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                SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549
                     _______________________

                           FORM 10-KSB

             ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
              OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended: December 31, 2003   Commission File Number: 0-22057
                     _______________________

                   GK INTELLIGENT SYSTEMS, INC.
          (Name of Small Business Issuer in Its charter)

       Delaware                                            76-0513297
 (State or Other Jurisdiction of                         (I.R.S. Employer
 Incorporation or Organization)                         Identification No.)

            2602 Yorktown Place, Houston, Texas 77056
       (Address of Principal Executive Offices) (Zip Code)

                          (713) 626-1504
         (Issuer's Telephone Number, including Area Code)

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

                               None

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

                  Common Stock, $0.001 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 a
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [x]    No  [ ]

     Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.    [ ]

     The Issuer's revenues for the most recent fiscal year ended December 31,
2003, were approximately $-0-.

     The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the Registrant on April 14, 2004 based upon the
average bid and ask price of the common stock on the OTC Bulletin Board for
such date, was approximately $643,545.15. The number of shares of the
Registrant's common stock issued and outstanding on April 9, 2004, was
41,457,225 (post-reverse split adjusted).

     Transitional Small Business Disclosure Format. Yes [ ]  No [x]
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                        TABLE OF CONTENTS

ITEMS                                                                    PAGE
-----                                                                    ----
                              PART I

Item 1.    Description of Business........................................  4
Item 2.    Description of Property ....................................... 20
Item 3.    Legal Proceedings.............................................. 20
Item 4.    Submission of Matters to a Vote of Security Holders............ 20

                             PART II

Item 5.    Market For Common Equity and Related Stockholder Matters ...... 20
Item 6.    Management's Discussion and Analysis or Plan of Operation...... 22
Item 7.    Financial Statements .......................................... 24
Item 8.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure............................ 24
Item 8A.   Controls and Procedures........................................ 24

                             PART III

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
           Compliance With Section 16(a) of the Exchange Act.............. 24
Item 10.   Executive Compensation ........................................ 27
Item 11.   Security Ownership of Certain Beneficial Owners and
           Management and Related Stockholder Matters..................... 30
Item 12.   Certain Relationships and Related Transactions................. 32
Item 13.   Exhibits and Reports on Form 8-K............................... 34
Item 14.   Principal Accountant Fees and Services......................... 37
























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                       CAUTIONARY STATEMENT

     Some of the statements contained in this Form 10-KSB for GK Intelligent
Systems, Inc. ("Company") discuss future expectations, contain projections of
results of operation or financial condition or state other "forward-looking"
information.  These statements are subject to known and unknown risks,
uncertainties, and other factors that could cause the actual results to differ
materially from those contemplated by the statements.  The forward-looking
information is based on various factors and is derived using numerous
assumptions.  Important factors that may cause actual results to differ from
projections include, for example:

     .   the success or failure of management's efforts to implement their
         business strategy;
     .   the ability of the Company to raise sufficient capital to meet
         operating requirements;
     .   the uncertainty of consumer demand for our product;
     .   the ability of the Company to protect its intellectual property
         rights;
     .   the ability of the Company to compete with major established
         companies;
     .   the effect of changing economic conditions;
     .   the ability of the Company to attract and retain quality employees;
         and
     .   other risks which may be described in future filings with the SEC.

     Words such as "anticipates," "expects," "intends," "plans," "believes,"
"seeks," "estimates," and variations of such words and similar expressions are
intended to identify such forward-looking statements.  These statements are
not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict.  Therefore,
actual results and outcomes may differ materially from what is expressed or
forecasted in any such forward-looking statements.  Such risks and
uncertainties include those set forth herein under "Risk Factors" as well as
those noted in the documents incorporated herein by reference.  Unless
required by law, the Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.

















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                              PART I

Item 1.    Description of Business.

     Business Development

     GK Intelligent Systems, Inc. was formed in Delaware on February 26, 1988
under the name "Technicraft Financial, Ltd."  In October 1991, its name was
changed to LBM-US, Inc. ("LBM").  Pursuant to an agreement effective August
1994, GK Intelligent Systems, Inc., a Texas corporation ("GK-Texas"),
transferred all of its assets and liabilities to LBM, a Delaware shell
corporation with no significant assets or liabilities, in exchange for 675,892
(post reverse-split adjusted) shares of LBM common stock.  The remaining
96,327 (post reverse-split adjusted) shares of LBM common stock out of a total
of 772,219 (post reverse-split adjusted) shares outstanding were retained by
the former owners of LBM in a transaction treated for accounting purposes as a
purchase of the Company by GK-Texas, referred to as a "reverse merger", thus
making GK-Texas a wholly owned subsidiary of LBM.  Of the LBM shares of common
stock issued to GK-Texas, a total of 637,500 (post reverse-split adjusted)
shares were issued to Gary F. Kimmons and his family partnership.  Mr. Kimmons
had formed GK-Texas, a Texas corporation, in February 1994 to produce and
market multimedia, skill-oriented training and performance support systems
using artificial intelligence.  Mr. Kimmons had formed I-Net Intelligent
Systems, Inc., a Delaware corporation ("I-NET (Delaware)"), prior to forming
GK-Texas.  In October 1993, I-NET (Delaware) had contracted with AT&T to
develop the SMART ONE  training program template pursuant to an industrial
design services agreement ("AT&T Agreement").  In February 1994, the
intellectual property and all rights and obligations under the AT&T Agreement
were assigned by I-NET (Delaware) to GK-Texas.  In August 1994, after
acquiring all of the technology of GK-Texas in the reverse merger, the Company
changed its name to GK Intelligent Systems, Inc.

     In November 1995, the Company acquired from Microelectronics and Computer
Technology Corporation ("MCC") the non-exclusive, worldwide, perpetual right
and license to use various computer software tools and languages (referred to
as "CARNOT" technology) through the issuance to MCC of 88,333  (post
reverse-split adjusted) shares of the Company's preferred stock, which was
subsequently converted into 88,333 (post reverse-split adjusted) shares of
Company common stock.  MCC is a consortium of corporations, public and
non-profit agencies and universities who are cooperating and sharing
information and technology in order to gain competitive business advantages
for its members.  The Company is not a member of MCC.  To date, no final
products have been developed using the CARNOT technology, and there can be no
assurance that any products will be developed using the CARNOT technology.

     In August 1995, the stockholders of the Company amended and restated the
Company's Certificate of Incorporation in its entirety primarily to increase
the number of shares of capital stock and to adopt more favorable officers and
director's indemnification and limitation of liability provisions available
under Delaware law.  In September 1997, after approval by the boards of
directors and majority stockholders of both companies, the wholly owned
subsidiary GK-Texas was merged into the Company.  In May 1998, the
stockholders of the Company amended the Certificate of Incorporation to
increase the number of shares of common stock ("Common Stock").  In August
1998, the Company adopted a calendar year end that became effective December
31, 1998.

     On March 19, 2002, the Company's common stock underwent a 1 for 10
reverse stock split.  All prices of the Company's common stock referred to in
this report are post-reverse split adjusted prices, unless otherwise
indicated.

     In 2003, the Company formed three wholly-owned subsidiary companies,
Smart One Learning Systems, Inc. ("SOLS"), Recording Artists Worldwide, Inc.
("RAWW") and The Baseball Club, Inc. ("TBC").

     SOLS was formed to be an educational technology company specializing in
delivering advanced teaching technologies and assistance to education
providers.    SOLS intends to use the Company's

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advanced personalization technologies (including the Company's Smart One
Learning technology) to provide suppliers of educational products and services
with a value-added educational component.

     RAWW was formed to be a music entertainment services company which
intends to offer state-of-the-art personalization and interactivity via the
Web and cable television to music enthusiasts.  RAWW intends to use the
Company's advanced personalization technologies, cable TV, and the Internet to
create a one-to-one relationship between music enthusiasts (fans) of all
types, music industry service providers (recording artists, record companies,
etc.) and suppliers of music industry goods and services (brand
merchandisers.)

     TBC was formed to offer state-of-the-art personalization and
interactivity via the Web and cable television to amateur baseball
enthusiasts.  TBC intends to use the Company's advanced personalization
technologies, cable TV, and the Internet to create a one-to-one relationship
between baseball enthusiasts (fans, amateur players), baseball industry
service providers (players, Professional Baseball, baseball camp operators,
etc.) and suppliers of baseball industry goods and services (equipment
manufacturers, various other ancillary brand merchandisers).

     The Company has never filed for bankruptcy, receivership or similar
proceeding nor has the Company been a party to any reclassifications, mergers,
consolidations, or purchased or sold a significant amount of assets not in the
ordinary course of business other than those mentioned above.

     Business of Issuer

     GK Intelligent Systems, Inc., with its headquarters currently at 2602
Yorktown Place, Houston, Texas 77056, develops intelligent training software
that adapts to the learning styles and abilities of individual users.  Around
the Web in 80 Minutes was the Company's first consumer product based on the
Company's Smart One technology, which combines artificial intelligence,
multimedia technology and advanced instructional techniques to deliver
training more efficiently and cost-effectively than traditional computer-based
training.

     Now resurrecting its operations after a period of dormancy, the Company
has the opportunity to become a key player in a new and emerging "intelligent
performance support" ("IPS") market, with the development of advanced learning
products/services as its initial focus. The Company is developing and
marketing intelligent training software to move into additional IPS markets.
IPS promises to deliver relevant expert assistance to those desiring timely
guidance and support as they perform their daily activities.  In addition to
expanding its focus to new areas of the IPS market other than
education/learning, the Company will shift its emphasis to the licensure of
its technology and the acquisition of key service entities with potential IPS
clientele to derive revenues rather than the production and marketing of
products.  Management believes that by pursuing this strategy, the Company
will be able to enhance its revenues in a shorter period of time.

     The Company was formed in 1994 and became an AMEX company in 1998.
During its operation, the company has affiliated itself with internationally
known entities such as AT&T, the US Dept of Transportation, NCR Corporation,
Microelectronics Computer Consortium, Radio Shack, National Geographic, The
Smithsonian, AOL, and other notable entities.

     Early in 1998, its learning technology, Smart OneSM, was designated as an
official flagship (software) technology of the United Nations.  The Director
of Global Technology for the UN, Dr. Joseph Ben Dak, joined the Board to
facilitate a global implementation.  In the summer of 1998, a co-founder of
Compaq Computer Corporation, Rod Canion, joined the Company and shifted its
emphasis to the consumer marketplace.  Mr. Canion departed prematurely in
August 1998.  Shortly thereafter, in early 1999, the Company developed its
first product, Around the Web in 80 Minutes, targeting the vast market of
those desiring to learn how to use the Internet.

     Approximately thirty thousand copies of the product were sold retail.
The retailers of America selected the Company and its product as "best new
technology", "best retail marketing strategy" and


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"best overall for show" at their Retail XChange conference in February 1999.
Around the Web In 80 Minutes was distributed internationally by three large
software distributors in America.  In April and May of 1999, the Company
worked on an Internet Explorer version of the product in conjunction with AOL,
and had completed a beta version of the new product ready for AOL market
testing.

     However, the Company, suffering from a precipitous drop in its stock
price linked to Mr. Canion's premature departure, encountered difficulty in
securing the capital necessary to sustain its growth and brand its product.
The Company closed its doors in June 1999 with approximately $4 million in
outstanding debt.

     The Company terminated all of its employees, except its President by
December 1999. All of the Company's tangible assets were lost to the landlords
of the abandoned offices. The Company's receivables were uncollectible and
written off. The inventory was liquidated or abandoned. Only the Company's
intangible technology rights remained, however they were written down to a
$-0- book value because the Company is unable to establish its ability to
successfully market the products.

     During its dormancy, the Company received numerous inquiries from other
entities inquiring about the possibility of a restructuring and/or merger
opportunities.

     Products and Services

     The Company is developing an interactive software for use by companies to
better serve their customers needs. The software gathers data from interacting
with individuals in various settings. The data is used to develop a profile of
the individual's preferences and interests. Using this profile the company is
able to offer to the customer tailored services and products. The Company
believes that this software will be particularly useful to Internet based
marketers because they interact with their customers using computers.  The
Company has identified several markets where it intends to commence its
services. These include the music and sports markets.

     Smart One Learning Systems, Inc.

     Smart One Learning Systems, Inc. was formed as a Nevada Corporation in
February 2003 and as a wholly-owned subsidiary to become a leader in web-based
intelligent educational support.  The implementation of SOLS' business plan
which is described below is dependent on many factors such as raising
sufficient capital and establishing important contractual relationships with
third parties, and such factors are beyond the Company's ability to control.
The Company can offer no assurance that SOLS will be able to fully implement
its business plan, if at all.

     The Company anticipates that SOLS will need up to $3.0 million in funding
to institute its educational service and for implementation of its operations
and marketing plan.  Using the Internet to create a one-to-one relationship
with consumers, educational providers, humanitarian organizations and
agencies, SOLS intends to provide an effective, efficient and personalized
tool for education service providers to offer personalized service to the
education marketplace.  The Company intends to license its learning technology
to SOLS.

     The Company intends that SOLS will resume the operations that the Company
was pursuing in 1999 before the Company suspended its operations.  The
Company's technology remains preeminent. SOLS intends to resurrect the
Company's original relationships and anticipates strong demand for its
technology and services.

     Objective.  SOLS' objective is to create the "ultimate learning
experience" by optimizing the learner-provider relationship while improving
the credibility and profitability of today's branded education providers.
Examples of branded providers are Discovery Learning, National Geographic, The
Smithsonian, and others.  SOLS intends to use Intelligent Performance Support
(IPS) systems to provide a powerful solution that emulates the best behavior
of today's educators.  SOLS believes that its


                              Page 6
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proposed IPS will serve as an intelligent extension of the provider's
interaction with consumers (learners) who have Internet access.  The service
is intended to create a highly personal interactive relationship between the
provider and the learner.  This relationship is established by intelligent
software "agents" which emulate human behavior.  Like an electronic teacher,
each agent maintains a dialog with the learner and offers valuable
information, guidance and support that many of today's education providers
find difficult to offer.

     Humanitarian Applications.  The Company's Smart OneSM learning technology
was chosen by the United Nations to be its Flagship software technology in
1998 based upon its advanced teaching capabilities and its potential positive
impact on humanity.  The Company intends to license this learning technology
to SOLS.  Because of the tremendous potential humanitarian benefit of the
technology, SOLS proposes to license Smart One internationally for
humanitarian application.

     Value Proposition.  SOLS's goal is to improve connectivity between the
three key stakeholders in the education industry   learners, suppliers and
providers.  SOLS' proposed service could provide a valuable tool for improving
each stakeholder's relationship with the others.

     .   Learners.  SOLS intends to establish the personal, one-to-one
         relationship between learners and their educational provider that
         they deserve and expect, resulting in an increased comfort level with
         the learning experience.

     .   Suppliers. SOLS intends to provide a method to target, reach, and
         close pre-qualified, customers with specific needs for their goods
         and services.  The Company believes this will lead to more effective
         marketing expenditures and lower inventory and fulfillment costs.  In
         addition, SOLS intends to provide an efficient channel to communicate
         directly with the educational community, whether it is to describe
         products or the results of a learner's educational experience.

     .   Service Providers.  SOLS plans to become a tool to improve
         communications between the provider, its constituents (learners) and
         its resources.  By integrating SOLS proposed service into its portal,
         the branded service provider will be one step closer to creating an
         attractive educational portal that provides more personalized service
         while creating greater constituent loyalty.  SOLS' proposed service
         also reduces overall educational expenditures and improves learning
         outcomes by insuring more efficient skill/knowledge acquisition and
         enhanced learning achievement.

     Services.  SOLS intends to combine content, service, commerce and
connectivity to create a service that educational providers can integrate into
their existing web sites to make them inherently more attractive and useful to
their constituents. The following describes the services that SOLS plans to
offer:

..    Intelligent Learning.  SOLS intends to use IPS technology to maintain a
     rich, highly interactive and ongoing learning dialog between the learner
     and provider.  The service enhances personalized learning by defining the
     learner's unique needs, interests, and capabilities and dynamically
     tailoring the learning experience in real time.   This establishes a
     proactive, supportive relationship between the provider and learner
     leading to enhanced learning and affiliation.

..    Education outcome reporting,  SOLS intends to provide assistance to
     learners and providers regarding educational outcomes and achievement.
     This assistance documents the learner's and provider's actions along with
     an analysis of educational outcomes.  An extensive data base is created
     with limitless data mining applications and possibilities.

..    Targeted e-commerce.  SOLS intends to provide a new channel for suppliers
     to contact learners and educational providers who have specific needs for
     the supplier's product.  This service can use the information gathered by
     SOLS regarding learner and provider needs and interests to


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     initiate contact with potential customers meeting specific target
     criteria and to identify potential participants in educational research
     activities.

     Industry.  The online education market is the result of the convergence
of the education industry, one of the largest and fastest growing sectors in
the U.S., with the Internet, the fastest growing means of communicating and
accessing information.   The scope of the education market is immense
approximately $54.2 billion is being spent in the US corporate arena alone,
with 52% of US companies reporting larger training budgets.  Two principal
vertical markets are corporate training and development and public/private
education.  According to the 2002 Training Magazine Industry Report
organizations are still experimenting to see what works regarding online
learning.  Approximately 54% of corporate training is "frequently" delivered
via the Internet.  In the public education market, National Center for
Education statistics show an increase from 35% to 95% for schools connected to
the Internet.  Approximately 73% of teachers access the Internet and the
number of college students enrolled in distance learning grew to approximately
2.2 million in 2003.

     Competitive Landscape.  The market for Internet services and products is
relatively new, intensely competitive and rapidly changing. Since the
Internet's commercialization in the early 1990's, the number of Web sites on
the Internet competing for users' attention has proliferated with no
substantial barriers to entry.  SOLS intends to compete, directly and
indirectly, with the following categories of companies: (I) online services or
Web sites targeted to the education industry generally, (ii) publishers and
distributors of traditional off-line media, including those targeted to
educational professionals, many of which have established or may establish Web
sites; (iii) general purpose consumer online services which provide access to
education-related content and services; (iv) public sector and non-profit Web
sites that provide educational information without advertising or commercial
sponsorships; (v) vendors of educational information, products and services
distributed through other means, including direct sales, mail and fax
messaging; and (vi) Web search and retrieval services and other high-traffic
Web sites.

     Differentiators.  Education-related websites can be classified into one
of four areas: content, service, commerce or connectivity.  Of the thousands
of different education-related web sites available over the Internet, over 99%
of the sites are focused on providing educational information (i.e., content,
or "knowledge") to consumers.  Although primarily a service, SOLS intends to
combine all four areas to create a platform that allows stakeholders in the
educational industry to better communicate with each other.  Other factors
that will differentiate SOLS and its proposed services from other e-education
companies include:

     .   Focus on skill acquisition, not content.
     .   Integrated tool to connect all stakeholders with each other.
     .   Ancillary service for educational service providers, not an
         independent information source.
     .   Provides direct source to influence educational decisions of users.
     .   Courses are reviewed by an educational advisory board.
     .   Designed with input from all stakeholders in the educational service
         industry, thus mitigating behavioral resistance of each key
         stakeholder group.
     .   Relies primarily on service fees from the host provider and targeted
         marketing success fees, not advertising or subscriptions.

