UNITED STATES
               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 the quarterly period ended June 30, 2004

                               OR

[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                      EXCHANGE ACT OF 1934

      For the transition period from _______ to __________


                  Commission file number 0-22057

                   GK INTELLIGENT SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)

                  Delaware                       76-0513297
           ------------------------------     ------------------
          (State or other jurisdiction of       (IRS 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)


Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:

As of August 16, 2004, the Issuer had outstanding 85,599,374 shares of its
common stock, par value $0.001.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE) YES [ ] NO [X]







<PAGE>


                GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                        TABLE OF CONTENTS




PART I - FINANCIAL INFORMATION                                        PAGE

     ITEM 1.  FINANCIAL STATEMENTS (unaudited).......................   2

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

     ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
              OPERATION .............................................  10

     ITEM 3.  CONTROLS AND PROCEDURES................................  14

PART II - OTHER INFORMATION

     ITEM 1.  LEGAL PROCEEDINGS......................................  14

     ITEM 2.  CHANGES IN SECURITIES..................................  15

     ITEM 3.  DEFAULTS UPON SENIOR SECURITIES........................  15

     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE
              OF SECURITY HOLDERS ...................................  15

     ITEM 5.  OTHER INFORMATION......................................  16

     ITEM 6.  EXHIBITS AND REPORTS ON FORM  8-K......................  16







                 PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


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

                CONSOLIDATED FINANCIAL STATEMENTS

                          June 30, 2004






<PAGE> 2
          GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                  (A Development Stage Company)
                    Consolidated Balance Sheet

                              ASSETS
                                                               June 30,
                                                                2004
                                                            -------------
                                                            (Unaudited)
CURRENT ASSETS

  Cash                                                      $    151,404
                                                            -------------

    Total Current Assets                                         151,404
                                                            -------------

  FIXED ASSETS, NET                                                2,945
                                                            -------------

    TOTAL ASSETS                                            $    154,349
                                                            =============

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

  Accounts payable                                          $    172,251
  Accrued liabilities                                            745,633
  Accrued liabilities - related parties                          323,757
  Notes payable                                                  102,000
                                                            -------------

    Total Current Liabilities                                  1,343,641
                                                            -------------

    TOTAL LIABILITIES                                          1,343,641
                                                            -------------
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;
     73,618,701 shares issued and outstanding                     73,619
  Additional paid-in capital                                  42,583,841
  Stock subscription receivable                                  (10,000)
  Unearned compensation                                         (558,372)
  Accumulated deficit                                        (43,278,380)
                                                            -------------

    Total Stockholders' Equity (Deficit)                      (1,189,292)
                                                            -------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)    $    154,349
                                                            =============

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

<PAGE> 3
<TABLE>
<CAPTION>

                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Operations
                                   (Unaudited)

                                                                                               From
                                                                                             Inception
                                   For the Three Months Ended   For the Six Months Ended   on October 4,
                                            June 30,                  June 30,             1993 through
                                  ---------------------------- ---------------------------    June 30,
                                        2004          2003          2004          2003         2004
                                  -------------- ------------- ------------- ------------- -------------

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

REVENUES                          $           -  $          -  $          -  $          -  $    100,156

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

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

  Loss on disposal of fixed assets            -             -             -             -     1,385,199
  Depreciation and amortization             264             -           264             -     3,458,633
  Impairment loss on software                 -             -             -             -     1,308,520
  General and administrative            816,805       392,194     1,306,774       700,629    38,603,476
                                  -------------- ------------- ------------- ------------- -------------

    Total Costs and Expenses            817,069       392,194     1,306,711       700,629    44,755,826
                                  -------------- ------------- ------------- ------------- -------------

LOSS BEFORE OTHER INCOME (EXPENSE)     (817,069)     (392,194)   (1,306,711)     (700,629)  (44,685,631)
                                  -------------- ------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)

  Interest income                             -             -             -             -         7,663
  Gain on extinguishment of debt              -             -             -             -        60,788
  Loss on extinguishment of debt        (22,121)            -       (22,121)            -       (22,121)
  Gain on release of debt                     -     2,652,925       871,090     2,652,925     3,167,125
  Interest expense                      (21,388)      (30,683)      (50,907)     (113,987)   (1,618,889)
                                  -------------- ------------- ------------- ------------- -------------

    Total Other Income (Expense)        (43,509)    2,622,242       798,062     2,538,938     1,594,566
                                  -------------- ------------- ------------- ------------- -------------

NET INCOME (LOSS)                      (860,578)    2,230,048      (508,649)    1,838,309   (43,091,065)

