UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: June 16, 2004
(Date of earliest event reported)
GK INTELLIGENT SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
----------------------
Delaware 000-22057 76-0513297
---------------------------- ------------------------ -------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.
=============================================================================
2606 Yorktown Place
Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
=============================================================================
Registrant's telephone number, including area code: (713) 626-1504
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
1
Item 2.01 Completion of Acquisition or Disposition of Assets
Item 9.01 Financial Statements and Exhibits
The Registrant has previously filed its Current Report on Form 8-K,
dated June 23, 2004 (pertaining to the Purchase Agreement with Stellar
Software Network, Inc., whereby we issued a total of 8,025,211 restricted
shares of GK Intelligent Systems, Inc. common stock to Sunil Nariani in
exchange for One Hundred Percent (100%) of the issued and outstanding shares
of common stock of Stellar Software Network, Inc.) without certain financial
information required by Item 7 of such Form 8-K. The Registrant hereby
amends Item 9.01, subparagraphs (a) and (b) of the Current Report on Form
8-K to read as follows:
STELLAR SOFTWARE NETWORK, INC.
FINANCIAL STATEMENTS
December 31, 2003 and 2002
INDEPENDENT AUDITORS' REPORT
-----------------------------
To the Board of Directors of
Stellar Software Network, Inc.
Plano, TX
We have audited the accompanying balance sheet of Stellar Software Network,
Inc. at December 31, 2003, and the related statements of operations,
stockholders' equity and cash flows for the years ended December 31, 2003 and
2002. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Stellar Software Network,
Inc. at December 31, 2003, and the results of its operations and its cash
flows for the years ended December 31, 2003 and 2002 in conformity with the
standards of the Public Company Accounting Oversight Board (United States).
/s/ Chisholm, Bierwolf & Nilson
Chisholm, Bierwolf & Nilson
Bountiful, Utah
September 27, 2004
2
STELLAR SOFTWARE NETWORK, INC.
Balance Sheet
ASSETS
------
December 31,
2003
-------------
CURRENT ASSETS
Cash $ 34,111
Accounts receivable 128,177
-------------
Total Current Assets 162,288
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FIXED ASSETS, NET 3,458
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TOTAL ASSETS $ 165,746
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
Accounts payable $ 68,401
Line of credit 9,639
Note payable - related party 9,421
-------------
Total Current Liabilities 87,461
-------------
TOTAL LIABILITIES 87,461
-------------
STOCKHOLDERS' EQUITY
Common stock; no par value; 10,000,000 shares
authorized; 1,000 shares issued and outstanding 4,273
Retained earnings 74,012
-------------
Total Stockholders' Equity 78,285
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 165,746
=============
The accompanying notes are an integral part of these financial statements.
4
3
STELLAR SOFTWARE NETWORK, INC.
Statements of Operations
For the Years Ended
December 31,
----------------------------
2003 2002
------------- --------------
REVENUES
Consulting revenue $ 807,280 $ 698,188
Other revenues 14,003 12,148
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Total Revenue 821,283 710,336
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COSTS AND EXPENSES
Professional fees 365,416 339,777
Payroll expenses 352,116 297,518
Depreciation expense 436 1,125
General and administrative expenses 96,036 76,186
------------- --------------
Total Costs and Expenses 814,004 714,606
------------- --------------
OPERATING INCOME 7,279 (4,270)
------------- --------------
OTHER EXPENSES
Interest expense (1,421) -
------------- --------------
Total Other Expenses (1,421) -
------------- --------------
NET INCOME (Loss) $ 5,858 $ (4,270)
============= ==============
BASIC INCOME PER SHARE $ 5.86 $ (4.27)
============= ==============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,000 1,000
============= ==============
The accompanying notes are an integral part of these financial statements.
5
4
STELLAR SOFTWARE NETWORK, INC.
Statement of Stockholders' Equity
Common Stock Additional Retained
--------------------------- Paid-In Earnings
Shares Amount Capital (Deficit)
------------- ------------- ------------- -------------
Balance,
December 31, 2001 1,000 $ 4,273 $ - $ 72,424
Net income (loss) for
the year ended
December 31, 2002 - - - (4,270)
------------- ------------- ------------- -------------
Balance,
December 31, 2002 1,000 4,273 - 68,154
Net income (loss) for
the year ended
December 31, 2003 - - - 5,858
------------- ------------- ------------- -------------
Balance,
December 31, 2003 1,000 $ 4,273 $ - $ 74,012
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
6
5
STELLAR SOFTWARE NETWORK, INC.
