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 Quarterly period Ended: March 31, 2005; 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
_________________________________
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(FKA 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.)
432 Park Avenue South, 2nd Floor, New York, NY 10016
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(Address of principal executive offices) (Zip Code)
(212) 732-2310
------------------------------------------------------
(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 21, 2005, was 17,268,856.
Transitional Small Business Disclosure Format. Yes [ ] No [X]
1
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(FKA GK INTELLIGENT SYSTEMS, INC.)
Report on Form 10-QSB
For the Quarter Ended March 31, 2005
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements (unaudited)................... 3
Balance Sheets..................................... 4
Statements of Operations .......................... 5
Statements of Cash Flows........................... 6
Notes to the Financial Statements ................. 8
Item 2. Management's Discussion and Analysis
or Plan of Operation .............................. 12
Item 3. Controls and Procedures ........................... 15
Part II. Other Information
Item 1. Legal Proceedings ................................. 15
Item 2. Changes in Securities ............................. 16
Item 3. Defaults Upon Senior Securities ................... 16
Item 4. Submission of Matters to a Vote of
Security Holders .................................. 16
Item 5. Other Information ................................. 17
Item 6. Exhibits........................................... 17
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(FKA GK INTELLIGENT SYSTEMS, INC.)
FINANCIAL STATEMENTS
March 31, 2005
3
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intelligent Systsems, Inc., and Subsidiaries)
Consolidated Balance Sheet
ASSETS
------
March 31, December 31,
2005 2004
------------- -------------
CURRENT ASSETS (Unaudited)
Cash $ 55,931 $ 54,096
Accounts receivable 219,824 183,104
Other current assets 27,708 3,473
------------- -------------
Total Current Assets 303,463 240,673
------------- -------------
FIXED ASSETS, NET 17,144 9,964
------------- -------------
OTHER ASSETS
Goodwill 2,460,681 136,839
Investments 57,524 -
------------- -------------
Total Other Assets 2,518,205 136,839
------------- -------------
TOTAL ASSETS $ 2,838,812 $ 387,476
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 514,758 $ 257,548
Accounts payable - related parties - 3,697
Bank overdraft 2,183 -
Accrued expenses 797,558 777,634
Accrued expenses - related parties 132,980 65,681
Accrued acquisition costs 1,020,000 -
Notes payable 241,535 164,000
Notes payable - related parties 417,382 232,421
------------- -------------
Total Current Liabilities 3,126,396 1,500,981
------------- -------------
TOTAL LIABILITIES 3,126,396 1,500,981
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: $0.001 par value, 100,000
shares authorized, 100,000 and -0- shares
issued and outstanding, respectively 100 -
Common stock: $0.001 par value, 275,000,000
shares authorized, 1,304,642 and 1,112,731
shares issued and outstanding, respectively 1,305 1,113
Additional paid-in capital 48,458,411 46,811,939
Stock subscriptions receivable (500,000) (500,000)
Accumulated deficit (48,247,400) (47,426,557)
------------- -------------
Total Stockholders' Equity (Deficit) (287,584) (1,113,505)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 2,838,812 $ 387,476
============= =============
The accompanying notes are an integral part of these
consolidated financial statements
4
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intellitent Systems, Inc. and Subsidiaries)
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
March 31,
---------------------------
2005 2004
------------- -------------
REVENUES $ 476,250 $ -
COST OF GOODS SOLD 302,227 -
------------- -------------
GROSS PROFIT 174,023 -
------------- -------------
OPERATING EXPENSES
Depreciation and amortization 1,274 -
Payroll expenses 97,826 -
Professional fees 632,663 -
General and administrative 246,127 489,642
------------- -------------
Total Expenses 977,890 489,642
------------- -------------
LOSS FROM OPERATIONS (803,867) (489,642)
------------- -------------
OTHER INCOME (EXPENSE)
Gain on release of debt - 871,090
Interest expense and loan discount fees (16,975) (29,519)
------------- -------------
Total Other Income (Expense) (16,975) 841,571
------------- -------------
NET INCOME (LOSS) (820,842) 351,929
DIVIDENDS ON PREFERRED STOCK - -
------------- -------------
NET INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS $ (820,842) $ 351,929
============= =============
BASIC INCOME (LOSS) PER SHARE $ (0.71) $ 2.36
============= =============
FULLY DILUTED INCOME (LOSS) PER SHARE $ (0.71) $ 2.36
============= =============
BASIC WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 1,154,625 149,243
============= =============
FULLY DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING 1,154,625 149,243
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
5
