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

                                   FORM 10-QSB

     [X]  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
          ACT OF 1934

                  For Quarterly period Ended: June 30, 1999; or

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

                For the transition period _________ to __________

                         Commission File Number: 0-22057
                             -----------------------

                          GK INTELLIGENT SYSTEMS, INC.
             (Exact name of registrant as specified 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
               --------------------------------------------------
              (Registrant's telephone number, including area code)

     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 [ ]


     The number of shares outstanding of the registrant's common stock, $0.001
par value, as of June 30, 1999, was 3,273,059 (post reverse split adjusted).

     Transitional Small Business Disclosure Format. Yes [ ] No [X]

                                       1
<PAGE>

                          GK INTELLIGENT SYSTEMS, INC.

                              Report on Form 10-QSB

                       For the Quarter Ended June 30, 1999

                                      INDEX

                                                                         Page
                                                                         ----
Part I.  Financial Information

     Item 1.   Financial Statements (unaudited)........................... 3

               Balance Sheets ............................................ 3
               Statements of Operations .................................. 4
               Statements of Cash Flows................................... 5
               Notes to the Financial Statements ......................... 7

     Item 2.   Management's Discussion and Analysis or
                    Plan of Operation .................................... 12

     Item 3.   Controls and Procedures ................................... 14

Part II. Other Information

     Item 1.   Legal Proceedings ......................................... 15

     Item 2.   Changes in Securities ..................................... 17

     Item 3.   Defaults Upon Senior Securities ........................... 17

     Item 4.   Submission of Matters to a Vote of Security Holders ....... 17

     Item 5.   Other Information ......................................... 17

     Item 6.   Exhibits and Reports on Form 8-K .......................... 18


                                       2
<PAGE>
PART I - FINANCIAL INFORMATION

     Item 1. Financial Statements.

                          GK INTELLIGENT SYSTEMS, INC.
                          (A Development Stage Company)
                                 Balance Sheets

<TABLE>
<CAPTION>
                                     ASSETS

                                                                  June 30,
                                                                    1999
                                                                 ------------
                                                                (Unaudited)

<S>                                                              <C>
CURRENT ASSETS

   Cash                                                          $     13,572
   Prepaid expenses                                                   137,121
                                                                 ------------

     Total Current Assets                                             150,693
                                                                 ------------

   COMPUTER SOFTWARE, NET                                                  -

   PROPERTY AND EQUIPMENT, NET                                             -
                                                                 ------------

     TOTAL ASSETS                                                $    150,693
                                                                 ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                              $  1,358,217
   Accrued liabilities                                                947,517
   Accrued liabilities - related parties                              135,422
   Notes payable                                                      100,000
   Notes payable - related parties                                    200,000
                                                                 ------------

     Total Current Liabilities                                      2,741,156
                                                                 ------------

     TOTAL LIABILITIES                                              2,741,156
                                                                 ------------

STOCKHOLDERS' EQUITY (DEFICIT)

   Preferred stock authorized: 10,000,000 preferred
     shares at $0.001 par value; -0- issued and outstanding                 -
   Common stock authorized: 275,000,000 common
     shares at $0.001 par value; 3,273,059 shares
     issued and outstanding                                             3,273
   Additional paid-in capital                                      37,017,241
   Accumulated deficit                                            (39,610,977)
                                                                 -------------

     Total Stockholders' Equity (Deficit)                          (2,590,463)
                                                                 -------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)        $    150,693
                                                                 =============
</TABLE>

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


                                       3
<PAGE>
                          GK INTELLIGENT SYSTEMS, INC.
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                                           From
                                                                                                                         Inception
                                                        For the Three                       For the Six              on October 4,
                                                        Months Ended                       Months Ended                1993 through
                                                          June 30,                           June 30,                    June 30,
                                               -------------------------------   ----------------------------------
                                                    1999             1998               1999             1998              1999
                                               --------------  ---------------   ---------------  -----------------  --------------
<S>                                            <C>             <C>               <C>              <C>                <C>
REVENUES                                       $       28,423  $             -   $        41,901  $               -  $      100,156

Cost of sales                                           5,388                -            10,612                  -          29,961
                                               --------------  ---------------   ---------------  -----------------  --------------

   Gross margin                                        23,035                -            31,289                  -          70,195
                                               --------------  ---------------   ---------------  -----------------  --------------