DIVIDENDS ON PREFERRED STOCK                  -             -             -             -      (187,315)
                                  -------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) APPLICABLE TO
 COMMON SHAREHOLDERS              $    (860,578) $  2,230,048  $   (508,649) $  1,838,309  $(43,278,380)
                                  ============== ============= ============= ============= =============

BASIC INCOME (LOSS) PER SHARE     $       (0.11) $       0.10  $      (0.01) $      (0.09)
                                  ============== ============= ============= =============
BASIC WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                7,582,576    22,539,593    45,211,781    21,881,560
                                  ============== ============= ============= =============
FULLY DILUTED INCOME (LOSS)
 PER SHARE                        $       (0.11) $       0.08  $      (0.01) $      (0.07)
                                  ============== ============= ============= =============
FULLY DILUTED WEIGHTED AVERAGE
 NUMBER OF SHARE OUTSTANDING          7,582,576    22,246,243    45,211,781    29,246,243
                                  ============== ============= ============= =============

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

</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                                                                             Since
                                                                                           Inception
                                                               For the Six Months Ended   on October 4,
                                                                       June 30,           1993 through
                                                              ---------------------------   June 30,
                                                                   2004         2003          2004
                                                              ------------- ------------- -------------
<S>                                                           <c>           <c>           <c>

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)                                             $   (508,649) $  1,838,309  $(43,091,065)
Adjustments to reconcile net income (loss) to net
 cash used by operating activities:
   Depreciation and amortization                                       264             -     3,458,633
   Loss on disposal of fixed assets                                      -             -     1,385,199
   Impairment loss on software                                           -             -     1,308,520
   Gain on release of debt                                        (871,090)   (2,652,925)   (3,167,125)
   (Gain) loss on extinguishment of debt                            22,121             -       (38,667)
   Beneficial conversion on issuance of debt                             -             -       103,068
   Amortization of unearned compensation                           232,824        46,900     6,221,655
   Issuance of common stock, options, and warrants for services    581,260       326,199    14,484,102
Changes in operating assets and liabilities:
   (Increase) decrease in prepaid expenses                           6,476             -             -
   Increase (decrease) in accounts payable and accrued expenses     (2,425)      230,803     4,050,499
   Increase in accrued liabilities - related party                 131,737        83,906     1,614,842
                                                              ------------- ------------- -------------

     Net Cash Used by Operating Activities                        (407,482)     (126,808)  (13,670,339)
                                                              ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES

  Purchase of software                                                   -             -      (915,742)
  Purchase of fixed assets                                          (3,209)            -        (3,209)
  Other capital expenditures                                             -             -    (1,651,988)
  Organization costs                                                     -             -       (78,745)
                                                              ------------- ------------- -------------

     Net Cash Used by Investing Activities                          (3,209)            -    (2,649,684)
                                                              ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES

  Increase in stock subscription payable                                 -        42,000       779,900
  Proceeds from issuance of note payable                            47,000             -     1,191,769
  Common stock issued for cash                                     514,998       137,500    14,564,827
  Payments on notes payable                                              -             -      (306,637)
  Proceeds from issuance of notes payable - related party                -             -       250,000
  Payments on notes payable - related party                              -       (53,746)      (53,746)
  Capital contributed by the Company's president                         -             -        45,314
                                                              ------------- ------------- -------------

     Net Cash Provided by Financing Activities                     561,998       125,754    16,471,427
                                                              ------------- ------------- -------------

NET INCREASE (DECREASE) IN CASH                                    151,307        (1,054)      151,404

CASH AT BEGINNING OF PERIOD                                             97        15,566             -
                                                              ------------- ------------- -------------

CASH AT END OF PERIOD                                         $    151,404  $     14,512  $    151,404
                                                              ============= ============= =============

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


</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
                  GK INTELLIGENT SYSTEMS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)
                                   (Unaudited)
                                                                                             Since
                                                                                           Inception
                                                               For the Six Months Ended   on October 4,
                                                                       June 30,           1993 through
                                                              ---------------------------   June 30,
                                                                   2004         2003          2004
                                                              ------------- ------------- -------------
<S>                                                           <c>           <c>           <c>
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:

Cash Paid For:

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

Schedule of Non-Cash Financing Activities:

  Common stock issued for debt                                $    271,145  $    128,155  $  1,062,197
  Common stock, stock options and warrants
     issued for debt - related parties                        $          -  $    202,125  $  1,001,187
  Common stock, stock options and warrants
     issued for services                                      $    581,260  $    286,824  $ 14,484,102
  Fixed assets distributed for debt                           $          -  $          -  $     42,783
































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


</TABLE>
<PAGE> 6



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

NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated 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 three months and six months
ended June 30, 2004 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2004.