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intelligent Systems, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
---------------------------
2005 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (820,842) $ 351,929
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 1,274 -
Gain on release of debt - (871,090)
Amortization of unearned compensation - 54,518
Issuance of common stock, stock options,
and warrants for services rendered 386,764 330,201
Changes in operating assets and liabilities:
Decrease in accounts receivable 45,919 -
(Increase) decrease in other current assets 4,708 6,476
Increase (decrease) in accounts payable and
accrued expenses 101,966 (70,943)
Increase in accounts payable and accrued
expenses - related party 63,602 127,429
------------- -------------
Net Cash Used by Operating Activities (216,609) (71,480)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (406) -
Cash received in acquisition transactions 10,227 -
------------- -------------
Net Cash Used by Investing Activities 9,821 -
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 27,937 47,000
Proceeds from notes payable - related party 178,503 -
Increase in stock subscription payable - 25,000
Increase in bank overdraft 2,183 -
------------- -------------
Net Cash Provided by Financing Activities 208,623 72,000
------------- -------------
NET INCREASE (DECREASE) IN CASH 1,835 520
CASH AT BEGINNING OF PERIOD 54,096 97
------------- -------------
CASH AT END OF PERIOD $ 55,931 $ 617
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
6
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intelligent Systems, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the Three Months Ended
March 31,
---------------------------
2005 2004
------------- -------------
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:
Cash Paid For:
Income taxes $ - $ -
Interest $ - $ -
Schedule of Non-Cash Investing and Financing
Activities:
Common stock issued for debt $ - $ 150,000
Preferred stock issued in acquisition of
subsidiary $ 1,260,000 $ -
Acquisition of subsidiary for accrued
compensation costs $ 1,020,000 $ -
The accompanying notes are an integral part of these
consolidated financial statements.
7
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intelligent Systems, Inc. And Subsidiaries)
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 ended March 31,
2005 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2005.
NOTE 2 - DESIGNATION OF PREFERRED STOCK
On February 7, 2005, the Company's Board of Directors elected to create and
designate a class of Series B Convertible Preferred Stock, primarily for the
purpose of facilitating the consummation of the Company's acquisition of
Corazong Music Management, B.V. As a part of this action, the Board of
Directors authorized 100,000 shares of $0.001 par value Series B Convertible
Preferred Stock, which could be converted into common stock at a rate of 3.15
post-split common shares for one preferred share, after May 1, 2005. The
preferred shares carry no liquidation preference, and no dividend rate.
NOTE 3 - ACQUISITIONS
Acquisition of Corazong Music Management
----------------------------------------
On January 17, 2005, the Company entered into a Purchase Agreement with two
unrelated individuals, whereby the Company acquired all of the issued and
outstanding common stock of Corazong Music Management B.V., a Dutch
corporation ("Corazong"), in exchange for $1,260,000, paid in the form of
100,000 shares of Series B Convertible Preferred Stock. The Company also
agreed to provide Corazong with a $1,500,000 line of credit to be used to
develop and market its catalog and to develop new talent and artists. The
transaction closed on February 11, 2005. As an additional stipulation of the
Agreement with Corazong, the sellers have retained the right to repurchase 49%
of Corazong for a period of up to two years. The Company recorded goodwill
totaling $1,336,378 relating to the acquisition of Corazong.
Corazong, formerly a privately-held European company, is a music recording and
production entity that released its first music CD in 1999 and is currently
attempting to expand its operations into Western Europe and the United States.
The most significant asset currently managed by Corazong is its catalog of
music recordings.
Acquisition of R.S. Entertainment
---------------------------------
On March 2, 2005, the Company agreed to purchase all of the outstanding common
stock of R.S. Entertainment, Inc., a Utah Corporation, ("RSE") for $1,000,000
in shares of the Company's unregistered common stock. The Company also
agreed to provide RSE with a $2,500,000 line of credit to be used for print
and advertising funds for the films it distributes. By providing the print and
advertising money for the films it distributes, RSE expects to retain a
substantial percentage of the box office and residual revenues from the films.
The Line of Credit is expected to be available to RSE upon the Company's
successful completion of its proposed financing. In the event that the line of
credit is not available as of May 31, 2005, an additional 5,000 post-split
shares of the Company's common stock will be issued each month until the line
of credit becomes available. The Company recorded $987,465 in goodwill
relating to this acquisition.