EXPENSES

   Loss on disposal of fixed assets                 1,385,199                -         1,385,199                  -       1,385,199
   Depreciation and amortization                            -          825,630           429,110          1,042,177       3,458,369
   Impairment loss on software                      1,308,520                -         1,308,520                  -       1,308,520
   General and administrative                       6,087,636        3,530,916        10,372,344          5,400,284      33,391,168
                                               --------------  ---------------   ---------------  -----------------  --------------

     Total Costs and Expenses                       8,781,355        4,356,546        13,495,173          6,442,461      39,543,256
                                               --------------  ---------------   ---------------  -----------------  --------------

LOSS BEFORE OTHER EXPENSE                          (8,758,320)      (4,356,546)      (13,463,884)        (6,442,461)    (39,473,061)
                                               --------------  ---------------   ---------------  -----------------  --------------

OTHER INCOME (EXPENSE)

   Gain on release of debt                             73,003                -            73,003                  -          73,003
   Interest expense                                   (23,604)               -           (23,604)                 -         (23,604)
                                               --------------  ---------------   ---------------  -----------------  --------------

     Total Other Income (Expense)                      49,399                -            49,399                  -          49,399
                                               --------------  ---------------   ---------------  -----------------  --------------

LOSS BEFORE TAX                                    (8,708,921)      (4,356,546)      (13,414,485)        (6,442,461)    (39,423,662)

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

NET LOSS                                           (8,708,921)      (4,356,546)      (13,414,485)        (6,442,461)    (39,423,662)

DIVIDENDS ON PREFERRED STOCK                                -          (79,500)                -           (159,000)       (187,315)
                                               --------------  ---------------   ---------------  -----------------  --------------

NET LOSS APPLICABLE TO COMMON
 SHAREHOLDERS                                  $   (8,708,921) $    (4,436,046)  $   (13,414,485) $      (6,601,461) $  (39,610,977)
                                               ==============  ===============   ===============  =================  ==============

BASIC LOSS PER SHARE                           $        (2.66) $         (1.57)  $         (4.11) $           (2.18)
                                               ==============  ===============   ===============  =================

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                               3,273,059        2,833,532         3,262,797          3,024,616
                                               ==============  ===============   ===============  =================

</TABLE>

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

                                       4
<PAGE>

                          GK INTELLIGENT SYSTEMS, INC.
                          (A Development Stage Company)
                            Statements of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                                                Since
                                                                                                              Inception
                                                                           For the Six Months               on October 4,
                                                                              Months Ended                  1993 through
                                                                                June 30,                      June 30,
                                                                 --------------------------------------
                                                                         1999                1998               1999
                                                                 ------------------  ------------------  -----------------
   <S>                                                           <C>                 <C>                 <C>
   CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                                      $      (13,414,485) $       (6,442,461) $    (39,423,662)
   Adjustments to reconcile net loss to net cash provided
     (used) by operating activities:
       Depreciation and amortization                                        429,110           1,042,177         3,458,369
       Loss on disposal of fixed assets                                   1,385,199                   -         1,385,199
       Impairment loss on software                                        1,308,520                   -         1,308,520
       Gain on release of debt                                               73,003                   -            73,003
       Beneficial conversion on issuance of debt                            103,068                   -           103,068
       Amortization of unearned compensation                              5,484,531                   -         5,484,531
       Common stock and warrants                                            217,124           5,574,982        12,920,806
   Changes in operating assets and liabilities:
     (Increase) decrease other assets                                       452,369            (279,654)         (137,121)
     Increase (decrease) in accounts payable and accrued
      expenses                                                            1,118,791             143,560         2,192,237
     Increase in accrued liabilities - related party                        135,422                   -           135,422
                                                                 ------------------  ------------------  ----------------

       Net Cash Provided (Used) by Operating Activities                  (2,707,348)             38,604       (12,499,628)
                                                                 ------------------  ------------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES

     Purchase of software                                                         -             (72,600)         (915,742)
     Other capital expenditures                                            (115,718)             (8,990)       (1,651,988)
     Organization costs                                                           -                   -           (78,745)
                                                                 ------------------  ------------------  ----------------