Statements of Cash Flows
For the Years Ended
December 31,
-----------------------------
2003 2002
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<c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 5,858 $ (4,270)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 436 1,125
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable 13,130 (50,001)
Increase (decrease) in accounts payable
and accrued expenses (6,994) 61,860
-------------- --------------
Net Cash Used by Operating Activities 12,430 8,714
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (3,458) -
-------------- --------------
Net Cash Provided by Investing Activities (3,458) -
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in bank overdraft - (745)
Proceeds from note payable - related party 7,500 30
Proceeds from line of credit 64,813 -
Payments for line of credit (55,173) -
Payments for notes payable (30,000) -
Proceeds from notes payable - 30,000
-------------- --------------
Net Cash Provided (Used) by Financing Activities (12,860) 29,285
-------------- --------------
NET INCREASE (DECREASE) IN CASH (3,888) 37,999
CASH AT BEGINNING OF YEAR 37,999 -
-------------- --------------
CASH AT END OF PERIOD $ 34,111 $ 37,999
============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ 1,421 $ -
Income Taxes $ - $ -
The accompanying notes are an integral part of these financial statements.
7
6
STELLAR SOFTWARE NETWORK, INC.
Notes to the Financial Statements
December 31, 2003 and 2002
NOTE 1 - NATURE OF ORGANIZATION
This summary of significant accounting policies of Stellar Software
Network, Inc. is presented to assist in the understanding of the
Company's financial statements. The financial statements and notes
are representations of the Company's management, which is responsible
for their integrity and objectivity. The financial statements
conform to the Standards of the Public Company Accounting Oversight
Board (United States) and have been consistently applied in the
preparation of the financial statements.
a. Organization and Business Activities
Stellar Software Network, Inc. was incorporated under the laws of the
State of Nevada on May 22, 1997 for the purpose of engaging in any
lawful business activities. At the time of incorporation the Company
authorized 10,000,000 shares of no-par common stock. Currently, the
Company is involved in the computer technology and programming
services industry.
b. Depreciation
The cost of the Company's fixed assets is depreciated over the
estimated useful lives of the respective assets, which for the
Company's computer equipment, has been estimated at three years.
Depreciation is computed using the straight-line method when the
assets are placed in service.
c. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31
year-end.
d. Cash and Cash Equivalents
For purpose of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months
or less to be cash equivalents.
7
e. Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
f. Basic Loss Per Share
The Computation of basic and diluted loss per share of common stock
is based on the weighted average number of shares outstanding during
the periods presented.
g. Income Taxes
The Company has elected to file federal and state income taxes under
the provisions of Subchapter S of the Internal Revenue Code. Under
these provisions, the Company does not pay corporate income taxes on
its taxable income. Instead, the shareholders are liable for
individual income taxes on their respective shares of the Company's
net taxable income on their individual income tax returns.
Therefore, the Company has no provision or liability for income taxes
as of December 31, 2003.
h. Revenue Recognition
The Company recognizes consulting fees revenue when the services have
been provided and collection is reasonably assured.
NOTE 2 - FIXED ASSETS
Fixed assets at December 31, 2003 consisted of the following:
Computer equipment $ 6,832
Less: Accumulated depreciation (3,374)
------------
Equals: Net Fixed Assets $ 3,458
============
Depreciation expense for the years ended December 31, 2003 and 2002
was $436 and $1,125, respectively.
NOTE 3 - RELATED PARTY TRANSACTIONS
Related Party Payable
---------------------
During the years ended December 31, 2003 and 2002, one of the
Company's officers had made payments on certain Company obligations.
These payments have been accounted for as increases in a note payable
related party. As of December 31, 2003 and 2002, the balance on the
note payable related party was $9,421 and $1,921, respectively.
8
NOTE 4 - LINE OF CREDIT
The Company has an available line of credit of $80,000, which bears
interest at 6.25% per annum. The balance of the line of credit at
December 31, 2003 was $9,640.
NOTE 5 - SUBSEQUENT EVENT
On June 16, 2004 the Company entered into a Purchase Agreement with
GK International, Inc. (GK). Pursuant to the agreement, GK acquired
the Company as a wholly-owned subsidiary.
9
UNAUDITED CONDENSED COMBINED PRO FORMA FINANCIAL STATEMENTS
The following unaudited condensed combined pro forma financial statements
("the pro forma financial statements") and explanatory notes have been
prepared and give effect to the merger as an acquisition of Stellar Software
Network ("Stellar") by GK Intelligent Systems, Inc. ("GK"). The historical
financial statements prior to the effective date of the acquisition will be
those of GK.