8
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intelligent Systems, Inc. And Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 3 - ACQUISITIONS (Continued)
Acquisition of R.S. Entertainment (Continued)
---------------------------------------------
The Sellers have the right to rescind this Agreement if line of credit is not
available after 120 days of the closing date. Should this Agreement be
rescinded, the Sellers will return the Company's shares received as part of
the purchase price for the RSE stock. Sellers shall retain any shares issued
in connection with their employment with RSE (subsequent to March 2, 2005) as
liquidated damages. As of the date of this report, the Company had not yet
issued the $1,020,000 in common shares associated with this Agreement. The
amount has been recorded as accrued acquisition costs on the Company's balance
sheet. Furthermore, as of March 31, 2005, the Company has not yet secured the
$2,500,000 line of credit for RSE.
Specializing in the independent motion picture industry, RSE provides
theatrical film distribution services and strategic market development. RSE
works with third parties in creative advertising, media placement and public
relations to achieve maximum box office return for their clients. RSE also
offers complete distribution services for clients whether the release is
limited, regional or nationwide.
The founders of R.S. are Ron Rodgers and Randy Slaughter. Each has over 35
years of theatrical distribution and marketing experience. Both Mr. Rodgers
and Mr. Slaughter will retain their executive positions with RSE subsequent to
its acquisition by the Company.
Pro Forma Information
---------------------
The following unaudited pro forma information is presented to reflect the
operations of the Company is if the acquisitions of Corazong Music Management
and R.S. Entertainment had been completed on January 1, 2005 and 2004,
respectively:
For the three months ended
March 31,
---------------------------
2005 2004
------------- -------------
Revenues $ 585,612 $ 697,220
Loss from Operations (864,920) (75,791)
Net Income (Loss) (881,895) 639,094
Loss per Common Share:
Basic Net Income (Loss) per Common Share $ (0.75) $ 4.28
Diluted Net Income (Loss) per Common Share $ (0.75) $ 4.28
NOTE 4 - COMMON STOCK ACTIVITY
During the three months ended March 31, 2005, the Company issued 190,441 post-
split shares of its previously unissued common stock to various parties as
consideration for services rendered at $2.00 per share. In addition, the
Company issued 1,471 shares at $4.00 per share for services rendered.
NOTE 5 - SUBSEQUENT EVENTS
Acquisition of White Canyon and Channel Access
----------------------------------------------
On April 7, 2005, the Company entered into a Purchase Agreement with two
unrelated individuals, whereby it acquired 100% of the issued and outstanding
common stock of White Canyon, Inc. ("White Canyon") and Channel Access, Inc.
("Channel Access"). According to the terms of the Agreement, the Company
issued to the individuals an aggregate of 1,000,000 shares of restricted
Series C convertible preferred stock, each share of which may be converted
into four shares of restricted common stock, or redeemed by the Company at
$4.00 per share. Additionally, upon the Company's completion of a
stock-split, the Company will issue to the individuals an additional 100,000
post-split shares of its common stock as further consideration for the
acquisitions. Both White Canyon and Channel Access are entities specializing
in the sale and distribution of proprietary computer software programs. Both
entities reported significant revenues during the year ended December 31, 2004
as well as an overall net income from operations.
9
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intelligent Systems, Inc. And Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 5 - SUBSEQUENT EVENTS (Continued)
Acquisition of White Canyon and Channel Access (continued)
----------------------------------------------------------
Upon the Company's completion of a listing on the American Stock Exchange or
on September 30, 2005, whichever is earlier, the Company will redeem any
unconverted shares of preferred stock at $4.00 per share. The Company
anticipates that, following the Closing Date, White Canyon and Channel Access
will operate as subsidiaries ("Subsidiaries") of the Company. Also, the
Sellers have the right to rescind this Agreement if any unconverted preferred
shares are not redeemed by September 30, 2005. Should this Agreement be
rescinded, the Sellers will return the Company's shares received as part of
the purchase price for the White Canyon and Channel Access stock. The Sellers
shall retain the 20,000,000 (pre split) common shares issued in connection
with the Agreement as full liquidated damages.
White Canyon, Inc. is a provider of security software aimed at protecting
individuals and businesses from personal identity theft and trade secret
theft. White Canyon markets and sells a hard drive sanitizing software product
called WipeDrive, and an individual file scanning and deletion utility program
called SecureClean.