       Net Cash Used by Investing Activities                               (115,718)            (81,590)       (2,646,475)
                                                                 ------------------  ------------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds from issuance of note payable                                   100,000                   -           816,269
   Common stock issued for cash                                             270,602           1,699,938        13,624,829
   Payments on notes payable                                                      -             (10,428)         (306,637)
   Proceeds from issuance of notes payable - related party                  200,000                   -           200,000
   Receipt of subscription receivable                                       779,900                   -           779,900
   Capital contributed by the Company's president                            45,314                   -            45,314
                                                                 ------------------  ------------------  ----------------

       Net Cash Provided by Financing Activities                          1,395,816           1,689,510        15,159,675
                                                                 ------------------  ------------------  ----------------

NET INCREASE (DECREASE) IN CASH                                          (1,427,250)          1,646,524            13,572

CASH AT BEGINNING OF PERIOD                                               1,440,822              32,910                 -
                                                                 ------------------  ------------------  ----------------

CASH AT END OF PERIOD                                            $           13,572  $        1,679,434  $         13,572
                                                                 ==================  ==================  ================

</TABLE>


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

                                       5
<PAGE>
                          GK INTELLIGENT SYSTEMS, INC.
                          (A Development Stage Company)
                      Statements of Cash Flows (continued)
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                                                                               Since
                                                                                                             Inception
                                                                           For the Six Months               on October 4,
                                                                              Months Ended                  1993 through
                                                                                June 30,                      June 30,
                                                                 --------------------------------------
                                                                         1999                1998               1999
                                                                 ------------------  ------------------  -----------------

<S>                                                              <C>                 <C>                 <C>
SUPPLEMENTAL SCHEDULE OF CASH FLOW
   ACTIVITIES:

Cash Paid For:

   Income taxes                                                  $                -  $                -  $              -
   Interest                                                      $                -  $                -  $              -

Schedule of Non-Cash Financing Activities:

   Common stock issued for debt                                  $                -  $                -  $        111,341
   Common stock issued for services - related party              $                -  $                -  $      4,549,123
   Options and warrants issued for services                      $          217,124  $                -  $      2,441,986
   Common stock issued for services                              $                -  $                -  $      5,929,697
   Fixed assets distributed for debt                             $           42,738  $                -  $         42,738



</TABLE>

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

                                       6
<PAGE>
                          GK INTELLIGENT SYSTEMS, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements
                             June 30, 1999 and 1998


NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

          The accompanying unaudited condensed financial statements have been
          prepared by the Company pursuant to the rules and regulations of the
          Securities and Exchange Commission. Certain information and footnote
          disclosures normally included in financial statements prepared in
          accordance with accounting principles generally accepted in the United
          States of America have been condensed or omitted in accordance with
          such rules and regulations. The information furnished in the interim
          condensed financial statements include normal recurring adjustments
          and reflects all adjustments, which, in the opinion of management, are
          necessary for a fair presentation of such financial statements.
          Operating results for the six months ended June 30, 1999 are not
          necessarily indicative of the results that may be expected for the
          year ending December 31, 1999.

NOTE 2 - GOING CONCERN

          The Company's financial statements are prepared using accounting
          principles generally accepted in the United States of America
          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 cash or other material
          assets, nor does it have an established source of revenue to cover its
          operating costs and to allow it to continue as a going concern. The
          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. 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 3 - SIGNIFICANT AND SUBSEQUENT EVENTS

          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.

          Property and Equipment
          ---------------------

          In June 1999, the Company's assets were seized by landlords and sold
          to off set amounts owing for rent. The Company realized a loss on
          disposal of the fixed assets of $1,385,199.



                                       7
<PAGE>
NOTE 3 - SIGNIFICANT AND SUBSEQUENT EVENTS (Continued)

          Computer Software
          -----------------

          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 was $1,308,520.

         Commitments and Contingencies

          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.

          In May 2001, the Company entered into a Consulting and Finder's Fee
          Agreement with The Herman Group pursuant to which the Herman Group was
          to provide services to the Company in connection with the clean-up,
          strategic planning, location and procurement of investors and
          financing for the Company and identification of potential buyer's
          and/or merger candidates for the Company. Despite not having rendered
          any substantive services to the Company, nor procuring any investment
          or identification of any buyer or strategic alliances, on May 14, 2002
          the Company received a letter threatening a lawsuit for the Company's
          breach of contract and demanding payment of $180,000 as fees due under
          the contract for services performed by the Herman Group. The Company
          believes The Herman Group's claim is without merit as no substantive
          services were provided and has responded to the demand letter. The
          Company has not accrued any amounts as it cannot estimate the amount
          of potential loss, if any, relating to this agreement.