     Marketing. The primary marketing focus of SOLS will be educational
service providers like distance learning companies, universities, government
agencies, large corporations, and internationally branded entities such as The
Learning Channel, Discover Network, National Geographic, and The Smithsonian,
although SOLS presently has not established any contractual relationships with
any of the foregoing. The Company believes that the SOLS proposed service can
become an effective tool that these providers will be able to use to enhance
their online relationship with their constituents.

     In addition to providers, SOLS also intends to market its proposed
services to suppliers such as companies offering products or services relevant
to the education experience, training equipment companies, and education
service companies.  The Company believes that suppliers will be interested in
SOLS' proposed services because of the direct- to-consumer channel that SOLS
intends to provide.

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     Revenues.  The Company believes that revenues can primarily be generated
through contracts with education service providers.  The proposed fee
structure includes an implementation fee and either a base monthly fee for
each learner or a nominal transaction fee for each time the service is used.
SOLS anticipates that contracts could be for three to five years.  As for
suppliers, SOLS plans to receive a variable transaction fee for each item
purchased through SOLS referrals.

     Recording Artists Worldwide, Inc.

     RAWW was formed as a Nevada Corporation in August 2003 and as a
wholly-owned subsidiary for the purpose of becoming a creator and distributor
of both live and recorded music media.   The implementation of the RAWW
business plan which is described below is dependent on many factors such as
raising sufficient capital, obtaining governmental approvals, and establishing
important contractual relationships with third parties, and such factors are
beyond the Company's ability to control.  The Company can offer no assurance
that RAWW will be able to fully implement its business plan, if at all.  RAWW
intends to license advanced "personalization" marketing technologies and
systems to suppliers of music-oriented goods and services.

     Mission.  RAWW's objective is to become a leader of the music recording,
sales, promotion and distribution markets.

     Differentiators.  RAWW intends to be unique in its emphasis on
establishing enhanced personalization as a key element of market transactions,
as well as its ability to execute that vision by integrating advanced
technological capabilities with highly creative "artistic" tools and
expertise.  Leveraging the personalization technology of the Company, RAWW
believes it can open the door to a new level of relationship between music
consumers and suppliers.

     Business Model.  The RAWW proposed business model is to create a
profitable, competitive alternative to the existing music industry production,
marketing and distribution system.  Cost and convenience are the two primary
factors driving the rapidly changing music market.  The Company proposes that
specific RAWW strategies will be to:  (a) streamline the functions of the
music business model, eliminating superfluous and marginal functions,
activities and personnel requirements; (b) develop new and reliable
alternative sources of revenue that do not rely on making people buy the
music; (c) create a culture that leads to enhanced, long-term relationships
with the artists and their fans; (d) develop alternative marketing and
promotion and distribution venues designed to foster enhanced exposure and
product availability; (e) identify and implement more cost-effective avenues
for producing music content; (f) specify, create measures for, and adhere to
new standards of product quality; and (g) establish a new brand that can be
readily identified with the solutions to the industry's problems and that is
synonymous with total customer satisfaction and need fulfillment.

     Revenue Model.  RAWW believes that revenue can be generated from four
sources: the proposed RAWW personal interactive website; recorded media; live
media; and print and other media.  There are specific revenues linked to each
source.  The most significant ones are: the sharing of revenues to be earned
by its performing artists; advertising fees to be charged to sponsoring
entities; a percentage of all goods and services to be merchandised; license
fees to be charged to all branded product/service providers who use the RAWW
personalization technology; and fees to be charged to consumers who use RAWW
personalization services.

     Markets.  RAWW proposes to target music fans worldwide and the nationally
branded entities that sell them goods and services.

     Competition.  RAWW proposes to compete for the advertising dollars of
nationally branded entities desiring to market to music fans.  It also
proposes to eventually compete with live broadcast media such as MTV, VH1 and
Clear Channel.  RAWW proposes to compete indirectly with existing major record
labels and independent production companies, as well as the distributors and
retailers who make

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music available to the public.  This also includes online vendors of
downloadable music such as Apple and Best Buy.

     Personalization Technology.  RAWW's proposed personalization technology
will be able to bring music stars to life in the most innovative way.  Each
music fan can experience a one-on-one, "up close and personal" relationship
with their music star of choice by having both virtual (i.e., with the star's
human-appearing software avatar) and real two-way dialogue.   RAWW's proposed
technology is unique; it plans to offer music fans a friendly, personal
environment.  The technology can open the door to intimate dialogue through
voice interaction technology, and find ways to tap into human feelings and
emotions with the goal of drawing each fan completely into new experiences
that will be remembered.

     The Baseball Club, Inc.

     The Baseball Club, Inc. was formed as a Nevada Corporation in February
2003 and as a wholly-owned subsidiary to offer state-of-the-art
personalization and interactivity via the web to baseball enthusiasts.  The
implementation of the TBC business plan which is described below is dependent
on raising sufficient capital, obtaining necessary approvals, and establishing
important contractual relationships with third parties, and such factors are
beyond the Company's ability to control.  The Company can offer no assurance
that TBC will be able to fully implement its business plan, if at all.

     TBC proposes to use, under a license agreement, the Company's advanced
personalization technologies, and also visual media and the Internet to create
an intimate one-on-one relationship between baseball enthusiasts (fans,
amateur players), baseball industry service providers (players, professional
baseball, baseball camp operators, etc.) and suppliers of baseball industry
goods and services (equipment manufacturers, various other ancillary brand
merchandisers.)  TBC proposes to provide, for the first time, the ability for
people to interact with an avatar to meet their specific needs in regards to
learning baseball skills, life skills, and purchasing baseball equipment, all
through an achievement-based inclusive club.

     Personalization Technology.  The Company's teaching technology, using
Personal Intelligent Performance Support (PIPS) can bring baseball stars to
life in a most innovative way.  Each user will experience a one-on-one
emotional bond with their MLB star of choice (provided TBC can obtain
necessary rights) by having a virtual expert (an avatar) available to assist
them with whatever task they are trying to accomplish, such as baseball
instruction or retail shopping.   Avatars are "pseudo interfaces" which
emulate human personal assistants. Like real assistants, the avatars will
collaborate with TBC's proposed  members to provide guidance and support. This
technology opens the door to intimate dialogue through voice interaction
technology with those we admire and seek to learn from, and finds ways to tap
into our feelings and emotions with the goal of drawing us completely into new
experiences that will live in our memories.

     Objectives.  Through the proposed TBC website, young players may have the
opportunity to interact with their baseball heroes and learn baseball skills,
knowledge about the game, life and character-based lessons.  In addition, TBC
proposes to reward members and celebrate their successes by providing
achievement-based incentives as members learn from the pros, such as baseball
cards, free tickets, and a chance to meet his hero at a clinic or camp.  TBC
proposes that parents will receive personalized information from players who
will demonstrate and propose the exact equipment that their children need to
be successful from the companies they represent, like Nike, Rawlings, and
Louisville Slugger.  TBC proposes to be used as an outreach and a support site
to the entire baseball industry from Major League Baseball to Little League in
promoting the game and possibly providing certification training to coaches
and umpires.  Finally, TBC could serve Major League ballplayers to prolong an
impact with the fans, years beyond their playing days, as they continue to
teach and guide the younger generations about the game of baseball.

     Business Model.  This technology reflects the growing trend that favors
targeted, personalized marketing.  This will allow TBC to reach clients on a
personal level and meet their exact needs.  The information that they receive
will come from interactions with the personal assistant of their choice, the


                             Page 10
<PAGE>

stars of the game.  Players and coaches who are experts could provide the best
knowledge available, which could position TBC as a specialized technology
designed to leverage the exact needs of the consumer to the products and
services offered in the market today.  The TBC business model is designed to
accommodate PIPS technology with a goal of near-universal applicability to
maximizing most products and services offered in the game of baseball today.

     Market.  The baseball market is vast in America and abroad, especially in
Latin American countries and in the Far East.  TBC proposes to market to
American cities first, and then Japan, Taiwan, and Korea and into the Latin
and South American market.  The Company believes that this proposed business
could be enhanced and expanded through low-power over- the-air television
channels, and by producing programming that would promote proposed TBC web
services. This network could become part of the Company's overall marketing
campaign to drive users to the website. According to an Arbitron study, 59% of
Americans say they have visited an Internet Web site that they learned about
from television advertising.  In addition, members of TBC Advisory Committee
will establish relationships with owners of baseball academies, camps and
schools and encourage them to join the franchise team.

     Competition.  TBC proposes to compete with the following categories of
companies: (I) online services or Web sites targeted to baseball and sports
industries; (ii) baseball academies, camps, and clinics; (iii) general purpose
sports online sites providing access to market-related content and services
(iv) vendors of baseball-related information (books and videos), products, and
services distributed through other means, including direct sales, sports
retailers, and online sports equipment merchants.

     Revenue.  The proposed business of TBC has numerous potential revenue
streams.  TBC could derive revenue from subscription/membership fees.  A
significant stream of revenue could come from the sale of baseball equipment
and merchandise.  TBC could also develop its own line of merchandise, such as
T-shirts and caps.  Specialized fees for skills assessment, profiling, and
premium lessons could also provide revenue.  Long-term revenue could come in
the form of franchise fees charged to baseball academies and camps for TBC
services.  TBC could also offer coaching and umpiring certifications through
affiliations with amateur leagues.  Future revenue could also come from
"virtual" online gaming competitions within TBC and through special events
held for club participants.

     Marketing and Distribution

         None.

     Recent Developments

     In November 2003, the Company initiated an aggressive merger and
acquisition strategy with an initial focus on business opportunities in the
music and entertainment markets.  A New York-based M&A specialist, Stanton
Walker & Co., was hired as a consultant to facilitate the process and is now
working under a one year agreement.  With their assistance, the Company has
been engaged in identifying and assessing specific opportunities.

     A primary aspect of the Company's strategy is serving as a holding
company that acquires profitable private entities interested in growing and
that view the public venue as a viable strategy for securing growth capital
and professional support.  The Company is placing a priority on finding
companies that have business models synergistic with the Company's RAWW
(Recording Artists Worldwide) initiative.  Also, the Company is searching for
acquisition opportunities that can benefit significantly from the Company's
technologies (such as its Smart One educational technology).

     To date, the Company has not signed any agreements with prospective
acquisitions.  However, the Company is currently involved in substantive
discussions with a number of entities in the music education market.  The
Company can offer no assurance at this time that it will be able to
successfully acquire profitable private entities in the music education market
or in other business areas.

     Strategic Alliances

                             Page 11
<PAGE>


         None.

     Competitive Business Conditions

     The Company intends to offer its services to internet marketers of
services and products. Most of these companies accumulate data on their
customers.  However, the Company does not believe that any other company has
interactive technology which determines the customer's interests and
preferences.

     Raw Materials and Supplies

     The Company does not utilize any specialized raw materials.  All
necessary required materials, if any, are readily available.  The Company is
not aware of any existing or future problem that will materially affect the
source and availability of any such materials, which would be required by the
Company.

     Dependence On One or a Few Major Customers

     The Company had no sales or customers in 2003.


     Intellectual Property and Proprietary Rights

     The Company currently holds two registered U.S. trademarks.  The mark
"SMART ONE," Trademark Registration 2095594, was registered on September 9,
1997.  The mark "SMART ENTERPRISE," Trademark Registration 2267846, was
registered on August 3, 1999.

     Need for Government Approval

     With the exception of the requirement that the Company and its
subsidiaries be registered or qualified to do business in the states and
foreign countries in which they will be doing business, the software products
developed and sold by the Company are not subject to approval of any
government regulation.

     Effect of Existing or Probable Governmental Regulations

     The Company's common stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934.  As a result of such registration, the
Company is subject to Regulation 14A of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), which regulates proxy solicitations.  Section
14(a) requires all companies with securities registered pursuant to Section
12(g) thereof to comply with the rules and regulations of the Commission
regarding proxy solicitations, as outlined in Regulation 14A.  Matters
submitted to stockholders of the Company at a special or annual meeting
thereof or pursuant to a written consent will require the Company to provide
its stockholders with the information outlined in Schedules 14A or 14C of
Regulation 14; preliminary copies of this information must be submitted to the
Commission at least 10 days prior to the date that definitive copies of this
information are forwarded to stockholders.

     The Company is also required to file annual reports on Form 10-KSB and
annual reports on Form 10-QSB with the Commission on a regular basis, and will
be required to disclose certain events in a timely manner, (e.g. changes in
corporate control; acquisitions or dispositions of a significant amount of
assets other than in the ordinary course of business; and bankruptcy) in a
Current Report on Form 8-K.

     The Company is not aware of any other governmental regulations now in
existence or that may arise in the future that would have an effect on the
business of the Company.

     Research and Development


                             Page 12
<PAGE>

     The Company has not performed any research or development of its
technology in either of the last two fiscal years. The Company will need to
raise additional capital to fund the research and development needed to make
the technology fully functional and marketable.

     Environmental Regulations

     The Company does not plan to manufacture the products that are derived
from the application and use of its technology.  The Company does not believe
that it is affected by any rules which have been enacted or adopted regulating
the discharge of material into the environment.  However, environmental laws,
rules and regulations may have an adverse effect on any business venture
viewed by the Company as an attractive acquisition, reorganization or merger
candidate, and these factors may further limit the number of potential
candidates available to the Company for acquisition, reorganization or merger.

     Employees

     As of December 31, 2003, the Company had one employee, Mr. Gary Kimmons.
No union or any other form of collective bargaining unit represents any
employee.  All employees are subject to employment agreements with the
Company.  The Company believes its relations with its employees are excellent.
The Company's success will depend in large part upon its ability to retain its
current employee and secure additional employees.

                      CERTAIN BUSINESS RISKS

     The risks and uncertainties described below are not the only ones facing
the Company and there may be additional risks that are not presently known or
are currently deemed immaterial. All of these risks may impair business
operations.

     The Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, as well as risk factors particular to the industries in
which it will operate, and will include, among other things, those types of
risk factors outlined below.

     Risk that the Company's Common Stock may be deemed a "Penny Stock."

     The Company's common stock may be deemed to be a "penny stock" as that
term is defined in Rule 3a51-1 of the Exchange Act of 1934.  Penny stocks are
stocks (I) with a price of less than five dollars per share; (ii) that are not
traded on a "recognized" national exchange; (iii) whose prices are not quoted
on the NASDAQ automated quotation system (NASDAQ-listed stocks must still meet
requirement (I) above); or (iv) of an issuer with net tangible assets of less
than US$2,000,000 (if the issuer has been in continuous operation for at least
three years) or US$5,000,000 (if in continuous operation for less than three
years), or with average annual revenues of less than US$6,000,000 for the last
three years.

     A principal exclusion from the definition of a penny stock is an equity
security that has a price of five dollars ($5.00) of more, excluding any
broker or dealer commissions, markups or markdowns.  As of the date of this
report the Company's common stock has a price less than $5.00.

     If the Company's Common Stock is at any time deemed a penny stock,
section 15(g) and Rule 3a51-1 of the Exchange Act of 1934 would require
broker-dealers dealing in the Company's Common Stock to provide potential
investors with a document disclosing the risks of penny stocks and to obtain a
manually signed and dated written receipt of the document before effecting any
transaction in a penny stock for the investor's account. Potential investors
in the Company's common stock are urged to obtain and read such disclosure
carefully before purchasing any shares that are deemed to be "penny stock."

     Moreover, Rule 15g-9 of the Exchange Act of 1934 requires broker-dealers
in penny stocks to approve the account of any investor for transactions in
such stocks before selling any penny stock to that investor This procedure
requires the broker-dealer to (I) obtain from the investor information
concerning

                             Page 13
<PAGE>

his or her financial situation, investment experience and investment
objectives; (ii) reasonably determine, based on that information, that
transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable
of evaluating the risks of penny stock transactions; (iii) provide the
investor with a written statement setting forth the basis on which the
broker-dealer made the determination in (ii) above; and (iv) receive a signed
and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for investors in the Company's common stock to resell their shares
to third parties or to otherwise dispose of them.

     Competition.

     There are several corporations, firms and individuals engaged in the type
of business activities in which the Company is presently engaged. Many of
those entities are more experienced and possess substantially greater
financial wherewithal, and technical and personnel resources than the Company
or its subsidiaries. Some of the Company's competitors have longer operating
histories. In addition, certain of the Company's competitors offer a wider
range of products than the Company, and thus may be able to respond more
quickly to new or changing opportunities, technologies and customer
requirements. Certain of the Company's competitors also have greater name
recognition and larger customer bases that could be leveraged, thereby making
it difficult for the Company to gain market share.  Such competitors could
conduct more extensive promotional activities and offer better terms and lower
prices to customers than the Company can.

     In certain instances, the Company is competing with such organizations
for the same customers. In addition, competition among software developers
exists for experienced technical and other personnel. There can be no
assurance that the Company will be able to compete effectively with current or
future competitors or that such competition will not have a material adverse
effect on the Company's business, financial condition and operating results.
While the Company hopes to be competitive with other companies, there can be
no assurance that such will be the case.

     Volatile and Limited Market for Common Stock.

     As of December 31, 2003, the Company's common stock was quoted on the
"OTC - Bulletin Board Service" under the symbol "GKIG.OB."  OTC, or "Over The
Counter," securities are issued by companies that either choose not to, or are
unable to, meet the standards for listing on the NASDAQ or a national stock
exchange. OTC equity securities can be quoted on the Pink Sheets Electronic
Quotation Service, or, if the companies meet the SEC reporting requirements
and eligibility requirements established by the NASD, such equity securities
may be quoted on the NASD OTC Bulletin Board Service.

     The market price of the Company's Common Stock has been and is likely to
continue to be highly volatile and subject to wide fluctuations due to various
factors, many of which may be beyond the Company's control, including: annual
variations in operating results; announcements of technological innovations or
new software, services or products by the Company or its competitors; and
changes in financial estimates and recommendations by securities analysts. In
addition, there have been large price and volume fluctuations in the stock
market, which have affected the market prices of securities of many technology
and services companies, often unrelated to the operating performance of such
companies. These broad market fluctuations, as well as general economic and
political conditions, may adversely affect the market price of the Company's
common stock. In the past, volatility in the market price of a company's
securities has often led to securities class action litigation. Such
litigation could result in substantial costs and diversion of the Company's
attention and resources, which could have a material adverse effect on the
Company's business, financial condition and operating results.


     Dependence on Key Employees and Need for Additional Management and
     Personnel.

                             Page 14
<PAGE>

     Historically, the Company has been heavily dependent on the ability of
Gary F. Kimmons who has contributed essential technical and management
experience.   The loss of Mr. Kimmons services would have a material adverse
effect on the Company's business.  However, Mr. Kimmons interests are closely
aligned with those of the Company due to his large ownership interest in the
Company.  There can be no assurance that it will be able to employ qualified
persons on acceptable terms to replace Mr. Kimmons should he become
unavailable.

     In the event of future growth in administration, marketing, manufacturing
and customer support functions, the Company may have to increase the depth and
experience of its management team by adding new members. The Company's success
will depend to a large degree upon the active participation of its key
officers and employees, as well as, the continued service of its key
technology and management personnel and its ability to identify, hire and
retain additional qualified personnel, particularly those in the field of
computer programming.  There can be no assurance that the Company will be able
to recruit such qualified personnel to enable it to conduct its proposed
business successfully.

     Unascertainable Risks Associated with Potential Future Acquired
     Businesses.

     To the extent that the Company may acquire a business in a highly risky
industry, the Company will become subject to those risks. Similarly, if the
Company acquires a financially unstable business or a business that is in the
early stages of development, the Company will become subject to the numerous
risks to which such businesses are subject. Although management intends to
consider the risks inherent in any industry and business in which it may
become involved, there can be no assurance that it will correctly assess such
risks.