Channel Access specializes in marketing and distributing utility and personal
productivity software products to retail stores in the United Sates and
Canada. Channel Access also distributes utility software for GetData, an
Australian software manufacturer.
Reverse Stock-Split
------------------
May 10, 2005, the Company's Board of Directors ratified by unanimous written
consent a proposal to effect a reverse stock-split of the authorized and
issued common stock on a one share for two hundred shares basis (1:200). The
split became effective at the opening of business on May 18, 2005. Following
the reverse stock split, the total outstanding shares of common stock was
reduced to 1,374,759 shares. All references to common stock activity within
these consolidated financial statements have been retroactively restated to
reflect the effect of this reverse stock-split.
Change of Corporate Name
------------------------
On May 10, 2005, the Company's Board of Directors resolved to change the
Company's corporate name from GK Intelligent Systems, Inc. to M Power
Entertainment, Inc.
Common Stock Issuances
----------------------
In April, 2005, the Company issued 47,697 post-split common shares at $2.00
per share to various individuals for services rendered.
In May, 2005, the Company issued 15,834,596 post-split common shares to
various individuals for services rendered at prices ranging from $0.40 to
$1.30 per share.
In June, 2005, the company issued 82,000 shares of post-split common stock to
various individuals as consideration for services rendered at $0.50 per share.
10
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(Formerly GK Intelligent Systems, Inc. And Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 6 - BUSINESS CONDITION
The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, the Company does not have significant
amounts of cash or other material liquid assets, nor does it have an
established source of revenues sufficient to cover its operating costs and to
allow it to continue as a going concern. The consolidated financial
statements do not reflect any adjustments that might result from the outcome
of this uncertainty
The Company's ability to continue as a going concern is dependent upon its
ability to a) maximize and grow its current revenue streams; b) streamline
current operations to reduce costs and overhead; and c) generate additional
debt and equity capital sufficient to continue carrying-out its business plan
and to pay its obligations as they become due. In addition, the Company
anticipates entering into various arrangements with compatible operating
business.
11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis compares our results of operations for
the three months ended March 31, 2005 to the same period in 2004. This
discussion and analysis should be read in conjunction with our consolidated
condensed financial statements and related notes thereto included elsewhere in
this report and our Form 10-KSB for the year ended December 31, 2004.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report on Form 10-QSB contains forward-looking statements, including,
without limitation, statements concerning possible or assumed future results
of operations and those preceded by, followed by or that include the words
"believes," "could," "expects," "intends" "anticipates," or similar
expressions. Our actual results could differ materially from these anticipated
in the forward-looking statements for many reasons including the risks
described in our 10-KSB for the period ended December 31, 2004 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
Our business plan is to become a next-generation media and entertainment
corporation. To capitalize on what we believe to be a significant investment
opportunity, we launched a new music entity called Recording Artists Worldwide
Inc. ("RAWW") We are seeking to acquire privately held entertainment
entities, initially in the music sector.
In July 2004, we acquired Stellar Software Solutions, Inc. as a wholly owned
subsidiary. Stellar Software Network is a Texas corporation that hires
programmers and contracts them to companies. The acquisition of Stellar
Software Network allowed us to generate our first revenues since 1999.
In August 2004, we acquired Ascendant Texas Source Group, Inc., a Texas
corporation, that is a full service provider of quality collaborative
e-business process software, process consulting, rapid web development and
hosting services.
We acquired Stellar Software Network Inc. and Ascendant Texas Source Group,
Inc. to create positive initial cash flow and to create an internal
architecture for managing future acquisitions.
In January of 2005, Ascendant lost its only significant customer and ceased
operations. The Company is in litigation with the former owner of Ascendant,
asserting misrepresentation of its status at the time of the sale and seeking
to recover the shares issued in the transaction. The seller has made various
counter claims. The results of the litigation are undeterminable at this time.
12
On January 17, 2005, the Company entered into a Purchase Agreement with
two unrelated individuals, whereby the Company acquired all of the issued
and outstanding common stock of Corazong Music Management B.V., a Dutch
corporation ("Corazong"), in exchange for $1,260,000, in the form of
100 shares of Series B Convertible Preferred Stock. The Company also agreed
to provide Corazong with a $1,500,000 line of credit to be used to develop
and market its catalog and to develop new talent and artists. The
transaction closed on February 11, 2005. As an additional stipulation of
the Agreement with Corazong, the sellers have retained the right to
repurchase 49% of Corazong for a period of up to two years.