In accordance with Article 11 of Regulation S-X under the Securities Act, an
unaudited condensed combined pro forma balance sheet (the "pro forma balance
sheet") as of December 31, 2003, and unaudited condensed combined pro forma
statements of income for the year ended December 31, 2003 and the six months
ended June 30, 2004 (the "pro forma statements of income"), have been prepared
to reflect, for accounting purposes, the acquisition of Stellar by GK.
The following pro forma financial statements have been prepared based upon the
historical financial statements of Stellar and GK. The pro forma financial
statements should be read in conjunction with (a) the historical consolidated
financial statements and related notes thereto of Stellar as of December 31,
2003 and 2002; and (b) the historical consolidated financial statements and
related notes thereto of GK as of December 31, 2003 and 2002; included in this
Form 8-K.
The December 31, 2003, pro forma balance sheet assumes that the acquisition of
Stellar by GK was completed on January 1, 2003. The December 31, 2003, pro
forma balance sheet includes the historical audited consolidated balance sheet
data of Stellar as of December 31, 2003, and the historical audited
consolidated balance sheet data of GK as of December 31, 2003. Stellar and GK
have had no intercompany activity that would require elimination in the pro
forma financial statements.
The pro forma statement of operations for the year ended December 31, 2003,
assumes that the acquisition of Stellar by GK occurred on January 1, 2003, and
includes the audited historical consolidated statement of operations data of
Stellar for the year ended December 31, 2003, and the audited historical
consolidated statement of operations data of GK for the year ended December
31, 2003.
The pro forma statement of operations for the six months ended June 30, 2004,
assumes that the acquisition of Stellar by GK occurred on January 1, 2003, and
includes the unaudited historical consolidated statement of operations data of
Stellar for the six months ended June 30, 2004, and the unaudited historical
consolidated statement of operations data of GK for the six months ended June
30, 2004.
The pro forma financial statements are provided for illustrative purposes
only, and are not necessarily indicative of the operating results or financial
position that would have occurred if the mergers had been consummated at the
beginning of the periods or on the dates indicated, nor are they necessarily
indicative of any future operating results or financial position. The pro
forma financial statements do not include any adjustments related to any
restructuring charges or one-time charges which may result from the mergers or
the final result of valuations of inventories, property, plant and equipment,
intangible assets, debt, and other obligations.
10
GK INTELLIGENT SYSTEMS, INC.
UNAUDITED CONDENSED COMBINED PRO FORMA BALANCE SHEET
Pro Forma
Stellar GK Combined
as of as of Combined Stellar and GK
December 31, December 31, Historical Pro Forma December 31,
2003 2003 Stellar and GK Adjustments 2003
-------------- ------------- -------------- ------------- --------------
<s> <c> <c> <c> <c> <c>
ASSETS
Current Assets:
Cash $ 34,111 $ 97 $ 34,208 $ - $ 34,208
Prepaid expenses - 6,476 6,476 - 6,476
Accounts receivable 128,177 - 128,177 - 128,177
-------------- ------------- -------------- ------------- --------------
Total Current Assets 162,288 6,573 168,861 - 168,861
-------------- ------------- -------------- ------------- --------------
Fixed Assets, Net: 3,457 - 3,457 - 3,457
Goodwill - - - 116,988 116,988
-------------- ------------- -------------- ------------- --------------
TOTAL ASSETS $ 165,745 $ 6,573 $ 172,318 $ 116,988 $ 289,306
============== ============= ============== ============= ==============
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $ 68,400 $ 157,998 $ 226,398 $ - $ 226,398
Accrued liabilities - 962,142 962,142 - 962,142
Accrued liabilities -
related parties - 442,628 442,628 - 442,628
Notes payable 9,639 530,500 540,139 - 540,139
Notes payable -
related party 9,421 216,296 225,717 - 225,717
-------------- ------------- -------------- ------------- --------------
Total Current Liabilities 87,460 2,309,564 2,397,024 - 2,397,024
-------------- ------------- -------------- ------------- --------------
Total Liabilities 87,460 2,309,564 2,397,024 - 2,397,024
-------------- ------------- -------------- ------------- --------------
Stockholders' Equity:
Preferred stock - - - - -
Common stock 4,273 27,562 31,835 (4,273)(1) 27,562
8,025 (2)
Additional paid-in capital - 40,574,178 40,574,178 4,273 (1) 40,578,451
182,975 (2)
Unearned compensation - (135,000) (135,000) - (135,000)
Accumulated deficit during
the development stage - - - - -
Retained earnings (deficit) 74,012 (42,769,731) (42,695,719) (74,012)(2)(42,769,731)
-------------- ------------- -------------- ------------- --------------
Total Stockholders' Equity 78,285 (2,302,991) (2,224,706) 116,988 (2,298,718)
-------------- ------------- -------------- ------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY(DEFICIT) $ 165,745 $ 6,573 $ 172,318 $ 116,988 $ 289,306
============== ============= ============== ============= ==============
___________________________
(1) To eliminate the common stock of Stellar as of the date of the merger.