          On February 1, 2002, a default judgment was entered on behalf of
          Imperial Business Credit, Inc. for $23,200. The Company has accrued
          the judgment and applicable costs in accrued expenses.

          On March 3, 2002, a judgment was filed in the matter of Fidelity
          Leasing, Inc. v. GK Intelligent Systems, Inc. The judgment was in
          favor of Fidelity Leasing in the amount of $29,854 in damages, fees
          and costs and subject to interest at various rates. The Company has
          accrued the judgment and applicable costs in accrued expenses.

          On June 14, 2002, an agreed judgment was entered on behalf of Lyon
          Financial Services d.b.a. The Manifest Group. It was ordered that GK
          Intelligent Systems, Inc. and Gary Kimmons, individually as guarantor,
          pay to Lyon Financial Services d.b.a. The Manifest Group the sum of
          $20,000 with interest at eight percent per annum from September 20,
          2001 to the above date of judgment, as well as $1,500 in attorney's
          fees. Subsequent to the judgment for $21,500, the two parties agreed
          to settle for $12,750.

          The Company has paid $5,750 subsequently. The Company has accrued the
          judgment and applicable costs in accrued expenses.


                                       8
<PAGE>
NOTE 3 - SIGNIFICANT AND SUBSEQUENT EVENTS (Continued)

          Commitments and Contingencies (Continued)
          ----------------------------------------

          On October 10, 2002, the Company and its President, Gary F. Kimmons
          entered in a Settlement Agreement with an unrelated individual. In
          this action, the individual alleged violations of the securities laws,
          common law fraud, conspiracy, negligence, and negligent
          misrepresentation and was seeking unspecified damages. The individual
          also alleged that certain officers and/or directors may have engaged
          in insider trading. The parties to this matter have released each
          other from any and all claims or actions they may have against each
          other.

          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.

          Common Stock
          ------------

          During 2002, the Company issued 121,980 common shares to various
          vendors valued at $0.18 to $2.00 per share for the conversion of debt.

          During 2002, the Company issued 4,055,000 common shares to various
          consultants valued at $0.10 per share for services performed.

          During 2002, the Company issued 775,000 common shares to the Company's
          President/CEO and director valued at $0.10 per share for services
          performed.

          During 2002, the Company issued 7,100,000 common shares to the
          Company's President/CEO and director valued at $0.10 per share for the
          conversion of related party debt.

          Private Placement Memorandum
          ----------------------------

          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.

          The Company has sold 7 units or 700,000 shares of common stock and
          1,400,000 warrants for stock subscription receivable for $175,000.


                                       9
<PAGE>
NOTE 3 - SIGNIFICANT AND SUBSEQUENT EVENTS (Continued)

          Notes Payable - Related Party
          -----------------------------

          On October 1, 2001, the Company entered into a promissory note for
          $50,000 with a director of the Company. The note bears an interest
          rate of 8% per annum. This note was converted into 100,000
          post-reverse shares of common stock on April 1, 2002.

          On September 26, 2002, the Company entered into a promissory note for
          $170,041 with the Company's president and CEO. The note bears an
          interest rate of 6% per annum. This note is unsecured. This note
          payable formalized the repayment of expenses paid by the Company
          president and CEO on behalf of the Company.

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

          On April 24, 2001, GK Intelligent Systems and Berkshire Capital
          Management Co., Inc. ("Berkshire Capital") entered into a Consulting
          Agreement. Under the terms of the Agreement, Berkshire Capital was to
          provide assistance in the development of the corporate strategy and
          recommend an effective growth strategy. This includes mentoring and
          assistance in forming the structure of the functional components of
          the Company as well as providing technical guidance in the
          establishing of business alliances and relationships. Further,
          Berkshire Capital would aid in the acquisition of administrative
          personnel for the Company. In consideration for their efforts the
          Company issued 1,000,000 unregistered and restricted shares of its
          common stock on the effective date of the agreement. These shares were
          fully earned and non-cancelable at time of issuance. Under the terms
          of the Agreement, Berkshire Capital will be entitled to receive
          additional shares, pro rata, in the event of a reverse stock split
          within 3 years from the effective date. The amount of pro rata shares
          to be issued will be proportional to the shares exchanged in the
          reverse stock split.