Corazong, formerly a privately-held European company, is a music recording and
production entity that released its first music CD in 1999 and is currently
attempting to expand its operations into Western Europe and the United States.
The most significant asset currently managed by Corazong is its catalog of
music recordings.
On March 2, 2005, the Company agreed to purchase all of the outstanding common
stock of R.S. Entertainment, Inc., a Utah Corporation, ("RSE") for $1,000,000
in shares of the Company's unregistered common stock. The Company also agreed
to provide RSE with a $2,500,000 line of credit to be used for print and
advertising funds for the films it distributes. By providing the print and
advertising money for the films it distributes, RSE expects to retain a
substantial percentage of the box office and residual revenues from the films.
The Line of Credit is expected to be available to RSE upon the Company's
successful completion of its proposed financing. In the event that the line of
credit is not available as of May 31, 2005, an additional 1,000,000 shares of
the Company's common stock will be issued each month until the line of credit
becomes available.
The Sellers have the right to rescind this Agreement if line of credit is not
available after 120 days of the closing date. Should this Agreement be
rescinded, the Sellers will return the Company's shares received as part of
the purchase price for the RSE stock. Sellers shall retain any shares issued
in connection with their employment with RSE (subsequent to March 2, 2005) as
liquidated damages.
Specializing in the independent motion picture industry, RSE provides
theatrical film distribution services and strategic market development. RSE
works with third parties in creative advertising, media placement and public
relations to achieve maximum box office return for their clients. RSE also
offers complete distribution services for clients whether the release is
limited, regional or nationwide.
The founders of R.S. are Ron Rodgers and Randy Slaughter. Each has over 35
years of theatrical distribution and marketing experience. Both Mr. Rodgers
and Mr. Slaughter will retain their executive positions with RSE subsequent to
its acquisition by the Company.
RESULTS OF OPERATIONS
THREE MONTHS ENDED March 31, 2005 AS COMPARED TO THE THREE MONTHS ENDED MARCH
31, 2004
We had net revenues of $476,250 for the three months ended March 31, 2005
compared to $-0- for same period in 2004. The increase in net revenues was the
result of our purchasing four subsidiaries. Our subsidiary, Texas Source
Group, had revenues of $39,431 and, Stellar Software Network had revenues of
$307,266 for the quarter. Our new subsidiaries, Corazong Music and R.S.
Entertainment, had revenues of $91,248 and $38,305, respectively, from the
dates we bought them to the end of the quarter.
13
We had operating expenses of $977,890 for the three months ended March 31,
2005 compared to $489,642 for the comparative period of 2004. $178,723 of this
increase was due to the costs incurred as we sought acquisitions of our
operating subsidiaries. Beginning in 2004 we hired consultants to develop our
business plan and provide legal and accounting services. $386,764 and
$384,719, respectively, of the consulting expenses incurred in each period
were paid in shares or options for shares of our common stock.
The other reason our operating expenses increased this year when compared to
last year was our acquisition of our operating subsidiaries. Stellar Software
Network had operating expenses of $169,902 and Texas Source Group had $65,570,
respectively. Corazong Music and R.S. Entertainment had $25,800 and $48,253 of
these expenses, respectively, after we bought them. We had no active
subsidiaries in the first quarter of 2004.
Interest expense during the three months ended March 31, 2005 was $16,975, a
decrease of $12,544 from the three months ended March 31, 2004. We attribute
the decrease in interest expense to the decrease in debt due to the passing of
the statute of limitations of some of our old debt. 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. During the quarter ended March 31, 2004 we recorded a gain
on release of debt of $871,090 for those debts which we are no longer
obligated to pay due to the statute of limitations. These debts were incurred
under our prior operations.
Our net loss was $820,842 during the three months ended March 31, 2005
compared to a net income of $351,929 incurred in the first three months of
2004. Our increased net loss was the result of our efforts to acquire
operating companies and the related cost of the consultants we hired to make
these acquisitions. The gain on forgiveness of debt is an unusual occurrence
and is not part of our ongoing operations. Excluding the gain on the release
of debt the loss for the first quarter of 2004 would have been $519,161.
Therefore the increase in the loss as actually incurred in the comparative
periods was $301,681.