NOTE 2 -  GOING CONCERN

The Company's consolidated 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.  These 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.  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

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

In March 2004, the Company issued a total of 13,616,666 shares of common stock
to unrelated parties for services rendered to date and in the future with a
total value of $519,117 based on market value on the date of issuance.  Of
that amount $32,518 was expensed at March 31, 2004 with the remaining amount
of $486,598 recognized as unearned compensation to be expensed in future
periods as earned.

Also in March 2004, the Company issued a total of 12,195,122 shares of common
stock to its president and CEO having a total value of $451,220 based on
market value on the date of issuance.  $144,019 of that value satisfied
obligations outstanding to the Company's president and CEO with the remaining
$307,201 recognized as additional compensation.

On April 12, 2004 the Company issued 6,944,444 common shares to various
investors upon the exercise of options and conversions of notes payable.

On April 22, 2004, the Company issued 395,659 common shares to an attorney to
be applied against his outstanding fees.


<PAGE> 7


NOTE 3 - SIGNIFICANT AND SUBSEQUENT EVENTS (Continued)

Common Stock (Continued)
------------------------
On April 22, 2004, the Company issued 2,190,890 common shares in satisfaction
of $93,000 of notes payable.

On April 22, 2004, the Company issued 1,272,726 common shares to a consultant
for services.

On April 23, 2004, the Company issued 1,388,888 common shares in satisfaction
of the stock subscription payable of $25,000.

On April 23, 2004, the Company issued 3,400,000 common shares to consultants
for services.

On May 25, 2004, the Company issued 133,333 common shares to a consultant for
services.

On June 6, 2004, the Company issued 3,250,000 common shares to consultants for
future services.

On June 24, 2004, the Company issued 1,000,000 common shares to a vendor in
order to pay-down an outstanding balance and prepay for additional future
services.

On June 26, 2004 the Company issued 268,870 common shares to a consultant for
services.

On July 16, 2004, the Company issued 8,025,211 restricted shares of common
stock to Sunil Nariani in connection with the acquisition of Stellar Software
Network.

On July 15, 2004, the Company authorized the issuance of 3,529,412 shares of
common stock, issued in 12 monthly installments, to Sunil Nariani pursuant to
a Consulting Agreement executed by the parties.

NOTE 4 - RELEASE OF DEBT

The Company has certain accounts payable, notes payable, accrued liabilities,
and accrued interest, which had been outstanding for some time.  According to
the Company's legal counsel, The Texas Code V.T.C.A., Civil Practice and
Remedies Code Section 16.004 (a), states that an action upon any contract
obligation or liability founded upon an instrument in writing must be brought
within four years of such a written agreement. As of June 30, 2004, no such
actions to enforce payment of the obligations have been filed.  Accordingly, a
total of $3,167,125 has been written-off and a gain on release of debt
recognized of which $871,090 and $2,652,925 has been recorded in the six
months ended June 30, 2004 and 2003, respectively.

NOTE 5 - STOCK OPTIONS

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.


<PAGE> 8

A summary of the status of the Company's outstanding stock options as of June
30, 2004 and December 31, 2003 and changes during the six months ended June
30, 2004 and the year ended December 31, 2003 is presented below:

                                           June 30,           December 31,
                                            2004                 2003
                                   --------------------- ---------------------
                                                Weighted             Weighted
                                                Average              Average
                                                Exercise             Exercise
                                   Shares       Price    Shares      Price
                                   ----------- --------- ----------- ---------
Outstanding, beginning of year      4,500,050  $   0.34     826,559  $  0.34
  Granted                           6,944,444      0.20   4,400,000     0.20
  Expired/Cancelled                  (500,000)     0.35    (729,509)    0.34
  Exercised                        (6,944,444)        -           -        -
                                   ----------- --------- ----------- ---------

Outstanding end of year             4,000,050  $   0.20   4,500,050  $  0.20
                                   =========== ========= =========== =========

 Exercisable                        4,000,050  $   0.21   3,500,050  $  0.21
                                   =========== ========= =========== =========




                              Outstanding                  Exercisable
                  ------------------------------------ ----------------------
                               Weighted
                  Number       Average       Weighted  Number       Weighted
                  Outstanding  Remaining     Average   Exercisable  Average
Range of          at June 30,  Contractual   Exercise  at June 30,  Exercise
Exercise Prices   2004         Life          Price     2004         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           100,000      6.00      $   0.35      100,000  $    0.35
   $   0.50           100,000      4.80      $   0.50      100,000  $    0.50
   $  25.00                50      4.65      $  25.00           50  $   25.00
                  ------------ ------------- --------- ------------ ----------
                    4,000,050      7.55      $   0.20    3,000,050  $    0.21
                  ============ ============= ========= ============ ==========


On October 18, 2002, the Company issued a Private Placement Memorandum (PPM)
to accredited investors as defined in Rule 501 of Regulation D 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 June 30, 2004 the Company has sold 17 units or 1,700,000 shares of
common stock and 3,400,000 warrants for total proceeds of $425,000.



