined under
"Termination" below.

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EXPENSE REIMBURSEMENT

o   All reasonable business expenses incurred by Duvall will be reimbursed
    within 10 working days. Expenses exceeding $500 must be pre-approved by
    GKIS. GKIS agrees that Duvall can travel first class by air; executive
    suites at hotels. Whenever possible, GKIS will prepay Duvall's expenses to
    minimize out-of-pocket expenditures.


FINDER'S FEE

o   GKIS will pay Duvall's business representative, Bobbie Crawford, $10,000
    upon execution of this Memorandum. After the Agreement is executed, GKIS
    will grant her options for 500 shares of its restricted common stock at the
    closing market price of GKIS stock upon execution (approximately $2.50). The
    stock will vest immediately but will be subject to SEC Rule 144 provisions.


NON-DISCLOSURE

o   Duvall agrees not to disclose any of the intellectual property of a
    confidential or trade secret nature during the term of the Agreement, and
    GKIS warrants that it will keep Duvall apprised of what is or is not of a
    confidential or trade secret nature.


PERFORMANCE WARRANTS

o   GKIS warrants that it will perform to its best effort in the following
    areas:

        *    The timing, funding and approval of projects. GKIS will fund all
             production costs.

        *    Timely payment of compensation to Duvall. 

        *    Provision of professional quality logistical support such as
             staffing, equipment, and facilities. 

        *    The offering of reasonable approval in the selection of acting
             talent and production personnel for the Children's Learning
             Division.

o   Duvall warrants that she will perform to her best effort in the following
    areas:

        *    The completion of a minimum of at least one project. 

        *    The provision of promotional support. 

        *    Cost minimization on projects. 

        *    The provision of professional product quality. 

        *    Interfacing professionally and effectively with GKIS personnel.
  
        *    Offering reasonable personal availability. 

        *    Timeliness in production.


TERMINATION

o   Duvall shall have the right to terminate the Agreement upon thirty (30) days
    prior written notice to GKIS

        *    if GKIS is adjudicated insolvent, declares bankruptcy or fails to
             continue the business of selling the products produced or created
             pursuant to the Agreement, provided, however that GKIS shall not be
             obligated to sell any specific quantities of products during the
             term of the Agreement

        *    GKIS fails to make payment to Duvall of any amounts due pursuant to
             the Agreement within thirty (30) days after such payment is due.

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o   GKIS shall have the right to terminate the Agreement upon thirty (30) days
    prior written notice to Duvall in the event Duvall

        *    engages in illegal conduct resulting in a felony arrest or
             indictment

        *    misrepresents or conceals anything in her background that could be
             detrimental to the value of the endorsement being made

        *    dies or becomes permanently disabled

        *    engages in conduct that could bring Duvall into public disrepute.

o   Either party may terminate the Agreement at any time upon thirty (30) days
    prior written notice to the other party in the event of a breach of any
    provision of the Agreement by the other party, provided that, during such
    thirty (30) day period the breaching party fails to cure such breach.

o   Upon termination of the Agreement, GKIS will retain the right to use the
    name "Shelley Duvall" in connection with any then existing product produced
    by or bearing the Duvall name for a ten (10) year period beginning on the
    date of payment of the license fee referred to above. Duvall shall continue
    to receive the compensation based on sales revenues (but not production
    costs) of such products until such time as those products are no longer
    marketed under the Duvall name. Any stock options granted but not exercised
    will be canceled upon the termination of the Agreement. The non-disclosure
    obligations of Duvall will survive the termination of the Agreement.


ARBITRATION

Any disputes arising under the Agreement will be settled by arbitration in
accordance with the commercial rules then in effect of the American Arbitration
Association.


This Memorandum of Understanding shall serve as a binding agreement until such
time as it is superseded by the Agreement. All material, terms and conditions
incorporated in this Memorandum of Understanding shall serve as the basis for
the Agreement. The Agreement will contain such other terms, conditions,
representations and warranties as are customary in a transaction of this nature.
If the Agreement is not completed within 30 days of the execution of this
Memorandum of Understanding, this Memorandum shall be binding.


Executed this 8th day of September, 1998 by and between the parties as
designated below:


Shelley Duvall                                  GK Intelligent Systems, Inc.


_________________________________               by _____________________________
                                                   Gary Kimmons, President

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