LIQUIDITY
During the three months ended March 31, 2005, we used cash from operations of
$196,866 compared to using $71,480 in the comparative quarter of the prior
year. This is the result of our acquiring our four active subsidiaries. We had
cash on hand of $55,931 as of March 31, 2005 compared to $617 cash as of March
31, 2004. $184,961 of the cash we used in 2005 came from loans from related
parties.
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 are seeking to raise such needed funds through the
sale of our shares of stock or through issuing debt. We may not be able to
raise the necessary funds on terms acceptable to us, or at all.
14
Item 3. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Company's
Chief Executive Officer, Gary F. Kimmons, and Chief Financial Officer, Gary F.
Kimmons, have reviewed the Company's disclosure controls and procedures as of
the end of the period covered by this report. Based upon this review, Mr.
Kimmons believes that the Company's disclosure controls and procedures are
effective in ensuring that material information related to the Company is made
known to him by others within the Company.
(b) Changes in Internal Controls Over Financial Reporting. There have
been no significant changes in internal controls over financial reporting that
occurred during the fiscal period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
PART II - OTHER INFORMATION.
Item 1. Legal Proceedings.
Texas Workforce Commission. On February 10, 2000, the Texas Workforce
Commission placed an administrative lien on us in the amount of $109,024 in
connection with a claim for unpaid compensation by our former employees.
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 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 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. The case was dismissed by
the Federal court in 2005 but the plaintiffs re-filed in state court alleging
a sworn account. We have filed an Answer asserting our statute of limitations
defense.
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 we never occupied. Plaintiff is requesting past due rents of an
unspecified amount, broker's commission of $21,806, tenant improvements of
$51,439, attorney's fees, costs, and prejudgment interest. 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. The case was tried on May 12, 2005. Post-trial briefs have
been submitted to the Court and a ruling is pending.
Marathon Oil Company. A default judgment was taken against us in favor of
Marathon Oil Company on August 31, 1999 in the amount of $326,943 representing
past and future rentals under a lease agreement, together with $7,500 in
attorney's fees and post judgment interest at 10% per annum until paid.
Credit towards the judgment was ordered for sale of personal property by the
Sheriff or Constable. We believe the personal property sold for approximately
$28,000. To the extent that the property was leased during the unexpired
term, it is possible that there would be a mitigation of the damages claim in
our favor. We believe that some or all of the space was subsequently rented
approximately 90 days later.
15
A lawsuit was filed by Julie Maranto, the former owner of Texas Source Group,
Inc. against us, Texas Source Group, Inc. and Gary Kimmons as CEO. The cause
of action from the pleadings appears to be primarily breach of contract
relating to her employment agreement. Damages have not been specified. It is
too early to tell the likely outcome of the case.
We are not aware of other claims or assessments, other than as described
above, which may have a material adverse impact on our financial position or
results of operations.
Item 2. Changes in Securities.
Recent Sales of Unregistered Securities
- ---------------------------------------
On January 18, 2005, February 11, 2005 and March 30, 2005, we issued 294,117
shares, respectively, of common stock to Sunny Nariani for consulting services
rendered to the Company. The securities were registered under Regulation S-8.
The party to whom the shares were issued received information concerning the
Company. No underwriters were involved in the transactions and no commissions
were paid.
On February 11, 2005, we issued 3,000,000 shares, respectively, of common
stock to various individuals for consulting services rendered to the Company.
The securities were registered under Regulation S-8. The party to whom the
shares were issued received information concerning the Company. No
underwriters were involved in the transactions and no commissions were paid.
On February 18, 2005, we issued 4,500,000 restricted shares of common stock to
the Company's CEO, Gary F. Kimmons, for compensation. The securities were
issued pursuant to an exemption from registration provided under Section 4(2)
and 4(6) of the Securities Act of 1933. The party to whom the shares were
issued received information concerning the Company. The shares were
appropriately restricted. No underwriters were involved in the transactions
and no commissions were paid.
On March 30, 2005, we issued 30,000,000 shares, respectively, of common stock
to various consultants for consulting services rendered to the Company. The
securities were registered under Regulation S-8. The party to whom the shares
were issued received information concerning the Company. No underwriters were
involved in the transactions and no commissions were paid.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
In March 2005, the Company submitted to its shareholders a proposal to split
its common shares on a one share for two hundred shares basis. The reverse
split was approved by a majority of the Company's shareholders and effectuated
in May of 2005. In addition, the Company shareholders approved an official
change of the Company's corporate name from GK Intelligent Systems, Inc. to
M. Power Entertainment, Inc.
Item 5. Other Information.