     Risks Associated with Acquisitions and Strategic Relationships.

     The Company may acquire other companies or technologies and regularly
evaluates such opportunities. Acquisitions entail numerous risks, including
difficulties in the assimilation of acquired operations and products,
diversion of management's attention from other business concerns, amortization
of acquired intangible assets; and potential loss of key employees of acquired
companies. The Company has limited experience in assimilating acquired
organizations into our operations.

     No assurance can be given as to the Company's ability to integrate
successfully any operations, personnel, services or products that might be
acquired in the future. Failure to successfully assimilate acquired
organizations could have a material adverse effect on the Company's business,
financial condition and operating results. The Company has established a
number of strategic relationships with online and Internet service providers
and software and information service providers. Additionally, there can be no
assurance that any such relationships will be maintained, or that if they are
maintained, they will be successful or profitable. The Company may not develop
any new such relationships in the future.

     Due to the foregoing factors, annual revenues and operating results are
difficult to forecast. The Company believes that period-to-period comparisons
of the Company's operating results will not necessarily be meaningful and they
should not be relied on as any indication of future performance. The Company's
future annual operating results may not consistently meet the expectations of
securities analysts or investors, which in turn may have an adverse effect on
the market price of the Company's Common Stock. Additionally, to the extent
that the Company may acquire a business in a highly risky industry, the
Company will become subject to those risks.

     Conflicts of Interest; Related Party Transactions.

     The possibility exists that the Company may acquire or merge with a
business or company in which the Company's executive officers, directors,
beneficial owners or their affiliates may have an ownership interest. Although
there is no formal bylaw, stockholder resolution or agreement authorizing any
such transaction, corporate policy does not forbid it and such a transaction
may occur if management deems it to be in the best interests of the Company
and its stockholders, after consideration of all factors. A transaction of
this nature would present a conflict of interest to those parties with a
managerial position

                             Page 15
<PAGE>

and/or an ownership interest in both the Company and the acquired entity, and
may compromise management's fiduciary duties to the Company's stockholders. An
independent appraisal of the acquired company may or may not be obtained in
the event a related party transaction is contemplated. Furthermore, because
management and/or beneficial owners of the Company's common stock may be
eligible for finder's fees or other compensation related to potential
acquisitions by the Company, such compensation may become a factor in
negotiations regarding such potential acquisitions. It is the Company's
intention that all future transactions be entered into on such terms as if
negotiated at arms length, unless the Company is able to receive more
favorable terms from a related party.

     Risks Associated with Significant Fluctuations in Annual Operating
     Results.

     The Company expects to experience large fluctuations in future annual
operating results that may be caused by many factors, including the timing of
introductions or enhancements to its software products by the Company or its
competitors; market acceptance of such newly introduced or upgraded products;
the pace of development of the market for the Company's software products;
changes in strategy; the success of or costs associated with acquisitions,
joint ventures or other strategic relationships; changes in key personnel;
seasonal trends; changes in the level of operating expenses to support
projected growth; and general economic conditions.

     Risks Associated with Management of a Changing Business.

     The Company expects operating expenses and staffing levels to increase
substantially in the future. In particular, the Company intends to hire a
significant number of additional skilled personnel, including persons with
experience in software development, marketing and sales.  Competition for such
personnel is intense, and there can be no assurance that the Company will be
able to find or keep additional suitable persons in the future.  The Company
expects that future expansion will continue to challenge the Company's ability
to successfully hire and retain associates.

     If the Company's revenues do not keep up with operating expenses, the
Company's production and release of new and upgraded products do not meet
increasing demands, the Company fails to attract, assimilate and retain
qualified personnel, or the Company fails to manage the Company's expansion
effectively, there could be a material adverse effect on the Company's
business, financial condition and operating results. The rapid growth in the
use and demand for the Company's software products may strain the Company's
ability to adequately expand.

     Risks Associated with Delays in Introduction of New Services and
     Products.

     The Company's future success depends in part on the Company's ability to
develop and enhance the Company's software products. There are significant
technical risks in the development of new products or enhanced versions of
existing products. There can be no assurance that the Company will be
successful in achieving any of the following: effectively using new
technologies; adapting the Company's products to emerging industry standards;
developing, introducing and marketing product enhancements; or developing,
introducing and marketing new products. The Company may also experience
difficulties that could delay or prevent the development, introduction or
marketing of these products.  Additionally, these new products may not
adequately meet the requirements of the marketplace or achieve market
acceptance. If the Company is unable to develop and introduce enhanced or new
products quickly enough to respond to market or customer requirements, or if
they do not achieve market acceptance, the Company's business, financial
condition and operating results will be materially adversely affected.

     Risks Associated with Dependence on Intellectual Property Rights.

     The Company does not presently hold any patents, but does hold registered
copyrights for the marks "Smart One" and "Smart Enterprise."  The Company
intends to seek additional copyright and trademark protection of its trade
names and products.  The Company's success and ability to compete are
dependent to a degree on the Company's name and product recognition.
Accordingly, the Company will primarily rely on copyright, trade secret and
trademark law to protect its product and brand names of

                             Page 16
<PAGE>

products or under which the Company conducts its business.  Effective
trademark protection may not be available for the Company's trademarks.  There
can be no assurance that the Company will be able to secure significant
protection for the Company's trademarks.

     The Company's competitors or others may adopt product or service names
similar to the Company's, thereby impeding the Company's ability to build
brand identity and possibly leading to customer confusion. The Company's
inability to adequately protect its product, brand, trade names and trademarks
would have a material adverse effect on the Company's business, financial
condition and operating results. Despite any precautions the Company takes, a
third party may be able to copy or otherwise obtain and use the Company's
software or other proprietary information without authorization or to develop
similar software independently.

     Policing unauthorized use of the Company's technology is made especially
difficult by the global nature of the Internet and the difficulty in
controlling the ultimate destination or security of software or other data.
The laws of other countries may afford the Company little or no effective
protection for the Company's intellectual property.

     There can be no assurance that the steps the Company takes will prevent
misappropriation of the Company's technology or that agreements entered into
for that purpose will be enforceable. In addition, litigation may be necessary
in the future to enforce the Company's intellectual property rights; protect
the Company's trade secrets; determine the validity and scope of the
proprietary rights of others; or defend against claims of infringement or
invalidity.  Such litigation, whether successful or unsuccessful, could result
in substantial costs and diversions of resources, either of which could have a
material adverse effect on the Company's business, financial condition and
operating results.

     Risks Associated with Infringement.

     The Company may in the future receive notices of claims of infringement
on other parties' proprietary rights. There can be no assurance that claims
for infringement or invalidity (or any indemnification claims based on such
claims) will not be asserted or prosecuted against the Company. Any such
claims, with or without merit, could be time consuming and costly to defend or
litigate, divert the Company's attention and resources or require the Company
to enter into royalty or licensing agreements. There can be no assurance that
such licenses would be available on reasonable terms, if at all, and the
assertion or prosecution of any such claims could have a material adverse
effect on the Company's business, financial condition and operating results.

     Risks Associated with Entering New Markets.

     One element of the Company's strategy is to leverage the Company's brand
names of products that the Company provides. No assurance can be given that
the Company will be able to compete successfully in any such new markets.
There can be no assurance that the Company's marketing efforts or the
Company's pursuit of any new opportunities will be successful. If the
Company's efforts are not successful, the Company could realize less than
expected earnings, which in turn could result in a decrease in the market
value of the Company's Common Stock. Furthermore, such efforts may divert
management attention or inefficiently utilize the Company's resources.

     Substantial Doubt that the Company Can Continue as a Going Concern.

     The Company expects to continue to incur significant capital expenses in
pursuing its business plan to market its product and expanding its product
line and obtaining additional financing through stock offerings or other
feasible financing alternatives.  In order for the Company to continue its
operations at its existing levels, the Company will require significant
additional funds over the next twelve months.  Therefore, the Company is
dependent on funds raised through equity or debt offerings.  Additional
financing may not be available on terms favorable to the Company, or at all.
If these funds are not available the Company may not be able to execute its
business plan or take advantage of business opportunities.  The ability of the
Company to obtain such additional financing and to achieve its operating


                             Page 17
<PAGE>

goals is uncertain. In the event that the Company does not obtain additional
capital or is not able to increase cash flow through the increase of sales,
there is a substantial doubt of its being able to continue as a going concern.

      New and Uncertain Markets and Technology; Unproven Market Acceptance.

      Factors that may adversely affect the Company's operating results
include, but are not limited to, the Company's ability to attract
consumers/users at a steady rate and maintain consumer/user satisfaction, the
Company's ability to maintain or increase sales productivity, the introduction
of new or enhanced sites and services, the amount of expenditures for online
advertising by businesses, the level of use of online services and consumer
acceptance of the Internet for services such as those the Company offers, the
Company's ability to upgrade and develop its systems and the amount and timing
of operating costs and capital expenditures relating to expansion of the
Company's business and infrastructure and general economic conditions.  The
markets for the Company's products and services have only recently begun to
develop, are rapidly changing and are characterized by low barriers to entry.
There can be no assurance that the markets for the Company's products and
services will develop at the pace anticipated and even if the market emerges
that it will become economically sustainable.  Additionally, it is becoming
increasingly important that strategic relationships with larger, more
financially sound, and well-known entities be entered into to obtain exposure
to a large number of users, sponsors and advertisers.  There is no assurance
that these strategic relationships can be developed and agreements entered
into.

     Future Capital Needs; Uncertainty of Additional Funding.

     No assurance can be given that the Company will be able to conduct its
marketing and product development programs as planned, or that changes in the
Company's marketing and product development plans or other changes affecting
the Company's operating expenses will not result in the expenditure of such
proceeds before such time.  Contingencies may arise that require the Company
to obtain additional funding before that time.  The Company's future capital
requirements will depend on many factors, including continued product
development programs, the magnitude of these programs, the time and expense
involved in obtaining new customers, competing technological and market
developments, the establishment of additional collaborative arrangements, the
costs involved in filing and prosecuting and enforcing copyright and trademark
claims, establishing marketing programs and conducting commercialization
activities and arrangements for new products and services.

     Substantial Future Sales of Stock; Dilution.

     There may be substantial sales of the Company stock, common or preferred.
Sales of substantial amounts of stock could have a material dilutive effect on
shareholders.  Additionally, it may be necessary to offer warrants or options
to obtain strategic relationships or to raise additional capital.  All of
these issuances will dilute the holdings of existing shareholders thereby
reducing such holder's percentage ownership.

     No Dividends.

     The Company anticipates that it will use any funds available to finance
its growth and that it will not pay cash dividends to stockholders in the
foreseeable future.

     Risk of Technical Obsolescence.

     The Company operates in an ever-evolving field.  Developments are
expected to continue at a rapid pace in the industry in general.  Competition
from other producers, large companies, joint ventures, research and academic
institutions and others is intense and expected to increase.  Many of these
companies and institutions have substantially greater capital resources,
research and development staffs and facilities than the Company, and many have
substantially greater experience in conducting testing, manufacturing and
marketing of products.  These entities represent significant long-term
competition for the Company.  There can be no assurance that developments by
others will not render the Company's


                             Page 18
<PAGE>

technologies and future products obsolete or noncompetitive.  In addition, the
Company's competitors might succeed in developing technologies and products
that are more effective than those that are being developed by the Company or
that would render the Company's technology and products obsolete or
noncompetitive.  See "Business - Competitive Business Conditions."

     Decreasing Prices for Software.

     In the last few years the average price for some categories of software
have fallen tremendously.  If this trend should affect software that licenses
the Company's technology the traditionally high margins will be eroded which
will be passed on to the Company in the form of lower revenues.  There can be
no guarantee that the price of the software utilizing the Company's technology
will not decline over the short-term future.  Further, competition may cause
the Company or those who utilize its technologies to lower prices in the
future.  It is difficult to raise prices in the industry even if internal
costs increase.

     Technology Changes in the Software Industry are Rapid.

     In the past few years software has been produced on different media and
in a matter of a few short years the industry has seen its software go from
floppy disk to CD-ROM to being offered online.  It cannot be known if the
Company will be able to rapidly and effectively make the necessary adjustment
with its business practices to keep pace and stay competitive in the
marketplace.

     Limited Current Sales and Marketing Capability.

     The Company has limited experience in sales, marketing and distribution.
To market its products, the Company must both hire and retain the necessary
personnel to distribute and market the product or enter into collaborative
arrangement or distribution agreements with third parties who will market such
products or develop its own marketing and sales force with technical expertise
and supporting distribution capability.  There can be no assurance that the
Company will be able to hire or retain the personnel with sufficient
experience and knowledge to distribute and market its products or be able to
enter into collaborative or distribution arrangements or develop its own sales
force, or that such sales and marketing efforts, including the efforts of the
companies with which the Company will enter into agreements will be
successful.

     No Guarantee of Continued Listing on OTC Bulletin Board.

     The Company's common stock is presently quoted on the OTC Bulletin Board
System.  There is no guarantee that the Company's common stock will continue
to be listed on the OTC Bulletin Board or on any other published medium
including, but not limited to, the pink sheets or any publication by Pink
Sheets, LLC or any by similar successor organizations, or by any member firm
of the New York Stock Exchange, or other American Exchange, NASDAQ, or NASD
related entity.

     History of Losses; Uncertainty of Future Profitability.

     As of December 31, 2003, the Company had accumulated significant net
losses.  The development of the Company's products will require the commitment
of substantial resources to increase its advertising, marketing and
distribution of its existing products and to complete the testing
manufacturing, marketing and distribution of said new products.  These
expenditures are expected to result in substantial and increasing losses over
the next six months.  There can be no assurance that the Company will not
incur substantial and continuing net losses beyond the next six months or that
the Company will ever reach profitability.  Furthermore, there can be no
assurance the Company's products will meet the expectations and effectiveness
required to be competitive in the market place, that the Company will enter
into arrangements for product development and commercialization, successfully
market its software products, or achieve customer acceptance.

     Reports to Security Holders

                             Page 19
<PAGE>


     Copies of the Company's reports, as filed with the Securities and
Exchange Commission, are available and can be accessed and downloaded via the
internet at http://www.sec.gov/cgi-bin/srch-edgar, and simply typing in "GK
Intelligent Systems."


Item 2.    Description of Property.

     The Company has no property, leased or owned at December 31, 2003.


Item 3.    Legal Proceedings.

     Texas Workforce Commission.  On February 10, 2000, the Texas Workforce
Commission placed an administrative lien on the Company in the amount of
$109,024.

     Awalt Group, Inc..  Awalt Group, Inc. commenced litigation against the
Company in January 2004 in the United States District Court, Southern District
of Texas, Houston Division (Cause No. H-03-5832).  This case relates to
advertising and promotional services rendered prior to July, 1999.  The
Plaintiff is requesting $77,189.27 for actual amounts invoiced and $10,000 in
attorney's fees.  Per their invoices, these are for services rendered from May
26, 1998 through June 15, 1999.  The Company has filed an answer and is
defending the lawsuit under Section 16.004 of the Texas Civil Practice and
Remedies Code, i.e., the Company believes that the statute of limitations has
tolled the claim.

     11500 Northwest, L.P.  11500 Northwest, L.P. commenced litigation against
the Company on October 31, 2003 in the 11th Judicial District Court for Harris
County, Texas (Cause No. 2003-60705).  This case relates to a breach of a
lease agreement allegedly entered into on or about March 5, 1999 for certain
office space never occupied by the Company.  Plaintiff is requesting past due
rents of an unspecified amount, broker's commission of $21,806.40, tenant
improvements of $51,439.29, attorney's fees, costs and prejudgment interest.
The Company intends to defend the lawsuit, denies breach of the alleged lease
agreement and further intends to defend under Section 16.004 of the Texas
Civil Practice & Remedies Code, i.e. the Company believes that the statute of
limitations has tolled some or all of the claims.  The suit was served on
April 13, 2004 and no discovery has been conducted by either side.

     Marathon Oil Company.  A default judgment was taken against the Company
in favor of Marathon Oil Company on August 31, 1999 in the amount of
$326,943.00 representing past and future rentals under a lease agreement,
together with $7,500.00 in attorney's fees and post judgment interest at 10%
per annum until paid.  Credit towards the judgment was ordered for sale of
personal property by the Sheriff or Constable.  The Company believes that the
personal property sold for approximately $28,000.00.  To the extent that the
property was leased during the unexpired term, it is possible that there would
be a mitigation of damages claim in favor of the Company.  The Company
believes that some or all of the space was subsequently rented approximately
90 days later.

     Fidelity Leasing, Inc.   On March 3, 2002, a judgment was entered against
the Company in favor of Fidelity Leasing in the amount of $29,854 in damages,
fees and costs, and it is subject to interest.

     The Company is not aware of pending claims or assessments, other than as
described above, which may have a material adverse impact on the Company's
financial position or results of operations.


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

     No matter was submitted to a vote of our shareholders during the fourth
quarter of 2003.

                             PART II


Item 5.    Market For Common Equity and Related Stockholder Matters.

     Our common stock is presently traded in the over-the-counter market and
quoted on the National Association of Securities Dealers' OTC Bulletin Board
System under the ticker symbol "GKIS.OB".  The

                             Page 20
<PAGE>


shares are thinly traded and a limited market presently exists for the shares.
The following table describes, for the respective periods indicated, the
prices of GK Intelligent Systems, Inc. common stock in the over-the-counter
market, based on inter-dealer bid prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions. The prices
have been adjusted to reflect a 1 for 10 reverse split of our common stock
which occurred on March 19, 2002.  The quotations have been provided by Pink
Sheets LLC, the National Association of Securities Dealers composite feed or
other qualified interdealer quotation medium.

     Fiscal 2003              High          Low
     ------------------------ ------------- --------
     First Quarter (1)        $0.15         $0.10
     Second Quarter   (1)     $0.16         $0.10
     Third Quarter (1)        $0.16         $0.05
     Fourth Quarter (1)       $0.20         $0.06

     Fiscal 2002              High          Low
     ------------------------ ------------- --------
     First Quarter (1)        $0.04         $0.01
     Second Quarter   (1)     $0.64         $0.01
     Third Quarter (1)        $0.17         $0.04
     Fourth Quarter (1)       $0.16         $0.03


     Holders

     There were approximately 222 holders of record of the Company's Common
Stock as of April 9, 2004.

     Dividends

     The Company has not declared any cash dividends with respect to its
common stock, and does not intend to declare dividends in the foreseeable
future. There are no material restrictions limiting, or that are likely to
limit, the Company's ability to pay dividends on its securities, except for
any applicable limitations under Delaware corporate law.

     Recent Sale of Unregistered Securities

     During the 4th quarter covered by this report ended December 31, 2003,
the Company sold unregistered and restricted shares of its common stock in the
following transactions:

     1.   On October 1, 2003, the Company issued 250,000 shares of its common
stock to BMA Ventures, Inc. in connection with entering into a Data
Dissemination Agreement with BMA Ventures, Inc. which requires BMA Ventures,
Inc. to provide certain services as described in the Data Dissemination
Agreement.

     2.   On November 7, 2003 William and Darlene Brown paid $12,500 in cash,
for 50,000 restricted shares of Common Stock for $0.25 per share.  This
represents the subscription for 0.5 units under a Private Placement Memorandum
dated October 18, 2002.  The shares are exempt from registration provided by
Section 4(2) and 4(6) of the Securities Act of 1933 and bear a restrictive
legend.