<PAGE> 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis covers material changes in our financial
condition  since  the year end December 31, 2003 and a comparison  of the
results of  operations  for the three and six months ended June 30, 2004 to
the  same  period  in  2003. This discussion and analysis should be read in
conjunction with our consolidated financial statements and related notes
thereto included elsewhere in this report and our  Form  10-KSB  for  the
year  ended  December  31,  2003.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Report on Form 10-QSB contains forward-looking statements, including,
without limitation, statements concerning our possible or assumed future
results of operations. These statements are preceded by, followed by or
include the words "believes," "could," "expects," "intends" "anticipates," or
similar expressions. Our actual results could differ materially from those
anticipated in the forward-looking statements for many reasons including the
risks described below and elsewhere in this report. Although we believe the
expectations reflected in the forward-looking statements are reasonable, they
relate only to events as of the date on which the statements are made, and our
future results, levels of activity, performance or achievements may not meet
these expectations. We do not intend to update any of the forward-looking
statements after the date of this document to conform these statements to
actual results or to changes in our expectations, except as required by law.

OVERVIEW

We are a micromarketing company that is leveraging our public status as well
as advanced software technologies to offer a unique new form of personal
service. In a world of fast developing personalized technology, we have
developed a business model that leverages a new form of marketing called
"permission marketing." We operate various emerging entertainment and
technology subsidiaries with an emphasis in the music industry.

Critical Accounting Policies
----------------------------

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make a wide variety of estimates and assumptions that affect (i)
the reported amounts of assets and liabilities and disclosure regarding
contingent assets and liabilities as of the date of the financial statements,
and (ii) the reported amounts of revenues and expenses during the periods
covered by the financial statements.  Our management routinely makes judgments
and estimates regarding the effect of matters that are inherently uncertain.
As the number of variables and assumptions affecting the future resolution of
the uncertainties increases, these judgments become even more subjective and
complex.  We have identified certain accounting policies that we deem to be
most important to the portrayal of our current financial condition and results
of operations.   Several of these critical accounting policies are as follows:

Amortization and Impairment of Software Costs
---------------------------------------------

Amortization is based on the estimated useful lives of the software
applications (usually three years) and is computed using the straight-line
method.  Additionally, management reviews the net carrying value of all

<PAGE> 10

computer software on a regular basis.  If the software is deemed to be damaged
or obsolete, or if the carrying value of the software is otherwise deemed to
be an inaccurate statement of the asset's true value, software costs are
written-off in full to expense as of the date the assessment of obsolescence
is made.

Research and Development
------------------------

We have elected to follow the policy of charging the costs of research and
development to expense as incurred.

Advertising
------------

We have elected to follow the policy of charging the costs of advertising to
expense as incurred.

Common Stock Issued for Services and Debt
-----------------------------------------

Due to the periodic shortage of liquid funds available to us, we have at times
deemed it beneficial to us to issue common stock for services and/or debt, as
an alternative to paying cash for these items.  Management has elected to
follow the policy of valuing the common shares issued at the market value on
the date of issuance.  Any differences between the value of the common stock
and the value of the debt satisfied through the issuance of common stock are
posted to "gain/loss on extinguishment of debt" on the date of issuance.

PLAN OF OPERATION

We are an entertainment services company that is leveraging our software
technologies (that we have either created or intend to create) to offer a
unique new form of personal service in the entertainment industry.  Our
strategic plan is as follows:

  .   Acquire profitable privately-held companies that can contribute revenue
      as well as offer technical and operational support for one of our
      startup ventures, Recording Artists Worldwide, Inc.;

  .   Secure an equity credit line to be used to further capitalize ventures
      we acquire to make them more profitable;

  .   Initiate a research and development program in conjunction with
      Technical Objectives, an Atlanta-based software technology company that
      will be focused on refining our existing Smart One learning software and
      on developing new "personalization" software that will be incorporated
      into anticipated service offerings such as Recording Artists Worldwide;
      and

  .   Begin first-stage development activities for the Recording Artists
      Worldwide startup.