(2) To record the issuance of 8,025,211 shares of common stock valued at $0.0238 per share in the
acquisition of Stellar Software Network, Inc.
11
<TABLE
UNITED COMPANIES CORPORATION
UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
Pro Forma
Stellar GK Combined
For the For the Stellar and GK
Year Ended Year Ended For the
Dec. 31, Dec. 31, Combined Pro Forma Year Ended
2003 2003 Stellar and GK Adjustments Dec. 31, 2003
-------------- ------------- -------------- ------------- --------------
<s> <c> <c> <c> <c> <c>
REVENUES
Consulting revenue $ 807,280 $ - $ 807,280 $ - $ 807,280
Other revenue 14,003 - 14,003 - 14,003
-------------- ------------- -------------- ------------- --------------
Total Revenues 821,283 - 821,283 - 821,283
-------------- ------------- -------------- ------------- --------------
COSTS AND EXPENSES
General and administrative 813,568 1,282,364 2,095,932 - 2,095,932
Depreciation and amortization 436 - 436 - 436
-------------- ------------- -------------- ------------- --------------
Total Costs and Expenses 814,004 1,282,364 2,096,368 - 2,096,368
-------------- ------------- -------------- ------------- --------------
OPERATING INCOME (LOSS) 7,279 (1,282,364) (1,275,085) - (1,275,085)
-------------- ------------- -------------- ------------- --------------
OTHER INCOME (EXPENSE)
Interest expense and loan
discount fees (1,421) (174,032) (175,453) - (175,453)
Gain on extinguishment of debt - 60,788 60,788 - 60,788
Gain on release of debt - 2,220,782 2,220,782 - 2,220,782
-------------- ------------- -------------- ------------- --------------
Total Other Income (Expense) (1,421) 2,107,538 2,106,117 - 2,106,117
-------------- ------------- -------------- ------------- --------------
NET INCOME $ 5,858 $ 825,174 $ 831,032 $ - $ 831,032
============== ============= ============== ============= ==============
Basic loss per share $ 5.86 $ 0.06 $ 0.04
============== ============= ==============
Weighted average
shares outstanding 1,000 14,058,866 8,024,211 22,084,077
============== ============= ============= ==============
12
UNITED COMPANIES CORPORATION
UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
Pro Forma
Stellar GK Combined
For the For the Stellar and GK
6 Mos. Ended 6 Mos. Ended For the
June 30, June 30, Combined Pro Forma 6 Mos. Ended
2004 2004 Stellar and GK Adjustments June 30, 2004
-------------- -------------- -------------- ------------- --------------
<s> <c> <c> <c> <c> <c>
REVENUES
Consulting revenue $ 287,880 $ - $ 287,880 $ - $ 287,880
Other revenue 6,256 - 6,256 - 6,256
-------------- -------------- -------------- ------------- --------------
Total Revenues 294,136 - 294,136 - 294,136
-------------- -------------- -------------- ------------- --------------
COSTS AND EXPENSES
General and administrative 683 264 947 - 947
Depreciation and amortization 247,344 1,306,774 1,554,118 - 1,554,118
-------------- -------------- -------------- ------------- --------------
Total Costs and Expenses 248,027 1,307,038 1,555,065 - 1,555,065
-------------- -------------- -------------- ------------- --------------
OPERATING INCOME (LOSS) 46,109 (1,307,038) (1,260,929) - (1,260,929)
-------------- -------------- -------------- ------------- --------------
OTHER INCOME (EXPENSE)
Interest expense and
loan discount fees - (50,907) (50,907) - (50,907)
Loss on extinguishment of debt - (22,121) (22,121) - (22,121)
Gain on release of debt - 871,090 871,090 - 871,090
-------------- -------------- -------------- ------------- --------------
Total Other Income (Expense) - 798,062 798,062 - 798,062
-------------- -------------- -------------- ------------- --------------
NET INCOME $ 46,109 $ (508,976) $ (462,867) $ - $ (462,867)
============== ============== ============== ============= ==============
Basic loss per share $ (0.01) $ (0.06) $ (0.06) $ (0.01)
============== ============== ============== ==============
Weighted average shares
outstanding 1,000 45,211,781 45,212,781 8,024,211 53,236,992
============== ============== ============== ============= ==============
13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GK Intelligent Systems, Inc.
(Registrant)
Date: September 28, 2004 /s/ Gary F. Kimmons
-----------------------------------------
Gary F. Kimmons,
President and Chief
Executive Officer