          On March 6, 2002, GK Intelligent Systems and Petty International
          Development, Corp. signed an Engagement Letter memorializing an
          Agreement under which Petty International will act as the Company's
          non-exclusive U.S. consulting, marketing, public offering, mergers and
          acquisition agent, for the purpose of rendering financial advice and
          other such services. The engagement is effective as of April 5, 2001.
          In consideration for the services provided by Petty International the
          Company issued 1,200,000 post reverse split shares of its unregistered
          and restricted stock. The term of this Agreement is for two years from
          the effective date. In the event that the Company determines not to
          proceed with any transactions after such has been accepted in writing,
          then there is a $50,000 dollar "break-up" fee, which is also payable
          in Company common stock.

          On June 1, 2002, GK Intelligent Systems entered into a Marketing
          Agreement with BTH2, Inc. The terms of the Agreement state that BTH2
          is to provide its services as a marketing agency for the Company's
          products for a period of 12 months commencing June 1, 2002. In
          consideration for BTH2's efforts, the Company shall compensate BTH2 in
          the form of a non-refundable monthly retainer of $25,000 per month,
          with the first payment starting 60 days from the execution of the
          Agreement. Additionally as compensation, the Company issued 500,000
          post-reverse split adjusted shares of its unregistered and restricted
          common stock.

                                       10
<PAGE>
NOTE 3 - SIGNIFICANT AND SUBSEQUENT EVENTS (Continued)

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

          On September 13, 2002 GK Intelligent Systems and Alan S. Litvak
          ("Litvak") entered into a Consulting Agreement. The terms of the
          Agreement set forth that Litvak will assist in the identification and
          procurement of qualified investors for the Company. As compensation
          for the services rendered under this Agreement the Company will pay a
          commission amounting to 10% of the total dollars raised in the private
          placement. Payment to Litvak shall be made according to the following
          formula: 50% of the total amount shall be in cash and the remaining
          50% shall be in the form of unregistered and restricted Common Stock
          of the Company.

          During 2001 and 2002, the Company entered into a number of additional
          consulting agreement with various individuals and companies wherein
          they are to provide a variety of current and future services to the
          Company in exchange for compensation in the form of cash payments and
          issuance of common stock. Under the provisions of these agreements,
          the Company is obligated to issue a minimum of 1,200,000 shares of
          common stock plus additional cash payments or common stock in lieu of
          cash as services are performed in accordance with terms of the various
          agreements.

                                       11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of  Operations.

     CAUTIONARY FORWARD - LOOKING STATEMENT
     --------------------------------------

     The following discussion should be read in conjunction with the Company's
financial statements and related notes.

     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:

     -    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.

     Business Overview
     -----------------

     From inception (October 4, 1993) through March, 1999, the Company has
utilized funds obtained primarily through private placements of restricted
common stock to acquire and develop core software technologies used in the
creation of computer-based training products. The Company's first product,
Around the Web in 80 Minutes, a CD-ROM based internet training course, was
introduced at the COMDEX Fall '98 trade show in mid November 1998 and
subsequently made available to consumers solely through direct sales beginning
in late November 1998. During the first quarter of 1999, in an effort to align
itself with established product distribution companies capable of serving major
national retailers, the Company shifted emphasis from its direct sales approach
to a distributor-based approach and engaged as its marketing representatives
High Altitude Sales and Marketing, Inc. and Computer Generation. As a result,
the Company in turn signed distribution agreements with Ingram Micro, Inc. and
Tech Data Corporation in February and March 1999, respectively. Ingram Micro,
Inc. distributes products and services to more than 115,000 resellers in 120
countries. Tech Data serves more than 100,000 value-added resellers and retail
dealers in the United States, Canada, the Caribbean, Latin America, Europe, and
the Middle East.

     To fund its operations, the Company commenced a private placement in
November 1998, which was closed in early May 1999 after raising $3,373,000 for
the sale of 168,650 (post reverse split adjusted) shares of its common stock.
Due to increased marketing costs associated with product rollout the Company
needed additional capital. Unable to secure necessary capital from institutional
sources, the Company attempted a private placement in May 1999 wherein it
offered 240,000 (post reverse split adjusted) units at $2.00 per unit with each
unit consisting of one share of common stock and one warrant to purchase one
share of common stock at an exercise price of $4.00 per share. As of May 13,
1999, no funding had occurred under the new private placement.