<PAGE> 11

COMPARISON OF THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2004 AS COMPARED TO
JUNE 30, 2003

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

We had no net revenues for the six months ended June 30, 2004 and 2003. We had
operating expenses of $1,306,711 for the six months ended June 30, 2004
compared to $700,629 for the comparative period of 2003. The $606,082 increase
was due primarily to the issuance of shares and options to consultants. The
consultants are developing our business plan and providing legal and
accounting services. We incurred $581,260 and $326,199 of these expenses
through the issuance of common stock, options and warrants, in the six month
periods ended June 30, 2004 and 2003, respectively.

During the six months ended June 30, 2004, we experienced a gain on release of
debt of $871,090, compared to a related gain of $2,652,925 during the
comparative period for 2003.  The Texas Code provides, in part, that any
action upon any contract obligation or liability founded upon an instrument in
writing must be brought within four years of such a written agreement.
Approximately $871,090 of our liabilities were written-off during the six
months ended June 30, 2004 due to the fact that the relevant statute of
limitations now bars certain actions from being filed to enforce or collect
such liabilities.  Interest expense during the six months ended June 30, 2004
was $50,907, a decrease of $63,080 from the interest expense of $113,987
incurred in the six months ended June 30, 2003.  We attribute the decrease in
interest expense to the decrease in debt as described above.

We earned net loss of $508,649 during the six months ended June 30, 2004
compared to a net income of $1,838,309 incurred in the six months ended June
30, 2003.  We attribute the significant decrease in net earnings to the fact
that we experienced a substantial gain on extinguishment of debt during the
six months ended June 30, 2003, which was not duplicated during the
corresponding six months ended June 30, 2004.  This gain on release of debt is
a unique circumstance is not part of our normal operations.  We expect that
additional debts will be removed from our liabilities in the future as the
four year limit is fulfilled.

Liquidity
---------

During the six months ended June 30, 2004 and 2003, we used cash in operations
of ($407,482) and ($126,808), respectively. We had cash on hand of $151,404 as
of June 30, 2004 compared to $14,512 cash as of June 30, 2003. We received
$72,000 cash proceeds from the issuance of notes payable and also received
$250,000 cash from a note receivable during the six months ended June 30,
2004. The State of Texas provides that any liabilities founded upon any
contract obligation or an instrument in writing not brought within four years
of the date incurred are not legally collectible. During the six months ended
June 30, 2004, $912,050 of our liabilities fell beyond this statute of
limitations.  Accordingly, we recorded a gain on the release of debt for this
amount. We ceased operations in 1999 and were inactive in 2000 and 2001.

We anticipate that we will need to raise approximately $1,000,000 in cash in
the next twelve months to cover general and administrative expenses and other
anticipated cash needs.  We may seek to raise such needed funds through the
sale of our shares of stock or by borrowing.  We may not be able to raise the
necessary funds on terms acceptable to us, if at all.

<PAGE> 12

FINANCING ACTIVITIES

On April 22, 2004, we authorized the issuance of 645,437 restricted shares of
common stock to Deanna Slater in fulfillment of loans to us of $26,000
pursuant to a Promissory Note dated December 31, 2003, and of $7,000 pursuant
to a Promissory Note dated March 31, 2004.

On April 23, 2004, we authorized the issuance of 757,575 restricted shares of
common stock to Elaine Leonard in fulfillment of a loan to us of $25,000
pursuant to a Promissory Note dated February 28, 2004.

On April 23, 2004, we authorized the issuance of 1,388,888 restricted shares
of common stock to D. Scott Elliot pursuant to a Stock Purchase Agreement
dated April 5, 2004 wherein we received $25,000.

On April 23, 2004, we authorized the issuance of 787,878 restricted shares of
common stock to Joel Pickell in fulfillment of loans to us for $20,000
pursuant to a Promissory Note dated December 31, 2003 and of $15,000 pursuant
to a Promissory Note dated March 31, 2004.

On June 23, 2004, we entered into an Equity Line of Credit Agreement with
Dutchess Private Equities Fund II, LP which permits us to "put" up to
$10,000,000 in shares of our common stock to Dutchess Private Equities Fund
II.  We can not access the Equity Line of Credit until the SEC declares a Form
SB-2 effective that registers the securities that will be issued pursuant to
the Equity Line.  We have not yet filed the SB-2.

CAPITAL COMMITMENTS

On February 1, 2003, we 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 exercisable until February 1,
2013, 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 were exercisable
immediately, options to purchase  1,000,000 shares vested and were exercisable
when we were current and filed our 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 vested and were exercisable when we had
raised a minimum of $500,000 in investment capital.