On April 7, 2005, the Company's Articles of Incorporation were amended to
create a certificate of designation for Series C Convertible Preferred Stock
in connection with the acquisition of White Canyon, Inc. and Channel Access,
Inc.
16
On April 7, 2005, the Company acquired all of the outstanding shares of White
Canyon, Inc. and Channel Access, Inc., Utah Corporations for 1,000,000 shares
of its Series C Convertible Preferred Stock.
On May 18, 2005, the Company amended its Articles of Incorporation to record
the reverse split of its common stock on a one share for two hundred shares
basis. Also on this date the Company further amended its Articles of
Incorporation so as to change its corporate name from GK Intelligent Systems,
Inc. to M Power Entertainment, Inc.
On May 23, 2005, the Company's independent auditors resigned and the Company
engaged new independent auditors.
Item 6. Exhibits
List of Exhibits attached or incorporated by referenced pursuant to Item 601
of Regulation S-B.
Exhibit Number Description of Exhibit
- -------------------------------------------------------
2.1 Corporate Reorganization Agreement between the Company and Julie Maranto,
dated August 13, 2004 (included as Exhibit 2.1 to the Form 8-K filed
August 19, 2004, and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation, dated August 11, 1995
(included as Exhibit 3.(i) to the Form 10-SB12G filed January 24, 1997,
and incorporated herein by reference).
3.2 Amended and Restated Bylaws, dated August 11, 1995 (included as Exhibit
3.(ii) to the Form 10-SB12G filed January 24, 1997, and incorporated
herein by reference).
3.3 Certificate of Amendment to the Certificate of Incorporation (included as
Exhibit 3.3 to the Form 10-KSB filed September 14, 1998, and incorporated
herein by reference).
3.4 Certificate of Amendment to the Certificate of Incorporation (included as
Exhibit 3.(i) to the Form 10-QSB filed May 5, 2003, and incorporated
herein by reference).
4.1 Registration Rights Agreement between the Company and Benchmark
Consulting Inc., dated May 30, 2003 (included as Exhibit 10.37 to the
Form 10-QSB filed August 18, 2003, and incorporated herein by reference).
4.2 Warrant Agreement between the Company and Benchmark Consulting Inc.,
dated May 30, 2003 (included as Exhibit 10.38 to the Form 10-QSB filed
August 18, 2003, and incorporated herein by reference).
4.3 Registration Rights Agreement between the Company and Dutchess Private
Equities Fund, II, L.P., dated June 23, 2004 (included as Exhibit 10.70
to the Form 8-K filed June 29, 2004, and incorporated herein by
reference).
4.4 Warrant Agreement between the Company and Rubenstein Investor Relations,
Inc., dated September 16, 2004 (included as Exhibit 4.1 to the Form
10-QSB filed November 22, 2004, and incorporated herein by reference).
17
4.5 Amended and Restated Certificate of Designation for Series B Convertible
Preferred Stock, dated March 2, 2005 (included as Exhibit 4.1 to the
Form 8-K filed March 10, 2005, and incorporated herein by reference).
4.6 Certificate of Designation for Series C Convertible Preferred Stock,
dated April 1, 2005 (included as Exhibit 4.1 to the Form 8-K filed April
13, 2005, and incorporated herein by reference).
10.1 Consulting Agreement between the Company and Berkshire Capital
Management Co., Inc., dated April 24, 2001 (included as Exhibit 10.11 to
the Form 8-K filed November 6, 2002, and incorporated herein by
reference).
10.2 Consulting and Finder's Fee Agreement between the Company and The Herman
Group, L.P., dated May 29, 2001 (included as Exhibit 10.12 to the Form
8-K filed November 6, 2002, and incorporated herein by reference).
10.3 Engagement Letter between the Company and Petty International
Development Corp., dated April 5, 2001 (included as Exhibit 10.13 to the
Form 8-K filed November 6, 2002, and incorporated herein by reference).
10.4 Consulting Agreement between the Company and Ron Sparkman, dated March
7, 2001 (included as Exhibit 10.14 to the Form 8-K filed November 6,
2002, and incorporated herein by reference).