     3.   On November 7, 2003 the Corporation authorized the issuance of a
Common Stock Purchase Warrant to William and Darlene Brown to purchase up to
100,000 shares of Common Stock at a price of $0.35 per share.  The warrant
expires on September 12, 2005.  The shares underlying the warrant, if
exercised, shall be exempt from registration provided by Section 4(2) and 4(6)
of the Securities Act of 1933 and shall bear a restrictive legend.

     4.   On November 7, 2003 Frank and Frances Yorek paid $12,500 in cash,
for 50,000 restricted shares of Common Stock for $0.25 per share.  This
represents the subscription for 0.5 units

                             Page 21
<PAGE>

under a Private Placement Memorandum dated October 18, 2002. The shares are
exempt from registration provided by Section 4(2) and 4(6) of the Securities
Act of 1933 and bear a restrictive legend.

     5.   On November 7, 2003 Frank and Frances Yorek received a Common Stock
Purchase Warrant to purchase up to 100,000 shares of Common Stock at a price
of $0.35 per share.  The warrant expires on September 12, 2005.  The shares
underlying the warrant, if exercised, shall be exempt from registration
provided by Section 4(2) and 4(6) of the Securities Act of 1933 and shall bear
a restrictive legend.

     6.   On November 11, 2003 the Corporation authorized the issuance of
400,000 restricted shares of Common Stock in consideration of consulting and
advisory services provided from September 1, 2003 to date.  The shares are
exempt from registration provided by Section 4(2) and 4(6) of the Securities
Act of 1933 and bear a restrictive legend.

     7.   On December 22, 2003 the Company authorized the issuance of a Common
Stock Purchase Warrant to Gary Kimmons to purchase up to 1,727,063 shares of
Common Stock at the price of $0.088 per share, which represented 110% of the
closing price of the Company's Common Stock on that date; the warrant is
exercisable for seven years and expires on December 31, 2010.  The Company's
Board of Directors subsequently rescinded and cancelled this warrant
retroactively.

     8.   On December 22, 2003 the Company authorized the issuance of a Common
Stock Purchase Warrant to Dick Meador to purchase up to 300,000 shares of
Common Stock at the price of $0.08 per share, which represents 100% of the
closing price of the Company's Common Stock on that date; the warrant is
exercisable for seven years and expires on December 31, 2010.  This warrant
was issued in consideration of, and in full and complete satisfaction of
accrued and unpaid director fees due and owing to Mr. Meador through December
31, 2003, pursuant to a Non-Employee Director Agreement dated April 1, 2003.

     9.   On December 22, 2003, Deanna Slater received 445,830 restricted
shares of Common Stock in consideration for consulting services provided by
Ms. Slater during 2003.

     With respect to the sales of the Company's common stock described above,
the Company relied on the Section 4(2) and/or 4(6) exemptions from securities
registration under the federal securities laws for transactions not involving
any public offering.  No advertising or general solicitation was employed in
offering the shares.  The shares were sold to sophisticated and/or accredited
investors.  The securities were offered for investment purposes only and not
for the purpose of resale or distribution, and the transfer thereof was
appropriately restricted by the Company.

     The securities were sold directly by the Company through its officers and
directors without the payment of any commissions or other offering
compensation.  No underwriters were engaged to sell the securities offered.

     For information concerning the issuance of unregistered securities by the
Company during the first three quarters of 2003, and during the years ended
December 31, 2002 and 2001, see the Company's Annual Reports on Form 10-KSB
for the years ended December 31, 2002 and 2001 and the Company's Quarterly
Reports on Form 10-QSB for each of the relevant quarterly periods.


Item 6.    Management's Discussion and Analysis or Plan of Operation.

     Cautionary Forward - Looking Statement

     This section and other parts of this Form 10-KSB contain forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Certain matters discussed herein may contain forward-looking
statements that are subject to risks and uncertainties. Such risks and
uncertainties include, but are not limited to, the following:


                             Page 22
<PAGE>

         -     the volatile and competitive nature of the software business,
         -     the uncertainties surrounding the rapidly evolving markets
               in which the Company competes,
         -     the uncertainties surrounding technological change and the
               Company's dependence on computer systems,
         -     the Company's dependence on its intellectual property rights,
         -     the success of marketing efforts by third parties,
         -     the changing demands of customers and
         -     the arrangements with present and future customers and third
                parties.

     Should one or more of these risks or uncertainties materialize or should
any of the underlying assumptions prove incorrect, actual results of current
and future operations may vary materially from those anticipated.

     The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto included in Item 7 of this
Form 10-KSB. All information presented herein is based on the Company's fiscal
calendar.

     Results of Operations

     Net revenues for the years ended December 31, 2003 and 2002 were $-0- and
$-0-, respectively.  The Company had operating expenses of $835,321 for the
year ending December 31, 2002 compared to $1,282,364 for 2003. The increase of
$447,043 was due to the Company engaging various consultants as it attempts to
reestablish its business. The consultants were paid primarily in shares of the
Company's common stock options and warrants. The value of the shares issued in
2002 was $140,607 compared to $695,423 in 2003.

     The Company unsuccessfully launched its product sales in the first six
months of 1999. The Company was unable to raise sufficient capital to sustain
its marketing effort and closed its offices and terminated most of the
personnel in June of 1999. In 2001, the Company's general and administrative
expenses were primarily the accrual of officer wages and other expenses
incurred in winding down the failed operations. In 2002, the Company began to
rebuild the business and to complete the accounting and legal work necessary
to become current in its securities filings.

     The Company had interest expense of $343,414 for the year ended December
31, 2002 compared to $174,032 for 2003. The interest is accrued on the
Company's unpaid accounts payable and accrued expenses. The decrease in
interest expense was the result of the Company being relieved of the
obligation to pay approximately $2,220,782 of these debts due to passing of
the 4 year collection period under the applicable Texas statute of
limitations. In 2002 the Company converted $877,073 of its debt to 6,521,980
shares of common stock and recorded a gain of $2,250 on the release of debt.

     Liquidity

     During the year ended December 31, 2002, the Company used cash of
$159,434 in its operations compared to $257,723 in 2003. The Company received
$175,000 cash from the sale of its common stock in 2002 compared to $250,000
in 2003. The Company received $46,000 in loans in 2003 compared to $-0- in
2002. The Company repaid $53,746 of these loans in 2003.


                             Page 23
<PAGE>

The Company had cash on hand of $15,566 as of December 31, 2002 and $97 at
December 31, 2003.

     Plan of Operations

     The Company ceased operations in 1999 and was inactive until the second
quarter of 2002. Management believes that it will require approximately
$1,000,000 of additional operating capital in order for the Company to revive
its operations. The Company is seeking additional capital through placements
of its common stock or debt. There is no guarantee that such capital will be
available or that if available will be on terms acceptable to the Company.

     The Company plans to use the funds to research and develop improvements
to its products, to purchase additional businesses, and to hire additional
employees in 2004.

Item 7.     Financial Statements.

     The financial statements filed as a part of this report include:

     Index to Consolidated Financial Statements..........................F-2
     Report of Independent Certified Public Accountants..................F-3
     Consolidated Balance Sheet as of December 31, 2003 .................F-4
     Consolidated Statements of Operations for the years ended
       December 31, 2003 and 2002, and the period from
       inception(October 4, 1993) through December 31, 2003..............F-5
     Consolidated Statements of Stockholders' Equity for the period
       from inception (October 4, 1993) through December 31, 2003........F-6
     Consolidated Statements of Cash Flows for the years ended
       December 31, 2003 and 2002, and the period from
       inception (October 4, 1993) through December 31, 2003............F-14
     Notes to Consolidated Financial Statements.........................F-16


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

               None.

Item 8A.

     (a)  Evaluation of Disclosure Controls and Procedures.

The Company's Chief Executive Officer, Gary F. Kimmons, and Chief Financial
Officer, Gary F. Kimmons, have reviewed the Company's disclosure controls and
procedures as of the end of the period covered by this report.  Based upon
this review, Mr. Kimmons believes that the Company's disclosure controls and
procedures are effective in ensuring that material information related to the
Company is made known to him by others within the Company.

     (b)  Changes in Internal Controls Over Financial Reporting.

There have been no significant changes in internal controls over financial
reporting that occurred during the fiscal period covered by this report that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.


                             PART III

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



                             Page 24
<PAGE>

     See Item 11 for information on the beneficial ownership of the Company's
securities.

     (a)    Identity of Directors and Executive Officers.

     Name                Age   Position
     ------------------------------------------------------------------
     Gary F. Kimmons     53    Chairman of the Board, President
                               and Chief Executive Officer and Chief
                               Financial Officer
     Dick Meador         54    Director
     Kathryn Kimmons     50    Director and Secretary

     There are no arrangements or understandings between any of the directors
or executive officers, or any other person or person pursuant to which they
were selected as directors and/or officers.

     GARY F. KIMMONS, Age 53, has served as chairman of the board of the
Company since August 1998, and from 1993 until April 1998. Mr. Kimmons has
also served as president and chief executive officer of the Company since 1993
and secretary since September 1998. Mr. Kimmons has extensive experience in
the design, development and implementation of business management and
technical training systems. Mr. Kimmons received a bachelor of science degree
in psychology, anthropology, and behavioral science from Rice University in
1973 and a masters degree in applied industrial psychology and management
science from Stevens Institute of Technology in 1975.

     DICK MEADOR, age 54, currently serves as Director of Operations for
Whataburger, Inc., a large regional service provider in the food and beverage
industry.  Mr. Meador has been an employee there for 16 years, during which
time he has distinguished himself as a top performer.  Mr. Meador brings to
the Board significant expertise in the management of corporate operations.
Prior to his tenure with Whataburger, Inc., Meador worked with several other
large food service providers in a similar capacity.

     KATHRYN KIMMONS, age 50, currently serves as the Secretary and a Director
to the Company.  Mrs. Kimmons has over 20 years of experience in the
entertainment industry as well as 10 years in retail sales and operations.  A
business entrepreneur who has founded her own successful entertainment
business as well as a retail business selling antiques and collectibles, Mrs.
Kimmons is uniquely talented in small business management, merchandising
presentation, creative retail project implementation, interior design and
display, retail buying, and effective sales and marketing.

     Directorships

     No Director of the Company or person nominated or chosen to become a
Director holds any other directorship in any company with a class of
securities registered pursuant to section 12 of the Exchange Act or subject to
the requirements of section 15(d) of such Act or any other company registered
as an investment company under the Investment Company Act of 1940.

     Family Relationships.

     Gary Kimmons and Kathryn Kimmons, both directors and officers of the
Company, are husband and wife.

     Involvement in Certain Legal Proceedings.

     During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
the Company:

     (1)    was a general partner or executive officer of any business against
     which any bankruptcy petition was filed, either at the time of the
     bankruptcy or two years prior to that time;


                             Page 25
<PAGE>


     (2)    was convicted in a criminal proceeding or named subject to a
     pending criminal proceeding (excluding traffic violations and other minor
     offenses);

     (3)    was subject to any order, judgment or decree, not subsequently
     reversed, suspended or vacated, of any court of competent jurisdiction,
     permanently or temporarily enjoining, barring, suspending or otherwise
     limiting his involvement in any type of business, securities or banking
     activities; or

     (4)   was found by a court of competent jurisdiction (in a civil action),
     the Securities and Exchange Commission or the Commodity Futures Trading
     Commission to have violated a Federal or state securities or commodities
     law, and the judgment has not been reversed, suspended or vacated.

     Section 16 (a) Beneficial Ownership Compliance.

     Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than ten
percent of the Company's Common Stock, to file initial reports of beneficial
ownership on Form 3, changes in beneficial ownership on Form 4 and an annual
statement of beneficial ownership on Form 5, with the SEC.  Such executive
officers, directors and greater than ten percent shareholders are required by
SEC rules to furnish the Company with copies of all such forms that they have
filed.

     Based solely on its review of the copies of such forms filed with the SEC
electronically, received by the Company and representations from certain
reporting persons, the Company believes that for the fiscal year ended
December 31, 2003, all the officers, directors and more than 10% beneficial
owners complied with the above described filing requirements, although the
following Form 4 reports were filed late by certain officers and directors:

     1.   On November 17, 2003, the Kimmons Family Partnership, Ltd. made a
gift of 95,500 shares of the Company's common stock and Gary F. Kimmons made a
gift of 181,780 shares of the Company's common stock.  The transactions were
reported in a Form 4 report filed late on December 12, 2003.

     2.   On March 24, 2003, Kathryn Kimmons filed a Form 4 report late for
February 2003 to report the indirect beneficial ownership of securities owned
and acquired by her husband, Gary F. Kimmons.

     3.   On March 20, 2003, Gary F. Kimmons filed a Form 4 report late to
report his acquisition of 588,235 shares which occurred on February 17, 2003.

     4.   On March 10, 2003, Dick Meador filed a Form 5 report late.

     5.   On March 3, 2003, Gary F. Kimmons filed a Form 4 report late to
report his acquisition of a warrant on January 31, 2003.

     6.   On March 3, 2003, Gary F. Kimmons filed a Form 5 report late.

     7.   On March 3, 2003, Gary F. Kimmons filed a Form 4 report late to
report gifts of common stock made by the Kimmons Family Partnership, Ltd.
which occurred on November 4 and November 5, 2002.

     8.   On March 3, 2003, Gary F. Kimmons filed a Form 4 report late to
report the acquisition of 7,600,000 shares of the Company's common stock by
the Kimmons Family Partnership, Ltd. which occurred on September 26, 2002.


                             Page 26
<PAGE>

     9.   On March 3, 2003, Gary F. Kimmons filed a Form 4 report late to
report a gift of common stock made by the Kimmons Family Partnership, Ltd.
which occurred on August 30, 2002.

     10.  On March 3, 2003, Kathryn Kimmons filed a Form 5 report late.


Item 10.    Executive Compensation.

     The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:

<TABLE>
<CAPTION>


                        SUMMARY COMPENSATION TABLE
                       ---------------------------

                                                        Long Term Compensation
                                                      --------------------------
                               Annual Compensation       Awards          Payouts
                          --------------------------- ----------------- --------
                                                                 Secur-         All
                                            Other                ities    ($)   Other
Name and         Year or                    Annual    Restricted Under-   LTIP  Compen-
Principal        Period   Salary     Bonus  Compen-   Stock      lying    Pay-  sation
Position         Ended    ($)        ($)    sation($) Awards     Options  outs  ($)
(a)              (b)      (c)        (d)    (e)       (f)        (g)(#)   (h)   (I)
---------------  -------  ---------- -----  --------- ---------- -------  ----  --------

              <c>      <c>        <c>    <c>       <c>        <c>      <c>   <c>
Gary F.
Kimmons (1)(2)   2003     $ 240,000     0   $      0        0        0     0     0
President, CEO   2002     $ 240,000     0   $      0        0        0     0     0
and Director     2001     $ 240,000     0   $      0        0        0     0     0

Kathryn Kimmons  2003     $       0     0   $      0        0        0     0     0
Director and     2002     $       0     0   $      0        0        0     0     0
Secretary        2001     $       0     0   $      0        0        0     0     0

Dick Meador(3)   2003     $       0     0   $ 36,750        0        0     0     0
Director         2002     $       0     0   $ 17,500        0        0     0     0
                 2001     $       0     0   $      0        0        0     0     0
_____________________
</TABLE>

     (1)   Mr. Kimmons, the President and CEO of the Company is currently
     subject to an Employment Agreement with the Company.  See "Employment
     Contracts" below.

     (2)   In 2003, Mr. Kimmons received a base salary of $240,000,
     $118,760.41 of which was paid in cash, $20,000 of which was paid through
     the issuance of warrants to acquire 80,000 shares of common stock
     exercisable at $0.35 per share until December 31, 2007, and $101,239.59
     of which was paid on March 25, 2004 in the form of 8,230,861 shares of
     restricted common stock issued to Mr. Kimmons at a price of $0.0123 per
     share.  In 2002, Mr. Kimmons received a base salary of $240,000, $130,000
     of which was paid through the issuance of 1,300,000 post-reverse split
     adjusted restricted shares of common stock and $110,000 of which was paid
     in 2003 in the form of a warrant entitling Mr. Kimmons to purchase
     520,000 shares of common stock at a price of $0.35 per share.  In 2001
     Mr. Kimmons received a base salary of $240,000, which was accrued and
     paid in 2002 in the form of 2,400,000 restricted shares of common stock.

     (3)   In 2003, Mr. Meador, a Director of the Company, received a common
     stock purchase warrant to purchase up to 300,000 shares of the Company's
     common stock exercisable at $0.08 per share for a period of seven years,
     which was valued at $24,000, and Mr. Meador also received 75,000
     unregistered shares of common stock valued at $12,750.  In 2002, Mr.
     Meador, a Director of the Company, received 175,000 post-reverse split
     adjusted restricted shares of common stock in consideration of director
     services valued at $17,500.  Mr. Meador was not an officer or director of
     the Company in 2001 and did not receive any form of compensation during
     2001.


                             Page 27
<PAGE>

     Employment Contracts

     On February 1, 2003, the Company entered into a new employment agreement
with Mr. Kimmons. The agreement provides for a three-year term that
automatically renews at the end of the term for consecutive one-year terms,
and which provides for an annual base compensation of $240,000 and
non-qualified stock options to 3,000,000 shares of Common Stock under the
Company's 2003 Stock Option Plan, at a purchase price of $0.18 per share (110%
of the closing market price on the date of grant). Options to purchase
1,000,000 shares are exercisable immediately, options to purchase 1,000,000
shares vest and shall be exercisable at such time as the Company is current
and filed its annual and quarterly reports for the years 2000, 2001 and 2002
and any reports then due for the fiscal year 2003, and options to purchase
1,000,000 shares vest and shall be exercisable at such time as the Company has
raised a minimum of $500,000 in investment capital.  Upon Mr. Kimmon's death
or disability all unvested warrants will become immediately vested and
exercisable.  The Company may terminate the agreement for cause, or upon the
extended disability or death of Mr. Kimmons. Mr. Kimmons may terminate the
agreement for good reason, which is defined as (1) diminution of duties, (2)
failure by the Company to comply with the agreement, (3) a requirement by the
Company for Mr. Kimmons to move locations, (4) any purported termination other
than as permitted in the agreement, (5) a change of control, or (6) failure to
have a successor corporation assume the agreement. If the agreement is
terminated in connection with a change of control, (1) the Company must pay
Mr. Kimmons an amount equal to approximately three times the sum of his annual
base salary and the average of the last annual incentive bonuses actually
paid, (2) all outstanding warrants immediately vest, (3) welfare and fringe
benefits are provided for one year, (4) the Company must pay the sum of any
earned salary not yet paid, deferred compensation and an amount equal to 150%
of the value of Mr. Kimmons accrued benefits in any Company long term
incentive plan times a fraction equal to the months worked in the performance
period before termination divided by the total performance period. If the
agreement is terminated for cause or Mr. Kimmons terminates for other than
good reason, the Company shall pay earned but unpaid salary and any vested
benefits payable to him under a plan or policy. In the event of a change of
control, Mr. Kimmons will remain with the Company until the later of: (1) 15
days after the one year anniversary of the change of control, (2) 15 days
after the anniversary date of any merger, or (3) January 31, 2006. The
agreement defines a change of control as: (1) any person acquiring 30% of the
Company or if Mr. Kimmons' voting rights are reduced to less than 30% of the
outstanding shares, (2) if during a two year period, individuals who were on
the board of directors (and any new directors elected by two-thirds of
directors in office at the beginning of the period or whose election or
nomination was so approved) cease to be a majority of the board of directors,
(3) if the shareholders approve a merger or consolidation (other than a merger
in which company shareholders own at least 50% of surviving entity), or (4) a
complete liquidation.