                                       12
<PAGE>

     Thereafter, the Company continued to pursue the private placement of its
securities with accredited investors but was unsuccessful. In May 1999, Gerald
C. Allen requested that Gary F. Kimmons resign as Chief Executive Officer,
claiming that if Mr. Kimmons resigned the Company would receive financing which
would be provided through previous private placement sources. Before a
resignation agreement could be effectuated, the Company at the direction of
Gerald C. Allen announced the resignation of Mr. Kimmons and purported to
appoint Winston Van Bieutenen as Chief Executive. Despite these actions, no
financing was forthcoming as Mr. Allen represented, and on June 11, 1999, Marcus
F. Wray, Jean Paul Dejoria, and Gerald C. Allen all submitted letters of
resignation as officers and directors of the Company. Mr. Kimmons attempted to
resurrect the Company and was unable to do so, and the Company closed its doors
on June 11, 1999.

     Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, and in future filings by the
Company with the Securities and Exchange Commission, in the Company's press
releases and in oral statements made with the approval of an authorized
executive officer which are not historical or current facts are "forward-looking
statements" made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The following
important factors, among others, in some cases have affected and in the future
could affect the Company's actual results and could cause the Company's actual
financial performance to differ materially from that expressed in any
forward-looking statement: (i) the extremely competitive conditions that
currently exist in the market for "blank check" companies similar to the Company
and (ii) lack or resources to maintain the Company's good standing status and
requisite filings with the Securities and Exchange Commission. The foregoing
list should not be construed as exhaustive and the Company disclaims any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.

     Plan of Operation
     -----------------

     The Company has not engaged in any material operations or had any revenues
from operations during the last three fiscal years. The Company's plan of
operation for the next 12 months is to continue to seek the acquisition of
assets, property or business that may benefit the Company and its shareholders.
Because the Company has virtually no resources, management anticipates that to
achieve any such acquisition, the Company will be required to issue shares of
its common stock as the sole consideration for such acquisition.

     In the event that the Company contacts or is contacted by a private company
or other entity which may be considering a merger with or into the Company, it
is possible that the Company would be required to raise additional funds in
order to accomplish the transaction. Otherwise, and even though the Company only
possesses nominal funds, as the Company does not engage in any ongoing business
which requires the routine expenditure of funds, the Company would not be
required to raise additional funds during the next twelve months. The Company
does not routinely expend any funds for the ownership or lease of property, as
any routine activities are being conducted out of an office made available by
the Company's President.

                                       13
<PAGE>

     During the next 12 months, the Company's only foreseeable cash requirements
will relate to maintaining the Company in good standing and making the requisite
filings with the Securities and Exchange Commission and the payment of expenses
associated with reviewing or investigating any potential business venture, which
may be advanced by management or principal shareholders, or as loans to the
Company. Because the Company has not identified any such venture as of the date
of this Report, it is impossible to predict the amount of any such loan.
However, any such loan will not exceed $25,000 and will be on terms no less
favorable to the Company than would be available from a commercial lender in an
arm's length transaction. Management may at its discretion raise any required
funds through any private placement of "unregistered" and "restricted"
securities or any public offering of its common stock.

     Results of Operations
     ---------------------

     Net revenues for the six months and three months ended June 30, 1999 were
$41,901 and $28,423, respectively, compared to no revenues in the same periods
of 1998. The Company had a operating expenses of $13,495,173 and $8,781,355 for
the six and three months ending June 30, 1999, compared to $6,442,461 and
4,356,546 for the comparative periods of 1998.

     The Company unsuccessfully launched its product sales in the first six
months of 1999. The increase in expenses was the result of the Company's efforts
to market its products by opening offices through out the eastern United States
and the hiring of consultants, software programmers and management personnel.
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.

     The Company had a net loss of $13,414,485 and $8,708,921 for the six months
and three months ended June 30, 1999 compared to $6,601,461 and 4,436,046 in
1998. The increase is due to the start up and shut down of the product sales
effort described above. It is also due to the change in the Company's fiscal
year end from May to December. The 1998 numbers reflect on the one month ended
June 30.