On September 26, 2002, we entered into a Promissory Note with Gary Kimmons
wherein we promised to pay Mr. Kimmons $170,041.42 with interest thereon of 6%
per annum upon demand, as repayment for monies he paid on behalf of us.

On September 17, 2003, we entered into a Consulting Agreement with Gust C.
Kepler where, in exchange for Mr. Kepler's services, we agreed to pay, at our
option, $72,000 cash or 1,200,000 shares of our common stock of valued at a
price of $0.06 per share, which we registered on a Form S-8.

On January 19, 2004, we entered into a Referral Fee Agreement with Michael
Aczon wherein he shall receive a referral fee as described below as soon as
practical after each closing of an acquisition that is directly the result of
a facilitated introduction by him to us. The referral fee shall calculated by
taking the total consideration paid for an acquisition and multiplying that by
the following percentages: For the first $ 1 million of acquisition cost:


<PAGE> 13


5.0%, For the next $ 1 million of acquisition cost: 4.0%, For the next $ 1
million of acquisition cost: 3.0%, For the next $ 1 million of acquisition
cost: 2.0%, For all consideration above $ 4 million: 1.0%. The referral fee
shall be paid in the same manner and in the same ratio as that of the
transaction e.g. cash, common stock, restricted common stock et cetera.

SUBSIDIARIES

As of July 20, 2004, we had four wholly-owned subsidiary companies, Smart One
Learning Systems, Inc., Recording Artists Worldwide, Inc., The Baseball Club,
Inc., and Your True Voice Studios.  Smart One Learning Systems, Your True
Voice Studios and The Baseball Club are currently dormant.

ITEM 3. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Our chief executive officer
and chief financial officer has evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this Quarterly Report on Form 10-QSB.
Based on this evaluation, our chief executive officer and chief financial
officer concluded that these disclosure controls and procedures are effective
and designed to ensure that the information required to be disclosed in our
reports filed or submitted under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the requisite time
periods.

Changes in internal controls. There was no change in our internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934, as amended) that occurred during our last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

                   PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Awalt Group, Inc. - Awalt Group, Inc. commenced litigation against us 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.  We have filed an answer and are defending the lawsuit
under Section 16.004 of the Texas Civil Practice and Remedies Code, i.e., we
believe that the statute of limitations has tolled the claim.

11500 Northwest, L.P. -  11500 Northwest, L.P. commenced litigation against us
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 us.  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.  We intend to
defend the lawsuit, deny breach of the alleged lease agreement and further
intend to defend under Section 16.004 of the Texas Civil Practice & Remedies
Code, i.e. we believe that the statute of limitations has tolled some or all
of the claims.

<PAGE> 14

ITEM 2. CHANGES IN SECURITIES

(c) We sold the following unregistered (restricted) securities during the
quarter ended June 30, 2004:

On April 22, 2004, we authorized the issuance 645,437 restricted shares of
common stock to Deanna Slater in fulfillment of loans to us of $26,000
pursuant to a Promissory Note dated December 31, 2003, and of $7,000 pursuant
to a Promissory Note dated March 31, 2004.

On April 22, 2004, we authorized the issuance of 1,272,726 restricted shares
of common stock to Deanna Slater in consideration for consulting services
provided by Ms. Slater from October 1, 2003 to April 30, 2004.

On April 22, 2004, we authorized the issuance of 395,659 shares of common
stock to Arne Ray in consideration for consulting services provided by Mr.
Ray.

On April 23, 2004, we authorized the issuance of 757,575 restricted shares of
common stock to Elaine Leonard in fulfillment of a loan to us of $25,000
pursuant to a Promissory Note dated February 28, 2004.

On April 23, 2004, we authorized the issuance of 1,388,888 restricted shares
of common stock to D. Scott Elliot pursuant to a Stock Purchase Agreement
dated April 5, 2004.

On April 23, 2004, we authorized the issuance of 787,878 restricted shares of
common stock to Joel Pickell in fulfillment of loans to us for $20,000
pursuant to a Promissory Note dated December 31, 2003 and of $15,000 pursuant
to a Promissory Note dated March 31, 2004.

Subsequent issuances:

On July 16, 2004, we issued 8,025,211 restricted shares of common stock to
Sunil Nariani in connection with the acquisition of Stellar Software Network.

On July 15, 2004, we authorized the issuance of 3,529,412 shares of common
stock, issued in 12 monthly installments, to Sunil Nariani pursuant to a
Consulting Agreement executed by the parties.

With respect to the sales of our common stock described above, we 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 us.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

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

None.