     Stock Options and Warrants

     During 1996 the Company adopted, and the board of directors approved, the
1995 Incentive Stock Option Plan ("1995 Plan").  Pursuant to the 1995 Plan,
options to purchase shares of Common Stock may be granted to employees,
officers, and directors of the Company.  In June 1998, the board of directors
approved an increase in the number of authorized options from 100,000 (post
reverse-split adjusted) shares to 500,000 (post reverse-split adjusted)
shares.  Options granted under the 1995 Plan generally expire five to ten
years after the date of grant.

     On February 1, 2003, the Board of Directors approved and adopted the GK
Intelligent Systems, Inc, 2003 Stock Option Plan ("2003 Plan"). The 2003 Plan
was established in order to provide a method whereby chosen key employees and
persons providing services to the Company who are primarily responsible for
the management and growth of the Company and who are expected to continue to
make substantial contributions to the Company's future can be offered
incentives. The number of common shares authorized under the 2003 Plan is ten
million (10,000,000) and said shares will be granted either as Incentive Stock
Options as defined in Section 422 of the Internal Revenue Code or
Non-Qualified Stock Options for those options which do not meet the conditions
of Section 422 of the Internal Revenue Code.

                             Page 28
<PAGE>

     On March 31,2004 the Board of Directors approved and adopted the GK
Intelligent Systems, Inc. 2004 Stock Option Plan ( "2004 Plan") which became
effective April 5, 2004.  The 2004 Plan was established in order to provide a
method to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to employees and
consultants and to promote the success of the Company's business through the
issuance of options, stock purchase rights, other stock-based awards, and
other benefits. Options granted under the 2004 Plan may be Incentive Stock
Options as defined in Section 422 of the Internal Revenue Code or
Non-Qualified Stock Options. The number of common shares authorized under the
2004 Plan is thirty million (30,000,000).

     As of December 31, 2003, there were non-qualified stock options
outstanding to purchase 3,000,000 shares of common stock, of  which 2,000,000
were exercisable.  As of December 31, 2003 there were also outstanding
warrants to purchase 4,900,050 shares.  For the fiscal year ended December 31,
2003, the Company did not maintain any long-term retirement or other benefit
plan, except as described in this report.

     Non-Employee-Directors and Consultants Retainer Stock Plan

     On April 1, 2003 the Board of Directors approved and adopted the Non
Employee-Directors and Consultants Retainer Stock Plan for the Year 2003. The
plan was established in order to provide a method whereby chosen directors and
persons providing services to the Company may be offered incentives in
addition to those presently available, and may be stimulated by increased
personal involvement in the fortunes and success of the Company, thereby
advancing the interests of the Company and its shareholders. The number of
common shares authorized under the plan is two million (2,000,000).

     Option Grants Table

     The following tables reflect certain information, with respect to stock
options granted under the Company's stock option plans to certain executive
officers and directors during fiscal 2003.

              OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

                    Number Of    % Of Total
                    Securities   Options
                    Underlying   Granted To   Exercise
                    Options      Employees    Or Base
                    Granted      In Fiscal    Price            Expiration
Name                (#)          Year(%)      ($/Sh)(1)        Date
------------------- ------------ ------------ ---------------- --------------
Gary Kimmons        3,600,000      92.3%      $0.018 to $0.35  (Note 1)
Kathryn Kimmons             0         0%         0                 0
Dick Meador           300,000       7.7%      $0.08            12/31/10
------------------- ------------ ------------ ---------------- -------------

     (1)    In 2003, Gary Kimmons received the following options and/or
     warrants: (a) a warrant to purchase up to 520,000 shares at the exercise
     price of $0.35 per share exercisable until December 31, 2007, which
     represented part of Mr. Kimmons' compensation for 2002; (b) a warrant to
     purchase up to 80,000 shares at the exercise price of $0.35 per share
     exercisable until December 31, 2007; and (c) an option to purchase up to
     3,000,000 shares at the exercise price of $0.18 per share which was
     granted to Mr. Kimmons in connection with his February 1, 2003 employment
     agreement, exercisable until February 1, 2013 (of which 2,000,000 shares
     are presently exercisable, and the balance shall become exercisable when
     the Company has raised a minimum of $500,000 in investment capital).


                             Page 29
<PAGE>

Option Exercise and Year End-Value Table

     The following tables reflect certain information, with respect to the
exercise of stock options by certain executive officers during fiscal 2003, on
a post-reverse split adjusted basis:

<TABLE>
<CAPTION>

         AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
                      AND YEAR-END OPTION/SAR VALUE

                                             Number Of
                                             Securities             Value Of
                                             Underlying             Unexercised
                                             Unexercised            In-The-Money
                                             Options At             Options At
                                             Fy-End(#)              Fy-End($)(1)
                 Shares       Value     ---------------------------------------------
                 Acquired On  Realized      Exercisable (E)/        Exercisable (E)/
Name             Exercise(#)  ($)          Unexercisable (U)       Unexercisable (U)*
---------------- ------------ --------- -------------------------- ------------------

              <c>          <c>       <c>                         <c>
Gary Kimmons(1)       0        0        2,600,000(E)/1,000,000(U)   0(E)/0(U)
Dick Meador           0        0          300,000(E)/0(U)           0(E)/0(U)
Kathryn Kimmons       0        0                0(E)/0(U)           0(E)/0(U)
____________________

</TABLE>

     * Computed based on the differences between the closing market price and
     aggregate exercise prices as of December 31, 2003.

     (1)   Includes warrants to purchase 600,000 shares of Company Common
     Stock exercisable at $0.35 per share, which were fully vested as of
     December 31, 2003.  None of the warrants have been exercised, nor have
     any expired as of the date of this report.


Item 11.    Security Ownership of Certain Beneficial Owners and Management and
            Related Stockholder Matters.

     (a)    Security Ownership of Certain Beneficial Owners

     The following table sets forth security ownership information as of the
close of business on April 9, 2004, for any person or group, known by the
Company to own more than five percent (5%) of the Company's voting securities.


                                          Number of
                                          Shares           Percent of
                                          Beneficially     Outstanding
Name of Beneficial Owner                  Owned(1)         Shares
------------------------------------------------------------------------------
Kimmons Family Partnership, Ltd.(2)......  6,832,360        16.48%
Gary F. Kimmons(2)(3).................... 23,253,720        51.61%
Kathryn Kimmons(4)....................... 23,253,720        51.61%
__________________

     1.   All amounts shown in this column include shares obtainable upon
          exercise of stock options or warrants currently exercisable or
          exercisable within 60 days of the date of this table.

     2.   Mr. Kimmons is a general partner of the Kimmons Family Partnership,
          Ltd., and as such has the sole voting, investment and disposition
          power over the 6,832,360 shares of Common Stock owned by the
          partnership.

     3.   Mr. Kimmons is deemed to own (a) 6,832,360 of these shares owned of
          record by the Kimmons Family Partnership, Ltd., by virtue of Mr.
          Kimmons being the General Partner of the Kimmons Family Partnership,
          Ltd., (b) 600,000 of these shares by virtue of warrants to purchase
          these shares, and (c) 3,000,000 of these shares by virtue of options
          to purchase these shares (options to purchase 2,000,000


                             Page 30
<PAGE>

          of these shares have already vested, and the Company believes that
          options to purchase 1,000,000 of these shares shall vest during the
          next 60 days).

     4.   Mrs. Kimmons is deemed to have indirect beneficial ownership of
          these shares, as the spouse of Gary F. Kimmons.

     The address of all persons listed above is 2602 Yorktown Place, Houston,
Texas 77056


     (b)    Security Ownership of Management

     The following table sets forth security ownership information as of the
close of business on April 9, 2004, of all directors, executive officer listed
in the "Summary Compensation Table" set forth herein, and all directors and
executive officers as a group.


                                          Number of
                                          Shares           Percent of
                                          Beneficially     Outstanding
Name of Beneficial Owner                  Owned(1)         Shares
------------------------------------------------------------------------------
Gary F. Kimmons(2)(3)..................... 23,253,720        51.61%
Kathryn Kimmons(4)........................ 23,253,720        51.61%
Dick Meador(5)............................    652,000         1.56%
All directors and executive
 officers (3 Persons)..................... 23,905,720        52.71%
__________________

     1.   All amounts shown in this column include shares obtainable upon
          exercise of stock options or warrants currently exercisable or
          exercisable within 60 days of the date of this table.

     2.   Mr. Kimmons is a general partner of a the Kimmons Family
          Partnership, Ltd.,  and as such has the sole voting,  investment and
          disposition power over the 6,832,360  shares of Common Stock owned
          by the partnership.

     3.   Mr. Kimmons is deemed to own (a) 6,832,360 of these shares owned of
          record by the Kimmons Family Partnership, Ltd., by virtue of Mr.
          Kimmons being the General Partner of the Kimmons Family Partnership,
          Ltd., (b) 600,000 of these shares by virtue of warrants to purchase
          these shares, and (c) 3,000,000 of these shares by virtue of options
          to purchase these shares (options to purchase 2,000,000 of these
          shares have already vested, and the Company believes that options to
          purchase 1,000,000 of these shares shall vest during the next 60
          days).

     4.   Mrs. Kimmons is deemed to have indirect beneficial ownership of
          these shares, as the spouse of Gary F. Kimmons.

     5.   Mr. Meador is deemed to own 300,000 of these shares by virtue of a
          warrant to purchase these shares.

     (c)    Changes in Control.

     To the best of the Company's knowledge there are no present arrangements
or pledges of the Company's securities, which may result in a change in
control of the Company.

     There are certain contractual provisions which may deter an outside party
from attempting to acquire control of the Company.  Such provisions include:

     1.     The Employment Agreement with Gary F. Kimmons.  For a summary
description of the Employment Agreement with Mr. Kimmons and its change in
control provisions, see Item 10 Executive Compensation   Employment Contracts
in this report.

     2.     The Company's Non-Employee Directors and Consultants Retainer
Stock Plan for the year 2003 provides that in the event of a change in control
(as defined in the Plan) occurs, certain deferred stock accounts under the
plan will be immediately credited with the amount and kind of shares that the

                             Page 31

<PAGE>

holder would ordinarily have received at a later date, certain other
adjustments may be made to reflect the effectiveness of the transaction, and
the committee may adjust the plan.  No shares have been issued and no deferred
stock accounts have yet been credited under this Plan as of the date of this
report.

     3.     Both the Company's 2003 Stock Option Plan and 2004 Stock Option
Plan have "change in control" or "transfer of control" provisions, which
permit options to have accelerated or immediate vesting, and provide for
certain other rights, in the event of a "change in control" or "transfer of
control", as defined in the respective plans.

     (d)    Securities Authorized for Issuance Under Equity Compensation
Plans.

------------------------------------------------------------------------------
                                                              Number of
                                                              securities
                                                              remaining
                                                              available for
                                                              future issuance
                                                              under equity
                   Number of securities   Weighted-average    compensation
                   to be issued upon      exercise price of   plans (excluding
                   exercise of out-       outstanding         securities
                   standing options,      options, warrants   reflected
                   warrants and rights    and rights          in column (a))
                          (a)                (b)                  (c)
------------------------------------------------------------------------------
Equity
compensation plans
approved by
security holders           0                  0                    0
------------------------------------------------------------------------------
Equity
compensation plans
Not approved by
security holders(1)     7,900,050            $0.20                 0
------------------------------------------------------------------------------
Total                   7,900,050            $0.20                 0
------------------------------------------------------------------------------

        (1)  Includes 900,000 shares issuable upon exercise of warrants held
     by officers and directors, 3,000,000 shares issuable upon exercise of
     options held by officers and directors, and 4,000,050 shares issuable
     upon exercise of the warrants held by 17 individuals.


Item 12.    Certain Relationships and Related Transactions.

     Transactions with Management and Others

     Since January 1, 2002, there have been no material transactions, series
of similar transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest, other than the following:

     1.   On January 31, 2003, the Company authorized the issuance of a common
          stock purchase warrant to Gary F. Kimmons. This warrant is for the
          purchase of up to 520,000 shares of common stock at an exercise
          price of $0.35 per share as full and complete satisfaction of his
          accrued and unpaid salary totaling $110,000 ($20,000 a month, from
          July 15, 2002 through December 31, 2002). The warrant is immediately
          exercisable for a period of five (5) years and shall expire on
          December 31, 2007.

     2.   On January 31, 2003, the Company authorized the issuance of a common
          stock purchase warrant to Gary F. Kimmons. This warrant is for the
          purchase of up to 80,000 shares of common stock at an exercise price
          of $0.35 per share as full and complete satisfaction of the accrued
          and unpaid salary totaling $20,000 ($20,000 a month, from January 1,
          2003 through January 31,

                             Page 32

          2003). The warrant is immediately exercisable for a period of five
          (5) years and shall expire on December 31, 2007.

     3.   On February 1, 2002, the Board of Directors approved and adopted the
          GK Intelligent Systems, Inc., 2003 Stock Option Plan. The plan was
          established in order to provide a method whereby chosen key
          employees and persons providing services to the Company who are
          primarily responsible for the management and growth of the Company
          and who are expected to continue to make substantial contributions
          to the Company's future can be offered incentives. The number of
          common shares authorized under the plan are ten million (10,000,000)
          and said shares will be granted either as Incentive Stock Options as
          defined in Section 422 of the Internal Revenue Code or Non-Qualified
          Stock Options for those options which do not meet the conditions of
          Section 422 of the Internal Revenue Code.

     4.   On February 1, 2003, the Company entered into a new employment
          agreement with Mr. Kimmons. The agreement provides for a three-year
          term that automatically renews at the end of the term for
          consecutive one-year terms, and which provides for an annual base
          compensation of $240,000 and non-qualified stock options to
          3,000,000 shares of Common Stock under the Company's 2003 Stock
          Option Plan, at a purchase price of $0.18 per share (110% of the
          closing market price on the date of grant). Options to purchase
          1,000,000 shares are exercisable immediately, options to purchase
          1,000,000 shares vest and shall be exercisable at such time as the
          Company is current and filed its annual and quarterly reports for
          the years 2000, 2001 and 2002 and any reports then due for the
          fiscal year 2003, and options to purchase 1,000,000 shares vest and
          shall be exercisable at such time as the Company has raised a
          minimum of $500,000 in investment capital. Upon Mr. Kimmon's death
          or disability all unvested warrants will become immediately vested
          and exercisable.  The Company may terminate the agreement for cause,
          or upon the extended disability or death of Mr. Kimmons. Mr. Kimmons
          may terminate the agreement for good reason, which is defined as (1)
          diminution of duties, (2) failure by the Company to comply with the
          agreement, (3) a requirement by the Company for Mr. Kimmons to move
          locations, (4) any purported termination other than as permitted in
          the agreement, (5) a change of control, or (6) failure to have a
          successor corporation assume the agreement. If the agreement is
          terminated in connection with a change of control, (1) the Company
          must pay Mr. Kimmons an amount equal to approximately three times
          the sum of his annual base salary and the average of the last annual
          incentive bonuses actually paid, (2) all outstanding warrants
          immediately vest, (3) welfare and fringe benefits are provided for
          one year, (4) the Company must pay the sum of any earned salary not
          yet paid, deferred compensation and an amount equal to 150% of the
          value of Mr. Kimmons accrued benefits in any Company long term
          incentive plan times a fraction equal to the months worked in the
          performance period before termination divided by the total
          performance period. If the agreement is terminated for cause or Mr.
          Kimmons terminates for other than good reason, the Company shall pay
          earned but unpaid salary and any vested benefits payable to him
          under a plan or policy. In the event of a change of control, Mr.
          Kimmons will remain with the Company until the later of: (1) 15 days
          after the one year anniversary of the change of control, (2) 15 days
          after the anniversary date of any merger, or (3) January 31, 2006.
          The agreement defines a change of control as: (1) any person
          acquiring 30% of the Company or if Mr. Kimmons' voting rights are
          reduced to less than 30% of the outstanding shares, (2) if during a
          two year period, individuals who were on the board of directors (and
          any new directors elected by two-thirds of directors in office at
          the beginning of the period or whose election or nomination was so
          approved) cease to be a majority of the board of directors, (3) if
          the shareholders approve a merger or consolidation (other than a
          merger in which company shareholders own at least 50% of surviving
          entity), or (4) a complete liquidation.

     5.   On February 11, 2003, the Board of Directors authorized the issuance
          of  75,000 unregistered common shares of the Company to Dick Meador
          in consideration for his director services to the Company through
          March 31, 2003.

                             Page 33

<PAGE>

     6.   On February 17, 2003, the Company issued 588,235 unregistered shares
          of common stock to Gary F. Kimmons in consideration of the
          conversion of $100,000 of the unpaid balance due under the
          promissory note dated September 26, 2002 in the principal amount of
          $170,041.

     7.   On March 31, 2003 the Company entered into a Director's Agreement to
          retain the services of Dick Meador as a member of the Board of
          Directors. Under the Agreement Mr. Meador will serve as a Director
          of the Company from April 1, 2003 through March 31, 2004 and will
          receive compensation of 300,000 restricted shares of common stock or
          options to purchase 300,000 restricted shares of common shares.  As
          a result of this Agreement, Mr. Meador received a warrant on
          December 22, 2003 to purchase up to 300,000 shares of unregistered
          common stock exercisable at $0.08 per share until December 31, 2010.

     8.   On April 1, 2003 the Board of Directors approved and adopted the Non
          Employee-Directors and Consultants Retainer Stock Plan for the Year
          2003. The plan was established in order to provide a method whereby
          chosen directors and persons providing services to the Company may
          be offered incentives in addition to those presently available, and
          may be stimulated by increased personal involvement in the fortunes
          and success of the Company, thereby advancing the interests of the
          Company and its shareholders. The number of common shares authorized
          under the plan is two million (2,000,000).

     9.   On March 31,2004, the Board of Directors approved and adopted the GK
          Intelligent Systems, Inc. 2004 Stock Option Plan ("2004 Plan") which
          became effective April 5,2004.  The 2004 Plan was established in
          order to provide a method to attract and retain the best available
          personnel for positions of substantial responsibility, to provide
          additional incentive to employees and consultants and to promote the
          success of the Company's business through the issuance of options,
          stock purchase rights, other stock-based awards, and other benefits.
          Options granted under the plan may be Incentive Stock Options as
          defined in Section 422 of the Internal Code or Non-Qualified Stock
          Options. The number of common shares authorized under the 2004 Plan
          is thirty million (30,000,000)

     10.  For additional information concerning the compensation of executive
          officers and/or directors, refer to item 10 "Executive Compensation"
          of this report.

     Other Transactions and Material Contracts

     During 2003 and the first three months  of 2004, The company entered into
a large number of consulting agreements and two promissory notes for $26,000
and $20,000 respectively, With unrelated parties who are not officers,
directors or 5% of layer shareholders of the company. Copies of these
agreements are attached to this report as exhibits, and some are referred to
in the footnotes to the company's financial statements.

     Parents of the Issuer.

     The Company has no parents, except to the extent that Gary F. Kimmons and
the Kimmons Family Partnership, Ltd. may be deemed to be parents by virtue of
their stock holdings.  See the caption "Security Ownership of Certain
Beneficial Owners" and "Security Ownership of Management" in Item 11 of this
report.