     Liquidity
     ---------

     During the six months ended June 30, 1999, the Company used cash of
$2,707,348 in its operations compared to $38,604 of cash provided in the six
months ended June 30, 1998. The Company received $270,602 from the sale of its
common stock in the first six months of 1999 compared to $1,699,938 in June of
1998. The Company had cash on hand of $13,572 as of June 30, 1999. The Company
ceased operations in 1999 and became inactive in 2000 and 2001.

Item 3.  Controls and Procedures

     Within the 90 days prior to the filing date of this Form 10-QSQ, an
evaluation was performed under the supervision and with the participation of
management, including the Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the disclosure controls and
procedures (as defined in Exchange Act Rules 13a - 14(c) and 15d - 14(c)). Based
on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the disclosure controls and procedures were effective. There were
no significant changes in the internal controls and procedures or in other
factors that could significantly affect internal controls subsequent to the date
of the evaluation.

                                       14
<PAGE>

PART II - OTHER INFORMATION.

Item 1. Legal Proceedings.

     From time to time, the Company is involved in certain legal actions arising
from the ordinary course of business. It is the opinion of management that such
litigation, described below, will be resolved without a material adverse effect
on the Company's financial position or results of operations.

     Griffin v. GK Intelligent Systems, Inc., et al. In October 1998, the
Company, its president and a former officer were named as defendants in a
class-action lawsuit; Griffin v. GK Intelligent Systems, Inc., et al.; filed in
the Texas District Court of Harris County, Texas, Houston Division, Cause
H-98-3847. The plaintiff has alleged violations of the securities laws, common
law fraud, conspiracy, negligence, and negligent misrepresentation and is
seeking unspecified damages. The plaintiff has also alleged that certain
officers and/or directors may have engaged in insider trading. The Plaintiff
seeks to have a class certified for all purchasers of the Company's stock
between February 10, 1998 and September 14, 1998, inclusive, and seeks an
unspecified amount of damages. The case was removed to Federal Court because the
causes of action that were asserted could only have been brought under federal
law. The parties have exchanged basic discovery. There is no trial setting. The
Company is in the process of evaluating the plaintiff's claims and intends to
vigorously defend the lawsuit.

     U.S. Quest, Ltd. and Jacody Financial, Inc. v. Gary Kimmons and GK
Intelligent Systems, Inc. The Company is an appellee in Cause No. 99-20361; U.S.
Quest, Ltd. and Jacody Financial, Inc. v. Gary Kimmons and GK Intelligent
Systems, Inc.; in the United States Court of Appeals for the Fifth Circuit. The
lawsuit underlying this appeal was filed in January 1998 and alleged, among
other things, that the Company is liable to the plaintiffs for violation of
state and federal securities laws, breach of contract and quantum meruit. The
case arose out of services allegedly furnished by the plaintiffs to the Company,
for which plaintiffs claim they did not receive compensation. The case was
mediated without settlement in June 1998. In January 1999, Judge Lynn N. Hughes
of the United States District Court for the Southern District of Texas granted a
summary judgment in the Company's favor. The plaintiffs appealed the district
court's summary judgment to the United States Court of Appeals for the Fifth
Circuit. The amount of the plaintiffs' demand remains unknown except for their
initial claim to 590,000 shares of the Company's Common Stock or $590,000. The
Company denies any liability to the plaintiffs, and intends to vigorously defend
the appeal. In January 1999, Judge Lynn N. Hughes of the United States District
Court for the Southern District of Texas granted a summary judgment in the
Company's favor. The plaintiffs appealed the district court's summary judgment
to the United States Court of Appeals for the Fifth Circuit.

     David Michael Sims v. GK Intelligent Systems, Inc. The Company is a
defendant in Cause No. 98-35985; David Michael Sims v. GK Intelligent Systems,
Inc. in the 189th Judicial District Court of Harris County, Texas. The lawsuit
was filed in July 1998, and alleges the Company is liable to the plaintiff for
breach of contract and fraudulent misrepresentation. The case arises out of
services allegedly performed by the plaintiff for which he did not receive
compensation. Although preliminary discovery has commenced, the precise amount
of plaintiff's demand is currently unknown other than his initial claim for a
commission of approximately $500,000. The Company denies any liability to the
plaintiff, and intends to vigorously defend the lawsuit.