<PAGE> 15

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Number Description

2.1    Purchase Agreement between the Registrant and Sunil Nariani, dated June
       16, 2004 (filed as Exhibit 2.1 to the Registrant's Current Report on
       Form 8-K filed on  June 23, 2004 and incorporated herein by reference).
2.2    First Amendment to the Purchase Agreement between the Registrant and
       Sunil Nariani, dated June 18, 2004 (filed as Exhibit 2.2 to the
       Registrant's Current Report on Form 8-K filed on June 23, 2004 and
       incorporated herein by reference).
3.1    Amended and Restated Certificate of Incorporation (filed as Exhibit
       3.(i) to the Registrant's Registration Statement on Form 10-SB filed on
       January 24, 1997 and incorporated herein by reference).
3.2    Amended and Restated Bylaws (filed as Exhibit 3.(ii) to the
       Registrant's Registration Statement on Form 10-SB filed on January 24,
       1997 and incorporated  herein by reference).
3.3    Certificate of Amendment to the Certificate of Incorporation (filed as
       Exhibit 3.3 to the Registrant's Annual Report on Form 10KSB filed on
       September 14, 1998  and incorporated herein by reference).
3.4    Certificate of Amendment to the Certificate of Incorporation filed as
       Exhibit 3.(i) to the Registrant's Quarterly Report on Form 10QSB filed
       on May 5, 2003  and incorporated herein by reference).
10.1   Promissory Note from the Registrant to Gary Kimmons, dated September
       26, 2002 (filed as Exhibit 10.24 to the Registrant's Current Report on
       Form 8-K filed on  November 6, 2002 and incorporated herein by
       reference).
10.2   Employment Agreement with Gary F. Kimmons, dated February 1, 2003
       (filed as Exhibit 10.29 to the Registrant's Annual Report on Form
       10KSB filed on May 5,  2003 and incorporated herein by reference).
10.3   Consulting Agreement between the Registrant and Gust C. Kepler, dated
       September 17, 2003 (filed as Exhibit 4.1 to the Registrant's Form S-8
       filed on September 19, 2003 and incorporated herein by reference).
10.4   Consulting Services Agreement between the Registrant and Stanton,
       Walker &  Company, dated November 5, 2003 (filed as Exhibit 4.1 to the
       Registrant's Form S-8 filed on November 10, 2003 and incorporated
       herein by reference).
10.5   GK Intelligent Systems, Inc. 2004 Stock Option Plan (filed as Exhibit
       4.1 to the  Registrant's Form S-8 filed on April 5, 2004 and
       incorporated herein by  reference).
10.6   Non-Employee Director Agreement between the Registrant and Dick Meador,
       dated December 24, 2003 (filed as Exhibit 10.47 to the Registrant's
       Annual Report on Form 10KSB filed on April 23, 2004 and incorporated
       herein by reference).
10.7   Referral Fee Agreement between the Registrant and  Michael Aczon, dated
       January 19, 2004 (filed as Exhibit 10.50 to the Registrant's Annual
       Report on Form 10KSB filed on April 23, 2004 and incorporated herein by
       reference).