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

     (a)    List of Exhibits attached or incorporated by referenced pursuant
to Item 601 of Regulation S-B.

Exhibit      Description
-------      -----------
3.1(1)       Certificate of Incorporation of the Company and Amendments
             thereto.
3.2(1)       By-laws of the Company;

                             Page 34
<PAGE>

3.3(2)       Amendment to Certificate of Incorporation
3.4(4)       Certificate of Amendment to Certificate of Incorporation
10.11(3)     Consulting Agreement with Berkshire Capital Management Co., Inc.
10.12(3)     Consulting and Finder's Fee Agreement with The Herman Group, L.P.
10.13(3)     Engagement Letter with Petty International Development Corp.
10.14(3)     Consulting Agreement with Ron Sparkman.
10.15(3)     Consulting Agreement with Rockne J. Horvath.
10.16(3)     Consulting Agreement with Stephen K. Carper.
10.17(3)     Consulting Agreement with Renee H. Ethridge.
10.18(3)     Consulting Agreement with Technical Objective, Inc.
10.19(3)     Debt Resolution Agreement with Gary F. Kimmons.
10.20(3)     Interim Compensation Agreement with Gary F. Kimmons.
10.21(3)     Amended and Restated Consulting Agreement with Dick Meador.
10.22(3)     Promissory Note to BDO Seidman LLP.
10.23(3)     Consulting Agreement with Alan S. Litvak.
10.24(3)     Promissory Note to Gary Kimmons.
10.25(5)     Marketing Agreement with BTH2
10.26(6)     Consulting Agreement with AfterpPlay Entertainment Inc. dated
             12/12/02
10.27(6)     Consulting Agreement with Suns Associates Group dated 12/13/02
10.28(6)     Non-Employee Director Agreement with Dick Meador dated 3/31/03
10.29(6)     Employment Agreement with Gary F. Kimmons dated 2/1/03
10.30(7)     GK Intelligent Systems, Inc. 2003 Stock Option Plan
10.31(7)     GK Intelligent Systems, Inc. Non-Employee Directors and
             Consultants Retainer Stock Plan for the Year 2003
10.32(8)     Financial Public Relations Agreement with Strategic
             Resources dated 4/24/03
10.33(8)     Settlement Agreement with Brewer & Pritchard dated 4/28/03
10.34(8)     Consulting Agreement with Sage Office Solutions dated 5/4/03
10.35(8)     Consulting Agreement with Donald Giebler dated 5/14/03
10.36(8)     Consulting Agreement with Benchmark Consulting dated 5/30/03
10.37(8)     Registration Rights Agreement with Benchmark Consulting
             dated 5/30/03
10.38(8)     Benchmark Consulting Warrant Dated 5/30/03
10.39(8)     Consulting Agreement with W. Andrew Stack dated 7/22/03
10.40(9)     Consulting Agreement with Gust C. Kepler dated 9/17/03
10.41(9)     Consulting Agreement with Wenthur & Chachas dated 9/17/03
10.42(10)    BMA Ventures, Inc. Agreement
10.43(11)    Distribution Agreement with NPI
10.44(12)    Consulting Services Agreement with Stanton, Walker & Company
10.45(12)    Consulting Agreement with Wenthur & Chachas dated 11/5/03
10.46(13)    GK Intelligent Systems, Inc. 2004 Stock Option Plan
10.47**      Non-Employee Director Agreement with Dick Meador dated 12/24/03
10.48**      Promissory Note to Deanna Slater dated 12/31/03
10.49**      Promissory Note to Joel Pickell dated 12/31/03
10.50**      Referral Fee Agreement with Michael Aczon dated 1/19/04
10.51**      Notice of Default and Termination Letter to NPI dated 2/5/04
10.52**      Consulting Agreement with Z.A. Consulting LLC (David Zazoff)
             dated 2/27/04
10.53**      Investor Relations Agreement with FOCUS Partners LLC dated
             3/12/04
10.54**      First Amendment to Consulting Services Agreement with Stanton,
             Walker & Company dated 3/29/04
10.55**      Consulting Agreement with Harvey Levin dated 3/26/04
10.56**      Consulting Agreement with Isabella Elliott dated 3/26/04
10.57**      Consulting Agreement with John Pearmann dated 3/26/04
10.58**      Consulting Agreement with Lisa L. Fincher dated 3/26/04
10.59**      Consulting Agreement with Ted Davis dated 3/2604
10.60**      Consulting Agreement with D. Scott Elliott dated 3/26/04

                             Page 35
<PAGE>


10.61**      Consulting Agreement with Linda Davis dated 3/26/04
21**         Subsidiaries
31.1**       Certification of Chief Executive Officer pursuant to Section 302
             of the Sarbanes-Oxley Act of 2002
31.2**       Certification of Chief Financial Officer pursuant to Section 302
             of the Sarbanes-Oxley Act of 2002
32.1**       Certification of Chief Executive Officer pursuant to Section 906
             of the Sarbanes-Oxley Act of 2002
32.2**       Certification of Chief Financial Officer pursuant to Section 906
             of the Sarbanes-Oxley Act of 2002
_________________
     (1)     Filed as an exhibit to the Company's registration statement on
             Form 10-SB filed on January 24, 1997, and incorporated by
             reference herein.

     (2)     Filed as an exhibit to the Company's Annual Report for fiscal
             year ended May 31, 1998 on Form 10-KSB filed on September 14,
             1998, and incorporated by reference herein.

     (3)     Filed as an exhibit to the Company's Current Report on Form 8-K
             filed November 6, 2002 and incorporated by reference herein.

     (4)     Filed as an exhibit to the Company's Quarterly Report on Form
             10-QSB for the quarter ended March 31, 2002, and incorporated by
             reference herein.

     (5)     Filed as an exhibit to the Company's Quarterly Report on Form
             10-QSB for the quarter ended June 30, 2002, and incorporated by
             reference herein.

     (6)     Filed as an exhibit to the Company's Quarterly Report on Form
             10-QSB for the quarter ended March 31, 2003, and incorporated by
             reference herein.

     (7)     Filed as an exhibit to the Company's Registration Statement on
             Form S-8 filed on May 12, 2003, and incorporated by reference
             herein.

     (8)     Filed as an exhibit to the Company's Quarterly Report on Form
             10-QSB for the quarter ended June 30, 2003, and incorporated by
             reference herein.

     (9)     Filed as an exhibit to the Company's Registration Statement on
             Form S-8 filed on September 19, 2003, and incorporated by
             reference herein.

     (10)    Filed as an exhibit to the Company's Quarterly Report on Form
             10-QSB for the quarter ended September 30, 2003, and incorporated
             by reference herein.

     (11)    Filed as an exhibit to the Company's Registration Statement on
             Form S-8 filed on October 15, 2003, and incorporated by reference
             herein.

     (12)    Filed as an exhibit to the Company's Registration Statement on
             Form S-8 filed on November 10, 2003, and incorporated by
             reference herein.

     (13)    Filed as an exhibit to the Company's Registration Statement on
             Form S-8 filed on April 5, 2004, and incorporated by reference
             herein.

     **      Filed herewith.


     (b)    Reports on Form 8-K.


                             Page 36
<PAGE>

     The following current reports on Form 8-K were filed by the Company
during the quarter ended December 31, 2003:

     1.  A current report on Form 8-K was filed on October 2, 2003 to report
         an item 5 event.
     2.  A current report on Form 8-K was filed on October 15, 2003 to report
         an item 5 event.
     3.  A current report on Form 8-K was filed on October 28, 2003 to report
         an item 5 event.
     4.  A current report on Form 8-K was filed on October 28, 2003 to report
         an item 5 event.
     5.  A current report on Form 8-K was filed on November 10, 2003 to report
         an item 5 event.


Item 14.     Principal Accountant Fees and Services.

     Independent Public Accountants

     The Company's independent accountants for the fiscal years ended December
31, 2003 and 2002 was HJ & Associates, LLC of Salt Lake City, Utah.

     (a)   Audit Fees.  During the fiscal years ended December 31, 2003 and
2002, the aggregate fees billed by HJ & Associates LLC, for services rendered
for the audit of our annual financial statements and the review of the
financial statements included in our quarterly reports on Form 10-QSB or
services provided in connection with the statutory and regulatory filings or
engagements for those fiscal years, was $25,200 and $16,838, respectively.

     (b)   Audit-Related Fees.  During the fiscal years ended December 31,
2003 and 2002 our auditors, HJ & Associates LLC, did not receive any fees for
any audit-related services other than as set forth in paragraph (a) above.

     (c)   Tax Fees.  Our auditors did not provide tax compliance or tax
planning advice during the fiscal years ended December 31, 2003 and 2002.

     (d)   Other Fees.  During the fiscal years ended December 31, 2003 and
2002, the aggregate fees billed by HJ & Associates, LLC for services rendered,
other than those described above, totaled $1,450 and $-0-, respectively.
These fees related primarily to review and input associated with the Company's
registration statements filed with the U. S. Securities and Exchange
Commission.



                             Page 37

<PAGE>

                            SIGNATURE

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

                                        GK Intelligent Systems, Inc.


         April 23, 2004
Dated: ______________________           /s/ Gary F. Kimmons
                                        ____________________________________
                                        By: Gary F. Kimmons
                                        Its: Chief Executive Officer and
                                        Chief Financial Officer


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


                                         /s/ Gary F. Kimmons
Date: April 23,2004                      _________________________________
                                         Gary F. Kimmons, Director



                                         /s/ Dick Meador
Date: April 23, 2004                     _________________________________
                                         Dick Meador, Director



                                         /s/ Kathryn Kimmons
Date: April 23, 2004                     _________________________________
                                         Kathryn Kimmons, Director







                             Page 38
<PAGE>

















          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)

                CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003



<PAGE> 39




                         C O N T E N T S


Independent Auditors' Report..............................................F-3

Consolidated Balance Sheet................................................F-4

Consolidated Statements of Operations.....................................F-5

Consolidated Statements of Stockholders' Equity (Deficit).................F-6

Consolidated Statements of Cash Flows.....................................F-14

Notes to the Consolidated Financial Statements............................F-16





                               F-2

<PAGE> 40




















                   INDEPENDENT AUDITORS' REPORT
                   ----------------------------


To the Board of Directors
GK Intelligent Systems, Inc. and Subsidiaries
(A Development Stage Company)
Houston, Texas

We have audited the accompanying consolidated balance sheet of GK Intelligent
Systems, Inc. and Subsidiaries (a development stage company) as of December
31, 2003, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the years ended December 31, 2003 and 2002
and for the period from inception on October 4, 1993, through December 31,
2003.  These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.  The financial
statements for the period from inception on October 4, 1993 through December
31, 1998 were audited by other auditors whose report dated September 10, 1999
expressed an unqualified opinion on those statements with an explanatory
paragraph that expressed substantial doubt about the Company's ability to
continue as a going concern.  Our opinion on the consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the period
October 4, 1993 (inception) through December 31, 2003, insofar as it relates
to amounts for prior periods through December 31, 1998, is based solely on the
report of other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audits 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
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of GK Intelligent Systems, Inc. and Subsidiaries (a development stage company)
as of December 31, 2003 and the results of their operations and their cash
flows for the years ended December 31, 2003 and 2002 and for the period from
inception on October 4, 1993, through December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 9 to
the consolidated financial statements, the Company's deficit in working
capital, recurring losses and lack of operations raises substantial doubt
about its ability to continue as a going concern.  Management's plans
concerning these matters are also described in Note 9.  The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ HJ & Associates LLC

HJ & Associates, LLC
Salt Lake City, Utah
April 21,2004



                               F-3

<PAGE> 41

          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
                    Consolidated Balance Sheet

                              ASSETS
                              ------
                                                            December 31,
                                                                2003
                                                          ---------------
CURRENT ASSETS

  Cash                                                    $           97
  Prepaid expenses                                                 6,476
                                                          ---------------

    Total Current Assets                                           6,573
                                                          ---------------
COMPUTER SOFTWARE (Note 2)                                             -
                                                          ---------------

    TOTAL ASSETS                                          $        6,573
                                                          ===============

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
          ----------------------------------------------

CURRENT LIABILITIES

  Accounts payable (Note 5)                               $      157,998
  Accrued liabilities (Note 6)                                   962,142
  Accrued liabilities - related parties (Note 7)                 442,628
  Notes payable (Note 3)                                         530,500
  Notes payable - related parties (Note 4)                       216,296
                                                          ---------------

    Total Current Liabilities                                  2,309,564
                                                          ---------------

    TOTAL LIABILITIES                                          2,309,564
                                                          ---------------
COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY (DEFICIT)

  Preferred stock authorized: 10,000,000
    preferred shares at $0.001 par value;
    no issued and outstanding                                          -
  Common stock authorized: 275,000,000
    common shares at $0.001 par value;
    27,562,104 shares issued and outstanding                      27,562
  Additional paid-in capital                                  40,574,178
  Unearned compensation                                         (135,000)
  Deficit accumulated during the development stage           (42,769,731)
                                                          ---------------

    Total Stockholders' Equity (Deficit)                      (2,302,991)
                                                          ---------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $        6,573
                                                          ==============


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

                               F-4
<PAGE> 42
          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
              Consolidated Statements of Operations

                                                                 From
                                               For the           Inception
                                             Years Ended         on October 4,
                                             December 31,        1993 through
                                     --------------------------- December 31,
                                          2003          2002     2003
                                     ------------- ------------- -------------
REVENUES                             $          -  $          -  $    100,156

Cost of sales                                   -             -        29,961
                                     ------------- ------------- -------------

  Gross margin                                  -             -        70,195
                                     ------------- ------------- -------------
EXPENSES

  Depreciation and amortization                 -             -     3,458,369
  Loss on disposal of fixed assets              -             -     1,385,199
  Impairment loss on software                   -             -     1,308,520
  General and administrative            1,282,364       835,321    37,297,027
                                     ------------- ------------- -------------

    Total Costs and Expenses            1,282,364       835,321    43,449,115
                                     ------------- ------------- -------------

LOSS BEFORE OTHER EXPENSE              (1,282,364)     (835,321)  (43,378,920)
                                     ------------- ------------- -------------
OTHER INCOME (EXPENSE)
  Interest expense and loan
    discount fees                        (174,032)     (343,414)   (1,567,982)
  Gain on release of debt               2,220,782         2,250     2,296,035
  Gain on extinguishment of deb            60,788             -        60,788
  Interest income                               -             -         7,663
                                     ------------- ------------- -------------
    Total Other Income (Expense)        2,107,538      (341,164)      796,504
                                     ------------- ------------- -------------

INCOME(LOSS) BEFORE INCOME TAX EXPENSE    825,174    (1,176,485)  (42,582,416)

INCOME TAX EXPENSE                              -             -             -
                                     ------------- ------------- -------------

NET INCOME (LOSS)                         825,174    (1,176,485)  (42,582,416)

DIVIDENDS ON PREFERRED STOCK                    -             -      (187,315)
                                     ------------- ------------- -------------
NET INCOME (LOSS) APPLICABLE TO
 COMMON SHAREHOLDERS                 $    825,174  $ (1,176,485) $(42,769,731)
                                     ============= ============= =============

BASIC INCOME (LOSS) PER SHARE        $       0.03  $      (0.07)
                                     ============= =============
BASIC WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                    24,058,866    16,458,471
                                     ============= =============

FULLY DILUTED INCOME(LOSS) PER SHARE $       0.03  $      (0.07)
                                     ============= =============
FULLY DILUTED WEIGHTED AVERAGE
 NUMBER SHARES OUTSTANDING             30,958,916    16,458,471
                                     ============= =============

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

                               F-5
<PAGE> 43
<TABLE>
<CAPTION>


                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
            Consolidated Statements of Stockholders' Equity (Deficit)

                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>
Initial capitalization
 by Company president         -  $         -    637,500  $     638  $     5,737  $         -  $         -  $          -

Shares issued in
 connection with
 reverse merger               -            -     96,328         96          (96)           -            -             -

Series A preferred
 shares issued in
 connection with
 acquisition of
 software               883,333    3,389,432          -          -            -            -            -             -

Shares issued in
 private placement
 at prices ranging
 from $5.00 to
 $30.00 per share
 (net of commissions
 of $95,180)                  -            -     90,880         91    1,124,504            -            -             -

Shares issued to
 Company president
 for services rendered        -            -     33,258         33      236,721            -            -             -

Shares issued for
 professional services
 rendered                     -            -     28,396         28      339,246            -            -             -

Shares issued in
 settlement of debt           -            -     25,000         25      471,232            -            -             -

Net loss from inception
 on October 4, 1993
 through May 31, 1996         -            -          -          -            -            -            -    (2,672,906)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

Balance May 31, 1996    883,333    3,389,432    911,362        911    2,177,344            -            -    (2,672,906)

Shares issued in
 private placements
 at $8.75 and $10.00
 per share (net of
 commissions of $61,306)      -            -    237,164        237    1,804,269            -            -             -

Shares issued to Company
 president and employees
 for services rendered        -            -     29,611         30      706,982            -            -             -

Shares issued for
 professional services
 rendered and operating
 expenses                     -            -     50,865         51      941,123            -            -             -
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

Balance Forward         883,333  $ 3,389,432   1,229,002 $   1,229  $ 5,629,718  $         -  $         -  $ (2,672,906)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------


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

                                       F-6

</TABLE>
<PAGE> 44
<TABLE>
<CAPTION>



                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>

Balance Forward          883,333 $ 3,389,432   1,229,002 $   1,229  $ 5,629,718  $         -  $         -  $ (2,672,906)

Warrants issued
 to employees                  -           -           -         -       56,040            -            -             -

Warrants issued
 for professional
 services rendered             -           -           -         -      290,596            -            -             -

Net loss for the year
 ended May 31, 1997            -           -           -         -            -            -            -    (9,528,473)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance, May 31, 1997    883,333   3,389,432   1,229,002     1,229    5,976,354            -            -   (12,201,379)

Shares issued in
 private placements
 at prices ranging
 from $4.00 to
 $15.00 per share              -           -     813,629       814    7,536,188            -            -             -

Shares issued for
 exercise warrants
 at $10.00 per share           -           -      15,850        16      158,484            -            -             -

Shares issued to
 Company president
 and employees for
 services rendered             -           -     197,614       197    2,818,899            -            -             -

Shares issued
 for professional
 services rendered             -           -     561,836       562    4,999,242            -            -             -

Warrants and options
 issued to Company
 president and employees
 for services rendered         -           -           -         -      102,349            -            -             -

Warrants and options
 issued for professional
 services rendered             -           -           -         -      576,313            -            -             -

Dividends on Series
 A preferred stock             -     132,500           -         -            -            -            -      (132,500)

Net loss for the year
 ended May 31, 1998            -           -           -         -            -            -            -    (5,881,798)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

Balance, May 31, 1998    883,333 $ 3,521,932   2,817,931 $   2,818  $22,167,829  $         -  $         -  $(18,215,677)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------



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

                                       F-7


</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>





                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>

Balance May 31, 1998     883,333 $ 3,521,932   2,817,931 $   2,818  $22,167,829  $         -  $         -  $(18,215,677)

Shares issued in private
 placement at $20.00
 per share (net of
 commissions of $93,090)       -           -     155,151       155    3,009,760     (779,900)           -             -

Shares issued for
 exercise of warrants
 and options at $-0-,
 $3.10, $9.40, and
 $10.00 per share              -           -      88,496        88      319,010            -            -             -