                                       15
<PAGE>

     Claim of Union Atlantic, LC. In September 1997, the Company entered into a
consulting agreement with Union Atlantic, LC ("Union Atlantic") for performance
of services. The Company issued Union Atlantic a five year warrant to purchase
200,000 shares of Company Common Stock at an exercise price of $.9375 per share,
and a five year warrant to purchase 112,500 shares of Company Common Stock at an
exercise price of $1.25 per share as compensation for services to be rendered.
Each of the warrants contained demand registration rights. Union Atlantic
resigned as a consultant to the Company in November 1997. As no capital was
raised by Union Atlantic, the Company sent a notice to Union Atlantic in July
1998 canceling the warrants. In August 1998, the Company received notice from
Union Atlantic demanding registration of the warrants. The Company has contacted
Union Atlantic and is in the process of determining Union Atlantic's legal
rights, if any.

     Claim of SGD International Corp. In May 1997, the Company entered into a
sales purchase/asset recovery agreement with SGD International Corp. ("SGD")
pursuant to which the Company was to sell SGD certain of the Company's products
for marketing purposes. In exchange for the products, SGD agreed to furnish the
Company with merchandise, service and media credits. The period of exclusivity
of the Agreement expired in May 1998. As the Company had not released any
products, none were forwarded to SGD and the Company did not utilize any of the
SGD credits. In July 1998, the Company sent SGD a notice of termination
canceling the agreement. In August 1998, SGD sent a letter threatening a lawsuit
for the Company's alleged breach of contract. The Company contacted SGD and is
in the process of determining SGD's legal rights, if any.

     Claim of J. David Cabello. In August 1998, the Company received a letter
from J. David Cabello, the former general counsel and secretary of the Company,
in connection with Mr. Cabello's separation from employment with the Company.
The Company's contractual obligation to Mr. Cabello depends on whether he
resigned from his employment or whether he was terminated. Mr. Cabello has
demanded $190,000 in total compensation and immediate vesting of 600,000 shares
of Company Common Stock. The Company contends Mr. Cabello resigned from his
positions with the Company, and as such, Mr. Cabello is entitled to earned but
unpaid salary and vested options to purchase 25,000 shares of Company Common
Stock. In the event the parties are unable to settle this matter, it is likely
Mr. Cabello will file suit for wrongful termination.

     11500 Northwest, L.P. v. GK Intelligent Systems, Inc. The company is a
defendant in Civil Action No. 718504 filed on June 21, 1999 in the District
Court in Harris County Texas. 11500 Northwest is claiming a breach of a lease
agreement for office space. 11500 Northwest are seeking to recover past due
rent, broker fees, tenant improvement costs, and loss of future rental income in
the amount of $83,554. The Company denies any liability to the plaintiff, and
intends to vigorously defend the lawsuit.

     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.

                                       16
<PAGE>
Item 2. Changes in Securities.

     The following issuances of securities occurred between May 13, 1999 and
June 30, 1999. Each transaction was exempt from registration pursuant to Section
4(2) and/or Regulation D promulgated under the Act as a transaction by an issuer
not involving any public offering. No underwriter was utilized in such issuances
and no commissions were paid.

     In March 1999, the Company issued 135,000 shares of common stock to 2
accredited investors in exchange for proceeds of $270,000.

     In April 1999, the Company issued warrants to purchase 60,250 shares of
common stock with an exercise price of $0.01 per share to a corporation in
settlement of all claims between the Company and the corporation. The warrants
are exercisable immediately and expire in April 2004. In April 1999, the
warrants were exercised and the Company issued 60,250 shares of common stock to
the corporation.

Item 3. Defaults Upon Senior Securities.

     None.

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

     None.

Item 5. Other Information.

     On March 19, 2002, the Company reverse split its common stock on a 1 for 10
basis and accordingly, all references above to common stock have been restated
to show the effect of the reverse split.

                                       17
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.

<TABLE>
<CAPTION>

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

     <S>   <C>
     99.1  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
     99.2  Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
     99.3  Certification Pursuant to Section 906 of 18 U.S.C. Section 1350.

</TABLE>

         (b) Reports on Form 8-K.

     There were no other reports on Form 8-K filed during the period covered by
this report.


                                       18
<PAGE>

                                   SIGNATURES

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

                                        GK Intelligent Systems, Inc.


Dated: March 25, 2003                   /S/ Gary F. Kimmons
                                        --------------------------------------
                                        By: Gary F. Kimmons
                                        Its: President, Chief Executive Office
                                              and Chief Financial Officer


                                       19