<PAGE> 16

10.8   Consulting Agreement between the Registrant and Z.A. Consulting, LLC,
       dated February 27, 2004 (filed as Exhibit 10.52 to the Registrant's
       Annual Report on Form 10KSB filed on April 23, 2004 and incorporated
       herein by reference).
10.9   First Amendment to Consulting Services Agreement between the Registrant
       and Stanton, Walker & Company, dated March 29, 2004 (filed as Exhibit
       10.54 to the Registrant's Annual Report on Form 10KSB filed on April
       23, 2003 and incorporated herein by reference).
10.10  Consulting Agreement between the Registrant and Harvey Levin, dated
       March 26, 2004 (filed as Exhibit 10.55 to the Registrant's Annual
       Report on Form 10KSB filed on April 23, 2004 and incorporated herein by
       reference).
10.11  Consulting Agreement between the Registrant and Isabella Elliott, dated
       March 26, 2004 (filed as Exhibit 10.56 to the Registrant's Annual
       Report on Form 10KSB filed on April 23, 2004 and incorporated herein by
       reference).
10.12  Consulting Agreement between the Registrant and Jon Pearman, dated
       March 26, 2004 (filed as Exhibit 10.57 to the Registrant's Annual
       Report on Form 10KSB filed on April 23, 2004 and incorporated herein by
       reference).
10.13  Amended and Restated Consulting Agreement between the Registrant and
       Lisa L. Fincher, dated June 3, 2004.
10.14  Consulting Agreement between the Registrant and Ted Davis, dated March
       26, 2004 (filed as Exhibit 10.59 to the Registrant's Annual Report on
       Form 10KSB filed on April 23, 2004 and incorporated herein by
       reference).
10.15  Amended and Restated Consulting Agreement between the Registrant and D.
       Scott Elliott, dated June 3, 2004.
10.16  Amended and Restated Consulting Agreement between the Registrant and
       Linda Davis, dated June 3, 2004.
10.17  Promissory Note from the Registrant to Deanna Slater, dated December
       31, 2003 (filed as Exhibit 10.48 to the Registrant's Annual Report on
       Form 10KSB filed on April 23, 2004 and incorporated herein by
       reference).
10.18  Promissory Note from the Registrant to Joel Pickell, dated December 31,
       2003 (filed as Exhibit 10.49 to the Registrant's Annual Report on Form
       10KSB filed on April 23, 2004 and incorporated herein by reference).
10.19  Promissory Note from the Registrant to Elaine Leonard, dated February
       28, 2004 (filed as Exhibit 10.62 to the Registrant's Quarterly Report
       on Form 10QSB filed on May 19, 2004 and incorporated herein by
       reference).
10.20  Promissory Note from the Registrant to Joel Pickell, dated March 31,
       2004 (filed as Exhibit 10.63 to the Registrant's Quarterly Report on
       Form 10QSB filed on May 19, 2004 and incorporated herein by reference).
10.21  Promissory Note from the Registrant to Deanna Slater, dated March 31,
       2004 (filed as Exhibit 10.64 to the Registrant's Quarterly Report on
       Form 10QSB filed on May 19, 2004 and incorporated herein by reference).
10.22  Promissory Note from Harvey Levin to the Registrant, dated April 2,
       2004 (filed as Exhibit 10.65 to the Registrant's Quarterly Report on
       Form 10QSB filed on May 19, 2004 and incorporated herein by reference).
10.23  Promissory Note from Jon Pearman to the Registrant, dated April 2, 2004
       (filed as Exhibit 10.66 to the Registrant's Quarterly Report on Form
       10QSB filed on May 19, 2004 and incorporated herein by reference).
10.24  Promissory Note from Ted Davis to the Registrant, dated April 2, 2004
       (filed as Exhibit 10.67 to the Registrant's Quarterly Report on Form
       10QSB filed on May 19, 2004 and incorporated herein by reference).



<PAGE> 17

10.25  Consulting Agreement between the Registrant and Deanna Slater, dated
       May 14, 2004 (filed as Exhibit 10.68 to the Registrant's Quarterly
       Report on Form 10QSB filed on May 19, 2004 and incorporated herein by
       reference).
10.26  Investment Agreement between the Registrant and Dutchess Private
       Equities Fund, II, L.P., dated June 23, 2004 (filed as Exhibit 10.69 to
       the Registrant's Current Report on Form 8-K filed on June 29, 2004 and
       incorporated herein by reference).
10.27  Registration Rights Agreement between the Registrant and Dutchess
       Private Equities Fund, II, L.P., dated June 23, 2004 (filed as Exhibit
       10.70 to the Registrant's Current Report on Form 8-K filed on June 29,
       2004 and incorporated herein by reference).
10.28  Consulting Agreement between the Registrant and Sunil Nariani, dated
       July 15, 2004 (filed as Exhibit 10.72 to the Registrant's Current
       Report on Form 8-K filed on July 28, 2004 and incorporated herein by
       reference).
10.29  Consulting Agreement between the Registrant and Marcus Wray, dated
       November 10, 1998. (filed as Exhibit 10.1 to the Registrant's Quarterly
       Report on Form 10QSB filed on November 20, 1998 and incorporated herein
       by reference).
10.30  Stock and Warrant Purchase Agreement with D. Scott Elliot, dated April
       5, 2004.
31.1   Certification of the Chief Executive Officer and Chief Financial
       Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1   Certification of Officers pursuant to 18 U.S.C. Section 1350, as
       adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

On April 9, 2004 , we filed a Form 8-K regarding the issuance of common shares
as compensation to Gary Kimmons.

On June 23, 2004, we filed a Form 8-K regarding our Purchase Agreement with
Stellar Software Network, Inc.

On June 23, 2004, we filed a Form 8-K regarding our Investment Agreement with
Dutchess Private Equities Fund II, LP.


                           SIGNATURES

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


GK INTELLIGENT SYSTEMS, INC.



Dated: August 18, 2004

                                       By /s/ Gary F. Kimmons
                                       ---------------------
                                       Gary F. Kimmons
                                       President, Chief Executive Officer
                                       and Chief Financial Officer


<PAGE> 18