Shares issued to
 director for
 professional services         -           -     100,000       100    1,624,900            -   (1,001,096)            -

Warrants and options
 issued for professional
 services                      -           -           -         -    5,682,999            -   (4,483,435)            -

Dividends on Series A
 preferred stock               -      54,815           -         -            -            -            -       (54,815)

Shares issued to
 convert preferred
 stock                  (883,333) (3,576,747)     91,456        92    3,576,655            -            -             -

Net loss for the
 seven months ended
 December 31, 1998             -           -           -         -            -            -            -    (7,926,000)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance,
 December 31, 1998             -           -   3,253,034     3,253   36,381,153     (779,900)  (5,484,531)  (26,196,492)

Shares issued at
 $20.00 per share for
 cash on March 31, 1999        -           -      12,500        12      249,988            -            -             -

Shares issued at
 $20.00 per share for
 cash on March 31, 1999        -           -       1,000         1       19,999            -            -             -

Shares issued for
 exercise of warrants
 on April 1, 1999              -           -       6,025         6          596            -            -             -
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

Balance Forward                - $         -   3,272,559 $   3,272  $36,651,736  $  (779,900) $(5,484,531) $(26,196,492)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------








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


                                       F-8

</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>





                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>

Balance Forward                -  $        -   3,272,559 $   3,272  $36,651,736  $  (779,900) $(5,484,531) $(26,196,492)

Shares issued for
 conversion of debt
 at $0.13 per share
 on December 10, 1999          -           -   3,750,000     3,750      495,582            -            -             -

Amortization
 of deferred
 professional fees             -           -           -         -            -            -    5,484,531             -

Payment received
 on common stock
 subscription                  -           -           -         -            -      779,900            -             -

Additional shares
 issued to reconcile
 to transfer agent             -           -         500         1           (1)           -            -             -

Warrant and options
 issued for professional
 services rendered             -           -           -         -      217,124            -            -             -

Debt issued with
 beneficial conversion
 features                      -           -           -         -      103,068            -            -             -

Additional
 paid-in-capital
 contributed
 to the Company                -           -           -         -       45,314            -            -             -

Net loss for the year
 ended December 31, 1999       -           -           -         -            -            -            -   (14,526,409)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance,
 December 31, 1999             -           -   7,023,059     7,023   37,512,823            -            -   (40,722,901)

Net loss for the year
 ended December 31, 2000       -           -           -         -            -            -            -      (917,709)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance,
December 31, 2000              -           -   7,023,059     7,023   37,512,823            -            -   (41,640,610)

Shares issued
 for deferred
 professional fees             -           -   1,200,000     1,200       10,800            -      (12,000)            -

Amortization
 of deferred
 professional fees             -           -           -         -            -            -        9,000             -

Net loss for the year
 ended December 31, 2001       -           -           -         -            -            -            -      (777,810)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance,
 December 31, 2001             - $         -   8,223,059 $   8,223  $37,523,623  $         -  $    (3,000) $(42,418,420)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------



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

                                       F-9

</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>


                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>
Balance,
 December 31, 2001             - $         -   8,223,059 $   8,223  $37,523,623  $         -  $    (3,000) $(42,418,420)

Common stock issued
 in April 2002 for
 conversion of debt at
 $0.10 to $0.50 per share      -           -   6,475,000     6,475      796,168            -            -             -

Common stock issued
 in March and April
 2002 for services at
 $0.005 to $0.10 per share     -           -   2,775,000     2,775      265,225            -     (268,000)            -

Common stock issued in
 June 2002 for services
 at $0.10 per share            -           -   2,250,000     2,250      222,750            -     (165,000)            -

Common stock issued
 October 2002 for
 conversion of debt
 at $1.58 per share            -           -      46,980        47       74,382            -            -             -

Common stock issued
 in December 2002 for
 services at $0.22 to
 $0.25 per share               -           -     325,000       325       80,282            -            -             -

Common stock issued
 for cash in December
 2002 at $0.25 per share       -           -     700,000       700      174,300            -            -             -

Amortization of
 deferred compensation         -           -           -         -            -            -      389,100             -

Net loss for the year
 ended December 31, 2002       -           -           -         -            -            -            -    (1,176,485)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance,
 December 31, 2002             - $         -  20,795,039 $  20,795  $39,136,730  $         -  $   (46,900) $(43,594,905)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------





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


                                       F-10

</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>


















                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>
Balance,
 December 31, 2002            -  $         -  20,795,039 $  20,795  $39,136,730  $         -  $   (46,900) $(43,594,905)

Warrants issued for
 conversion of debt
 in January 2003              -            -           -         -      130,000            -            -             -

Common stock issued
 in February 2003 for
 services at $0.17 and
 $0.12 per share              -            -     275,000       275       42,475            -            -             -

Common stock issued in
 February 2003 for
 conversion of debt at
 $0.17 per share              -            -     588,235       588       99,412            -            -             -

Common stock issued in
 March 2003 for services
 at $0.16 per share           -            -     520,000       520       82,680            -            -             -

Amortization of
 unearned compensation        -            -           -         -            -            -       46,900             -

Common stock issued in
 April 2003 for cash at
 $0.25 per share              -            -     550,000       550      136,950            -            -             -

Common stock issued in
 April 2003 for services
 at $0.15 per share           -            -     100,000       100       14,900            -            -             -

Common stock issued in
 May 2003 for the
 conversion of debt and
 for services at $0.15
 per share                    -             -    500,000       500       74,500            -            -             -

Common stock issued
 in June 2003 for
 conversion of debt
 at $0.18 per share           -             -     33,000        33        5,907            -            -             -
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

Balance Forward               -  $          - 23,361,274 $  23,361  $39,723,554  $         -  $         -  $(43,594,905)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------







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


                                       F-11





</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>






                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>

Balance Forward                - $         -  23,361,274 $  23,361  $39,723,554  $         -  $         -  $(43,594,905)

Common stock issued
 in June 2003 for
 services at $0.16
 per share                     -           -     805,000       805      127,995            -            -             -

Common stock issued
 in July 2003 for cash
 at $0.25 per share            -           -     350,000       350       87,150            -            -             -

Common stock issued
 in August 2003 for
 services at $0.15
 per share                     -           -     300,000       300       44,700            -            -             -

Common stock issued
 in September 2003 for
 services at $0.10 and
 $0.15 per share               -           -   1,400,000     1,400      198,600            -     (194,300)            -

Common stock issued in
 September 2003 for the
 conversion of debt at
 $0.17 per share               -           -     500,000       500       49,500            -            -             -

Common stock issued
 in October 2003 for
 services at $0.14 and
 $0.20 per share               -           -     750,000       750      119,250            -            -             -

Common stock issued in
 November 2003 for cash
 at $0.25 per share            -           -     100,000       100       24,900            -            -             -

Common stock issuances
 cancelled in November
 2003                          -           -  (1,910,000)   (1,910)     (23,690)           -            -             -
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

Balance Forward                - $         -  25,656,274 $  25,656  $40,351,959  $         -  $  (194,300) $(43,594,905)
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------





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


                                       F-12












</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>




                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


                                                                                                           Deficit
                                                                                                           Accumulated
                            Preferred Stock       Common Stock       Additional                            During the
                       ---------------------- ---------------------   Paid-in    Subscription Unearned     Development
                         Shares      Amount     Shares      Amount    Capital    Receivable   Compensation Stage
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------

                    <c>       <c>          <c>        <c>        <c>          <c>          <c>          <c>

Balance Forward                - $         -  25,656,274 $  25,656  $40,351,959  $         -  $  (194,300) $(43,594,905)

Common stock issued
 in November 2003 for
 services at $0.10
 per share                     -           -   1,160,000     1,160      134,840            -            -             -

Common stock issued
 in December 2003 for
 services at $0.08 and
 $0.09 per share               -           -     745,830       746       63,379            -            -             -

Warrants issued as
 compensation to
 a director                    -           -           -         -       24,000            -            -             -

Amortization of
 unearned compensation         -           -           -         -            -            -       59,300             -

Net income for the year
 ended December 31, 2003       -           -           -         -            -            -            -       825,174
                       --------- ------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance,
 December 31, 2003             - $         -  27,562,104 $  27,562  $ 40,574,178 $         -  $  (135,000) $(42,769,731)
                       ========= ============ ========== ========== ============ ============ ============ =============


















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


                                       F-13







</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>












             GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                    (A Development Stage Company)
                 Consolidated Statements of Cash Flows
                                                                             From
                                                           For the           Inception
                                                         Years Ended         on October 4,
                                                         December 31,        1993 through
                                                 --------------------------- December 31,
                                                      2003          2002     2003
                                                 ------------- ------------- -------------

                                              <c>           <c>           <c>

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)                                $    825,174  $ (1,176,485) $(42,582,416)
Adjustments to reconcile net income (loss)
 to net cash used by operating activities:
   Depreciation and amortization                            -             -     3,458,369
   Loss on disposal of fixed assets                         -             -     1,385,199
   Impairment loss on software                              -             -     1,308,520
   (Gain) loss on release of debt                  (2,220,782)       (2,250)   (2,296,035)
   Gain on extinguishments of debt                    (60,788)            -       (60,788)
   Beneficial conversion on issuance of debt                -             -       103,068
   Amortization of unearned compensation              106,200       389,100     5,988,831
   Issuance of common stock, options and
     warrants for services                            695,423       140,607    13,902,842
Changes in assets and liabilities:
   (Increase) decrease in prepaid expenses             (6,476)            -        (6,476)
   Increase (decrease) in accounts payable
     and accrued expenses                              18,225       380,726     4,052,924
   Increase in accrued liabilities - related
     parties                                          385,301       108,868     1,483,105
                                                 ------------- ------------- -------------

     Net Cash Used by Operating Activities           (257,723)     (159,434)  (13,262,857)
                                                 ------------- ------------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES

  Purchase of software                                      -             -      (915,742)
  Purchase of fixed assets                                  -             -    (1,651,988)
  Organization costs                                        -             -       (78,745)
                                                 ------------- ------------- -------------

     Net Cash Used by Investing Activities                  -             -    (2,646,475)
                                                 ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES

  Common stock issued for cash                        250,000       175,000    14,049,829
  Proceeds from issuance of note payable               46,000             -     1,144,769
  Proceeds from issuance of notes payable -
    related parties                                         -             -       250,000
  Payments on notes payable                                 -             -      (306,637)
  Payments on notes payable - related party           (53,746)            -       (53,746)
  Receipt of subscription receivable                        -             -       779,900
  Capital contributed by the Company's president            -             -        45,314
                                                 ------------- ------------- -------------

     Net Cash Provided by Financing Activities        242,254       175,000    15,909,429
                                                 ------------- ------------- -------------

NET INCREASE (DECREASE) IN CASH                       (15,469)       15,566            97

CASH AT BEGINNING OF PERIOD                            15,566             -             -
                                                 ------------- ------------- -------------

CASH AT END OF PERIOD                            $         97  $     15,566  $         97
                                                 ============= ============= =============



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

                                 F-14

</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>

             GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                    (A Development Stage Company)
           Consolidated Statements of Cash Flows (continued)

                                                                             From
                                                           For the           Inception
                                                         Years Ended         on October 4,
                                                         December 31,        1993 through
                                                 --------------------------- December 31,
                                                      2003          2002     2003
                                                 ------------- ------------- -------------

                                              <c>           <c>           <c>
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:

Cash Paid For:

  Income taxes                                   $          -  $          -  $          -
  Interest                                       $      2,255  $     37,000  $     39,255

SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

  Common stock issued for debt                   $     92,367  $     88,011  $    791,052
  Common stock issued for debt-related parties   $    212,125  $    789,062  $  1,001,187
  Common stock, options and warrants issued
   for services                                  $    695,423  $    140,607  $ 13,902,842
  Fixed assets distributed for debt              $          -  $          -  $     42,783




























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

                                 F-15
</TABLE>
<PAGE> 53










          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.  Business

GK Intelligent Systems, Inc. (the "Company"), is a development stage
enterprise incorporated in Delaware in 1988. The Company is principally
engaged in the development and marketing of software products capable of
interaction with, and adaptation to, the needs of software users (referred to
as "intelligent" software) and sophisticated real-time access to and
interpretation of data. To date, the Company has realized minimal revenues and
its activities have been limited primarily to the acquisition of software
assets used to develop future products and applications, research and
development of software products and initial marketing activities. All
revenues to-date are derived from sales of the Company's first product,
"Around the Web in 80 Minutes."

Pursuant to an agreement effective August 15, 1994, LBM-US, Inc. (LBM) issued
675,892 shares of its common stock in exchange for all of the assets and
liabilities of GK Intelligent Systems, Inc., a Texas corporation (GKIS-
Texas). The remaining 96,328 common shares out of a total of 772,220 common
shares were retained by the former owners of LBM. Prior to, and in conjunction
with the transaction, LBM authorized a stock split of three and one-half
shares to one for its existing shareholders. On August 18, 1994, LBM changed
its name to GK Intelligent Systems, Inc.

This transaction resulted in the former stockholders of GKIS-Texas acquiring
approximately 88% of the Company. Accordingly, the transaction has been
treated for accounting purposes as a purchase of the Company by GKIS-Texas,
referred to as a "reverse merger". As GKIS-Texas is deemed to be the acquirer
for accounting purposes, (I) its assets and liabilities are included in the
financial statements of the continuing entity at their carrying values, (ii)
its operations are presented for all periods prior to August 15, 1994 and
(iii) its outstanding shares for periods prior to August 15, 1994 have been
retroactively restated giving effect to the reverse merger transaction.

The Company's software technology is capable of evaluating a users' competence
level and adapting training programs to the user's specific learning styles
and abilities, and is referred to as Smart One technology. The Company is
using this technology to develop specific training software products (e.g.,
Internet training).

The Company's proprietary Carnot technology is capable of accessing and
evaluating large amounts of data on network systems, such as the Internet. The
Company is  developing specific business applications utilizing this
technology in another technology called Smart Enterprise.

To fund its operations, the Company commenced a private placement in November
1998, which was closed in May 1999.  The funds raised by this private
placement were not enough to cover the increased marketing costs associated
with product rollout.  The Company attempted another private placement in May
1999.  No funds were secured from the May 1999 private placement.  Due to the
increase in costs and the lack of financial funding, the Company suspended
operations in June 1999.

In June 2002, the Company, which had been dormant for 3 years, commenced the
process of reestablishing business operations.  The Company is pursuing the
further development of its software technology and adapting the software to
current market needs in addition to pursuing other related business
opportunities.

                               F-16
<PAGE> 54

          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

a.  Business (Continued)

During 2003, the Company formed three new wholly-owned subsidiary companies,
Smart One Learning Systems, Inc. (SOLS), Recording Artists Worldwide, Inc.
(RAWW) and True Baseball Club, Inc. (TBC) all for the purpose of providing
various business opportunities and uses for the Company's software and
products.  As of December 31, 2003, none of these subsidiaries have conducted
any formal business operations.

Stock Split
-----------

On March 19, 2002, the Company reverse split its common stock on a 1 for 10
basis.  All references to common stock have been restated to show the effect
of the reverse split.  On the same date the Company approved the filing of
Amended Articles of Incorporation to increase the number of authorized shares
of common stock from 250,000,000 shares to 275,000,000 shares with a par value
of $0.001 per share.

b.  Accounting Method

The Company has adopted a calendar year end effective December 31, 1998.  The
Company's financial statements are prepared using the accrual method of
accounting.

c. Income (Loss) Per Share

The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the
consolidated financial statements.  Fully diluted income (loss) per share
calculations are not presented for year in which a loss is incurred as any
stock equivalents are antidilutive in nature.  The Company has included
6,900,050 of common stock equipments at December 31,2003, and has excluded
4,206,650 common stock equivalents at December 31, 2002.

                                                 For the Year Ended
                                                  December 31, 2003
                                    ----------------------------------------
                                       Income          Shares     Per Share
                                     (Numerator)   (Denominator)  Amount
                                    -------------- -------------- ----------
     Basic                          $     825,174     24,058,866  $    0.03
                                    ============== ============== ==========
     Fully Diluted                  $     825,174     30,958,916  $    0.03
                                    ============== ============== ==========

                                                  For the Year Ended
                                                  December 31, 2002
                                    ----------------------------------------
                                        Loss           Shares     Per Share
                                     (Numerator)   (Denominator)  Amount
                                    ------------- --------------- ----------
     Basic                          $ (1,176,485)     16,458,471  $   (0.07)
                                    ============= =============== ==========
     Fully Diluted                  $ (1,176,485)     16,458,471  $   (0.07)
                                    ============= =============== ==========

                               F-17

<PAGE> 55
          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002



NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (CONTINUED)

d.  Estimates

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

e.  Principles of Consolidation

The consolidated financial statements presented are those of GK Intelligent
Systems, Inc. and its wholly-owned subsidiaries.  All significant intercompany
transactions have been eliminated.

f.  Revenue Recognition

Revenues from the sale of software products to retail customers will be
recognized upon shipment, provided that no significant obligations remain
outstanding and collection of the receivable is probable. Revenues from the
sale of software products to distributors or other resellers where right of
return exists will be deferred until shipped products are sold to retail
consumers. Allowances for estimated returns are provided at the time of sale
and charged against revenues.

g.  New Accounting Pronouncements

During the year ended December 31, 2003, the Company adopted the following
accounting pronouncements which had no impact on the financial statements or
results of operations:

..   SFAS No. 143, Accounting for Asset Retirement Obligations;
..   SFAS No.145, Recision of FASB Statements 4, 44, and 64, amendment of
    Statement 13, and Technical Corrections;
..   SFAS No. 146, Accounting for Exit or Disposal Activities;
..   SFAS No. 147, Acquisitions of Certain Financial Institutions; and
..   SFAS No. 148, Accounting for Stock Based Compensation.
..   SFAS No.149, Amendment of Statement 133 on Derivative Instruments and
    Hedging Activities;
..   SFAS No.150, Accounting for Certain Financial Instruments with
    Characteristics of both Liabilities and Equity

In addition, during the year ended December 31, 2003, FASB Interpretations No.
45 and No. 46, along with various Emerging Issues Task Force Consensuses
(EITF) were issued and adopted by the Company and had no impact on its
financial statements.



                               F-18
<PAGE> 56





          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

h.  Provision for Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences.  Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases.  Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.  Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.

Net deferred tax assets consist of the following components as of December 31,
2003 and 2002:
                                                  2003         2002
                                             ------------- -------------
     Deferred tax assets:
       NOL Carryover                         $ 12,300,035  $ 13,424,757
       Related Party                               50,160             -
                                             ------------- -------------
                                               12,350,195    13,424,757
     Deferred tax liabilities:
       Deferred compensation                            -      (480,610)
       Related party                                    -      (110,045)

     Valuation allowance                      (12,350,195)  (12,834,102)
                                             ------------- -------------

     Net deferred tax asset                  $          -  $          -
                                             ============= =============

The income tax provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rates of 39% to pretax income
from continuing operations for the years ended December 31, 2003 and 2002 due
to the following:

                                                  2003          2002
                                             ------------- -------------
     Book income (loss)                      $    321,820  $   (458,975)
     Accrued compensation                               -         7,200
     Other                                            867             -
     Related party accruals                       (59,880)     (201,880)
     Stock for services                           271,215       191,950
     NOL Utilization                             (534,022)            -
     Valuation allowance                                -       461,705
                                             ------------- -------------

                                             $          -  $          -
                                             ============= =============

At December 31, 2003, the Company had net operating loss carryforwards of
approximately $31,538,000 that may be offset against future taxable income
from the year 2003 through 2023. No tax benefit has been reported in the
December 31, 2003 financial statements since the potential tax benefit is
offset by a valuation allowance of the same amount.

                               F-19
<PAGE> 57

          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

h.  Provision for Taxes (Continued)

Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carryforwards for Federal income tax reporting purposes are
subject to annual limitations.  Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future years.

I.  Long-Lived Assets

In accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of, long-lived assets,
including goodwill associated with other long-lived assets, are evaluated for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.

The amount of any impairment considered necessary would be determined by
comparing the book value of the net assets in the applicable line of business
to fair value using methods such as the present-value of estimated future cash
flows, sale value or other valuation methodologies available at the time,
depending on the stage of development of the line of business and the
Company's intentions at the time an impairment adjustment were considered
necessary.

j.  Advertising

The Company follows the policy of charging the costs of advertising to expense
as incurred.  The Company had no advertising expense for the years ended
December 31, 2003 and 2002.

k.  Cost of Revenues

Cost of revenues include materials such as diskettes, packaging and
documentation as well as labor required to assemble the product.

l.  Inventories

Inventories are stated at the lower of cost (average cost) or net realizable
value and consist principally of CD-ROM diskettes, jewel cases and product
boxes. Net realizable value is the estimated selling price less all applicable
selling costs. The Company had no inventory on hand at December 31, 2003.

m.  Computer Software Costs

The Company follows the accounting and disclosure requirements of SFAS No. 86,
"Accounting for the costs of computer software to be sold, leased, or
otherwise marketed", as such, costs of purchased software having alternative
future uses in developing other software products are (I) capitalized when
acquired, (ii) amortized on a straight-line basis over their expected useful
life of five years and (iii) reported at the lower of unamortized cost or net
realizable value.




                               F-20
<PAGE> 58



          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (CONTINUED)

m.  Computer Software Costs (Continued)

Costs of internally created computer software products are charged to expense
when incurred as research and development until technological feasibility has
been established for the product. Technological feasibility is considered
established upon completion of a detailed program design or, in its absence,
completion of a working model. Thereafter, all software production costs are
capitalized and subsequently reported at the lower of unamortized cost or net
realizable value. Capitalized costs are amortized based on the ratio of
current revenue to current and future revenue for each product with an annual
minimum equal to the straight-line amortization over the remaining estimated
economic life of the product.

n.  Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments, including cash
and cash equivalents, accounts payable, and accrued liabilities, approximate
fair value due to their short maturities.

o.  Stock-Based Compensation

The Company has chosen to continue to account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
Interpretations and to elect the disclosure option of SFAS No. 148,
"Accounting for Stock-Based Compensation". Accordingly, compensation cost for
stock options issued to employees is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.

NOTE 2 - COMPUTER SOFTWARE

Computer software costs were comprised of the following at December 31, 2003:

Cost of purchased software used to develop other software products:

      Training software technology                    $    444,833
      Carnot software technology                         3,389,432
      Other tools and product costs                        470,909
                                                      -------------
                                                         4,305,174

      Less accumulated amortization                     (2,996,655)
                                                      -------------

                                                         1,308,519

      Less impairment loss                              (1,308,519)
                                                      -------------
      Net Book Value                                  $          -
                                                      =============






                               F-21
<PAGE> 59

          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002


NOTE 2 - COMPUTER SOFTWARE (CONTINUED)

The Carnot software tools and languages were acquired on November 2, 1995 in
exchange for the issuance of 883,333 shares of the Company's Series A
preferred stock.  The cost basis of the software was determined using the
estimated fair market value of the preferred shares at the date the agreement
was signed.

During 1999, the Company was unable to secure funding to continue marketing
its software.  The Company suspended operations in June 1999.  Because of
minimal sales in 1999 and no sales through January 2003 the Company determined
that the software value has been fully impaired.  The impairment loss
recognized for the year ended December 31, 1999 was $1,308,520.


NOTE 3 - NOTES PAYABLE

At December 31, 2003, the Company had various unsecured notes payable totaling
$530,500, bearing imputed interest rates from 10% to 18% per annum. These
notes payable are due on demand.

Interest expense related to these notes payable for the years ended December
31, 2003 and 2002 was $56,610 and $38,250, respectively,


NOTE 4 - NOTES PAYABLE - RELATED PARTIES

At December 31, 2003, the Company had three unsecured notes payable   related
parties totaling $216,296 payable to an officer and directors of the Company
bearing interest at 10% per annum.  These notes payable-related parties are
due on demand.

Interest expense related to these note payable   related parties for the years
ended December 31, 2003 and 2002 was $29,317 and $30,132, respectively.


NOTE 5 - ACCOUNTS PAYABLE

Accounts payable consists of normal trade and operating liabilities incurred
since the Company recommenced operations in 2002. Accounts payable incurred
prior to the Company ceasing its operations in June 1999 have been outstanding
for periods exceeding the statute of limitations of 4 years and have been
determined to be extinguishable and written off as of December 31, 2003.
Accordingly, a gain of $1,100,753 has been recognized during the year ended
December 31, 2003 on the release of these old accounts payable.




                               F-22
<PAGE> 60











          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002



NOTE 6 - ACCRUED LIABILITIES

Accrued liabilities as of December 31, 2003 consists of the following:

     Accrued interest                                   $     489,365
     Judgments                                                445,542
     Accrued payroll taxes                                     27,234
                                                        --------------
                                                        $     962,142
                                                        ==============

Accrued liabilities amounting to $1,120,029 originating prior to the Company
ceasing its operations in June 1999 have been written off as of December 31,
2003 and have been included as part of the gain on release of debt on the same
basis as accounts payable as discussed in Note 5.


NOTE 7 - ACCRUED LIABILITIES - RELATED PARTIES

Accrued liabilities due to related parties at December 31, 2003 consists of
accrued salary of $101,240 to the Company's President and CEO and accrued
interest on notes payable   related parties of $101,388 and a $240,000
severance obligation due to a former employee.


NOTE 8 - SERIES A PREFERRED STOCK

Effective November 2, 1995, the Company issued 883,333 shares of Series A
convertible, redeemable preferred stock to Microelectronics and Computer
Technology Corporation ("MCC") in exchange for a perpetual non-exclusive
worldwide right and license to use and commercialize certain computer software
technology developed by MCC under its Carnot Project. The Series A preferred
stock had a stated value of $6.00 per share, a par value of $.001 per share,
accrues dividends at 6% per annum beginning January 1, 1998 and, along with
unpaid dividends, were convertible into shares of the Company's common stock
beginning January 1, 1998 at the rate of $6.00 per common share as adjusted
for certain events. Also beginning January 1, 1998, the Company had the right
to redeem the shares at their stated value of $6.00 per share, plus any
accrued and unpaid dividends. However, once notified of the Company's
intention to redeem, MCC had the option to convert the preferred shares to
common prior to the Company exercising its redemption rights. In addition, the
preferred shares were entitled to vote the applicable common shares beginning
January 1, 1998 even if not converted. No redemption rights were held by the
Series A preferred stockholders. During the seven months ended December 31,
1998 and the year ended May 31, 1998, the Company declared cumulative
dividends on the Series A preferred stock totaling $54,815, $132,500,
respectively.

During the seven months ended December 31, 1998, MCC converted the preferred
stock and accrued dividends into 883,333 and 31,219 shares of the Company's
common stock, respectively.



                               F-23
<PAGE> 61





          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 9 - GOING CONCERN

The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business.  However, the Company does not have significant
amounts of cash or other material assets, nor does it have an established
source of revenues to cover its operating costs and to allow it to continue as
a going concern.  The consolidated financial statements do not reflect any
adjustments that might result from the outcome of this uncertainty. It is the
intent of the Company to obtain additional financing through equity offerings
or other feasible financing alternatives to fund its ongoing operations.  The
Company also continues to pursue the development and marketing of its software
to generate sales to cover the Company's working capital needs and software
development expenditures.  In addition, the Company anticipates entering into
various arrangements with compatible operating business.  There is no
assurance that the Company will be successful in raising the needed capital or
that there will be sales of its software.


NOTE 10 - COMMITMENTS AND CONTINGENCIES

In July 1999, the Company was named as a defendant in a lawsuit, Marathon Oil
Company v. GK Intelligent Systems, Inc.  The plaintiff alleged that the
Company failed to pay rent under a lease for office space and was seeking to
recover rental payments in the amount of $78,554. Additionally, the plaintiff
was seeking future rental payments, court costs as well as attorney's fees.
On August 31, 1999, a default judgment was entered against the Company in the
amount of $326,943 plus attorney's fees of $7,500.  The plaintiff subsequently
took possession of the Company's assets and sold them for approximately
$28,000. The Company has accrued $306,444 for the judgment and applicable
costs in accrued liabilities.

On October 31, 2003, 11500 Northwest, L.P. commenced litigation against the
Company.  This case relates to a breach of a lease agreement allegedly entered
into on or about March 5, 1999 for certain office space never occupied by the
Company.  The Plaintiff is requesting past due rents of an unspecified amount,
broker's commission of $21,806, tenant improvements of $51,439, attorney's
fees, costs and prejudgment interest.  The Company intends to defend the
lawsuit, and denies breach of the alleged lease agreement. The Company
believes that the statute of limitations has extinguished some or all of the
claims.  The ultimate outcome of this action is not presently determinable.

On February 10, 2000, the Texas Workforce Commission placed an administrative
lien on the Company in the amount of $109,024.  As of the date of this filing
the Company has no evidence to show that this lien has been released.  This
amount is included in accrued liabilities at December 31, 2003.


                               F-24

<PAGE> 62











          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Employment Agreement
--------------------

On February 1, 2003, the Company entered into a new employment agreement with
Mr. Kimmons. The agreement provides for a three-year term that automatically
renews at the end of the term for consecutive one-year terms, and which
provides for an annual base compensation of $240,000 and non-qualified stock
options to 3,000,000 shares of Common Stock under the Company's 2003 Stock
Option Plan, at a purchase price of 110% of the closing market price on the
date of grant. Options to purchase 1,000,000 shares are exercisable
immediately, options to purchase 1,000,000 shares vest and shall be
exercisable at such time as the Company is current and filed its annual and
quarterly reports for the years 2000, 2001 and 2002 and any reports then due
for the fiscal year 2003, and options to purchase 1,000,000 shares vest and
shall be exercisable at such time as the Company has raised a minimum of
$500,000 in investment capital.  Upon Mr. Kimmon's death or disability all
unvested warrants will become immediately vested and exercisable.   The
Company may terminate the agreement for cause, or upon the extended disability
or death of Mr. Kimmons. Mr. Kimmons may terminate the agreement for good
reason, which is defined as (1) diminution of duties, (2) failure by the
Company to comply with the agreement, (3) a requirement by the Company for Mr.
Kimmons to move locations, (4) any purported termination other than as
permitted in the agreement, (5) a change of control, or (6) failure to have a
successor corporation assume the agreement. If the agreement is terminated in
connection with a change of control, (1) the Company must pay Mr. Kimmons an
amount equal to approximately three times the sum of his annual base salary
and the average of the last annual incentive bonuses actually paid, (2) all
outstanding warrants immediately vest, (3) welfare and fringe benefits are
provided for one year, (4) the Company must pay the sum of any earned salary
not yet paid, deferred compensation and an amount equal to 150% of the value
of Mr. Kimmons accrued benefits in any Company long term incentive plan times
a fraction equal to the months worked in the performance period before
termination divided by the total performance period. If the agreement is
terminated for cause or Mr. Kimmons terminates for other than good reason, the
Company shall pay earned but unpaid salary and any vested benefits payable to
him under a plan or policy. In the event of a change of control, Mr. Kimmons
will remain with the Company until the later of: (1) 15 days after the one
year anniversary of the change of control, (2) 15 days after the anniversary
date of any merger, or (3) January 31, 2006. The agreement defines a change of
control as: (1) any person acquiring 30% of the Company or if Mr. Kimmons'
voting rights are reduced to less than 30% of the outstanding shares, (2) if
during a two year period, individuals who were on the board of directors (and
any new directors elected by two-thirds of directors in office at the
beginning of the period or whose election or nomination was so approved) cease
to be a majority of the board of directors, (3) if the shareholders approve a
merger or consolidation (other than a merger in which company shareholders own
at least 50% of surviving entity), or (4) a complete liquidation.

Consulting Agreements
---------------------

On September 17, 2003, the Company entered into a consulting agreement with an
unrelated individual.  Under the terms of the agreement, the individual will
provide entertainment consulting to the Company for a term of 12 months
through September 30, 2003.  Compensation was in the form of 1,200,000 shares
of common stock that were issued on September 30, 2003 and valued at $180,000.
The $135,000 unearned portion has been included as unearned compensation in
the consolidated financial statements.

                               F-25
<PAGE> 63

          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Consulting Agreements (Continued)
--------------------------------

On November 5, 2003, the Company entered into a Consulting Services Agreement
with an unrelated organization.  Under the Agreement, the organization shall
provide advice and counsel regarding the Company's strategic business plans,
strategy and negotiations with potential business strategic partnering,
corporate planning and or other general business consulting needs as expressed
by the Company.  In addition to certain ongoing transaction fees which may be
paid pursuant to the terms of the Agreement, the organization has received an
initial signing and non-refundable fee of 900,000 shares of the common stock
of the Company, which were issued on November 17, 2003 and December 10, 2003,
and were valued collectively at $96,000.


NOTE 11 - STOCK OPTIONS AND WARRANTS

During 1998, the Company established the "1998 stock option plan (the plan) to
promote the interest of the Company and its shareholders by attracting and
retaining exceptional employees and directors.  Any employee, of the Company
is eligible to be designated a participant.  The Board of the Company has sole
and complete authority to determine the employees to whom options shall be
granted, the number of each grant and any additional conditions and
limitations. The exercise price shall not be less than the fair market value
of the underlying shares.

In addition, the Company periodically issues warrants to purchase common stock
as an incentive, as compensation for services or settlement of debt to
officers, directors, employees, and consultants.

 A summary of the status of the Company's outstanding incentive and
compensation stock options warrants as of December 31, 2003 and 2002 and
changes during the years ended December 31, 2003 and 2002 is presented below:

                                       2003                  2002
                              ----------------------- ----------------------
                                            Weighted              Weighted
                                            Average               Average
                                            Exercise              Exercise
                                 Shares      Price      Shares     Price
                              ------------ ---------- ---------- -----------
 Outstanding, beginning
  of year                         826,559  $    0.34    830,309  $     0.34
 Granted                        4,400,000       0.20          -        0.00
 Expired/Cancelled               (726,509)      0.34     (3,750)       1.25
 Exercised                              -          -          -           -
                              ------------ ---------- ---------- -----------

 Outstanding end of year        4,500,050  $    0.20    826,559  $     0.34
                              ============ ========== ========== ===========

 Exercisable                    3,500,050  $    0.21    826,559  $     0.34
                              ============ ========== ========== ===========



                               F-26
<PAGE> 64
          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 11 - STOCK OPTIONS AND WARRANTS (CONTINUED)

                              Outstanding                  Exercisable
                  ------------------------------------ ----------------------
                               Weighted
                  Number       Average       Weighted  Number       Weighted
                  Outstanding  Remaining     Average   Exercisable  Average
Range of          at Dec 31,   Contractual   Exercise  at Dec 31,   Exercise
Exercise Prices   2003         Life          Price     2003         Price
----------------- ------------ ------------- --------- ------------ ----------
   $   0.08           300,000      7.00      $   0.08      300,000  $    0.08
   $   0.18         3,500,000      7.94      $   0.18    2,500,000  $    0.18
   $   0.35           600,000      6.00      $   0.35      600,000  $    0.35
   $   0.50           100,000      4.80      $   0.50      100,000  $    0.50
   $  25.00                50      4.65      $  25.00           50  $   25.00
                  ------------ ------------- --------- ------------ ----------
                    4,500,050      7.55      $   0.20    3,500,050  $    0.21
                  ============ ============= ========= ============ ==========

On October 18, 2002, the Company issued a Private Placement Memorandum (PPM)
to accredited investors as defined in Rule 501 of Regulation 1 of the
Securities Act of 1933.  This PPM was for 40 units with each unit consisting
of 100,000 shares of common stock and a warrant to purchase up to 200,000
shares of common stock.  Each warrant vests immediately and will be
exercisable for a period of two years from the date of issuance.  Each unit is
being offered for $25,000 or $0.25 per share.  Each warrant is exercisable at
$0.35 per share.

Through December 31, 2003 the Company has sold 17 units or 1,700,000 shares of
common stock and 3,100,000 warrants for total proceeds of $425,000.

NOTE 12 - GAIN ON RELEASE AND EXTINGUISHMENT OF DEBT

During 1999, the Company defaulted on various liabilities.  Subsequently, the
Company and the vendors settled for amounts less than the original
liabilities.  The original amount of the liabilities were $97,340.  The amount
of the liabilities after the settlement was $24,337.  The difference of
$73,003 was recognized as a gain on release of debt for the year ended
December 31, 1999.

During 2002, the Company converted a note payable to equity for $50,000.  On
the date of conversion the note payable had accrued interest in the amount of
$2,250.  Only the principal balance was converted to equity with the accrued
interest being forgiven.  The $2,250 was recognized as a gain on release of
debt for the year ended December 31, 2002.

During 2003, the Company converted an accounts payable amount of $91,728 to
equity.  On the date of conversion the stock had a market value of $5,940,
therefore $85,788 was recorded as a gain on extinguishment of debt for the
year ended December 31, 2003.

During 2003, the Company converted a second accounts payable amount of $25,000
to equity.  On the date of conversion the stock had a market value of $50,000,
therefore $25,000 was recognized as a loss on the extinguishment of debt for
the year ended December 31, 2003.

As discussed in Notes 5 and 6, the Company had certain accounts payable and
accrued liabilities that originated prior to the Company ceasing its
operations in June of 1999 that have now been outstanding for periods
exceeding the statute of limitations of 4 years and have been determined to be
extinguishable and written off as of December 31, 2003, totaling $2,220,782.

                               F-27
<PAGE> 65

          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                   December 31, 2003 and 2002

NOTE 13 - SUBSEQUENT EVENTS

Subsequent to December 31, 2003, the Company issued a total of 1,700,000
shares of common stock for services rendered and 12,195,122 shares of common
stock for compensation to the Company's president and CEO.

Subsequent to December 31, 2003, the Company entered into consulting
agreements consisting of business development, strategy, and planning
services, with a number of different individuals resulting in the issuance of
11,916,666 shares of stock and 6,944,444 stock options and warrants. The
Company also entered into a consulting agreement that will result in the
Company issuing 1,500,000 shares of common stock payable quarterly along with
$5,000 cash due at the beginning of each month, for the term of one year from
the date of execution.

Subsequent to December 31, 2003, the Company agreed to issue stock to its
former attorney as partial consideration of an accounts payable balance of
$26,114.

In January 2004, Awalt Group, Inc. commenced litigation against the Company in
the United States District Court, Southern District of Texas, Houston
Division.  This case relates to advertising and promotional services rendered
prior to July, 1999.  The Plaintiff is requesting $77,189 for actual amounts
invoiced and $10,000 in attorney's fees.  Related services were rendered from
May 26, 1998 through June 15, 1999.  The Company has filed an answer and is
defending the lawsuit and believes that the statute of limitations has
extinguished the claim.  The ultimate outcome of this action is not presently
determinable.



                               F-28