10.5 Consulting Agreement between the Company and Rockne J. Horvath, dated
March 6, 2002 (included as Exhibit 10.15 to the Form 8-K filed November
6, 2002, and incorporated herein by reference).
10.6 Consulting Agreement between the Company and Stephen K. Carper, dated
March 13, 2002 (included as Exhibit 10.16 to the Form 8-K filed November
6, 2002, and incorporated herein by reference).
10.7 Consulting Agreement between the Company and Renee H. Ethridge, dated
March 15, 2002 (included as Exhibit 10.17 to the Form 8-K filed November
6, 2002, and incorporated herein by reference).
10.8 Consulting Agreement between the Company and Technical Objective, Inc.,
dated March 18, 2002 (included as Exhibit 10.18 to the Form 8-K filed
November 6, 2002, and incorporated herein by reference).
10.9 Debt Resolution Agreement between the Company and Gary F. Kimmons, dated
March 20, 2002 (included as Exhibit 10.19 to the Form 8-K filed November
6, 2002, and incorporated herein by reference).
10.10 Interim Compensation Agreement between the Company and Gary F. Kimmons,
dated March 20, 2002 (included as Exhibit 10.20 to the Form 8-K filed
November 6, 2002, and incorporated herein by reference).
10.11 Amended and Restated Consulting Agreement between the Company and Dick
Meador, dated March 20, 2002 (included as Exhibit 10.21 to the Form 8-K
filed November 6, 2002, and incorporated herein by reference).
18
10.12 Promissory Note between the Company and BDO Seidman LLP, dated June 2,
2002 (included as Exhibit 10.22 to the Form 8-K filed November 6, 2002,
and incorporated herein by reference).
10.13 Consulting Agreement between the Company and Alan S. Litvak, dated
September 13, 2002 (included as Exhibit 10.23 to the Form 8-K filed
November 6, 2002, and incorporated herein by reference).
10.14 Promissory Note from the Company to Gary Kimmons, dated September 26,
2002 (included as Exhibit 10.24 to the Form 8-K filed November 6, 2002,
and incorporated herein by reference).
10.15 Marketing Agreement between the Company and BTH2, dated June 1, 2002
(included as Exhibit 10.25 to the Form 10-QSB filed May 5, 2003, and
incorporated herein by reference).
10.16 Consulting Agreement between the Company and AfterPlay Entertainment
Inc., dated November 12, 2002 (included as Exhibit 10.26 to the Form
10-KSB filed May 5, 2003, and incorporated herein by reference).
10.17 Consulting Agreement between the Company and Suns Associates Group,
dated November 13, 2002 (included as Exhibit 10.27 to the Form 10-KSB
filed May 5, 2003, and incorporated herein by reference).
10.18 Non-Employee Director Agreement between the Company and Dick Meador,
dated March 31, 2003 (included as Exhibit 10.28 to the Form 10-KSB filed
May 5, 2003, and incorporated herein by reference).
10.19 Employment Agreement between the Company and Gary F. Kimmons, dated
February 1, 2003 (included as Exhibit 10.29 to the Form 10-KSB filed May
5, 2003, and incorporated herein by reference).
10.20 2003 Stock Option Plan, dated February 1, 2003 (included as Exhibit 4.1
to the Form S-8 filed May 12, 2003, and incorporated herein by
reference).
10.21 Non-Employee Directors and Consultants Retainer Stock Plan for the Year
2003, dated April 1, 2003 (included as Exhibit 4.2 to the Form S-8 filed
May 12, 2003, and incorporated herein by reference).
10.22 Settlement Agreement between the Company and Brewer & Pritchard, P.C.,
dated April 28, 2003 (included as Exhibit 4.3 to the Form S-8 filed May
12, 2003, and incorporated herein by reference).
10.23 Financial Public Relations Agreement between the Company and Strategic
Resources, dated April 24, 2003 (included as Exhibit 10.32 to the Form
10-QSB filed August 18, 2003, and incorporated herein by reference).
10.24 Settlement Agreement between the Company and Brewer & Pritchard, P.C.,
dated April 28, 2003 (included as Exhibit 10.33 to the Form 10-QSB filed
August 18, 2003, and incorporated herein by reference).
10.25 Consulting Agreement between the Company and Sage Office Solutions,
dated May 4, 2003 (included as Exhibit 10.34 to the Form 10-QSB filed
August 18, 2003, and incorporated herein by reference).
10.26 Consulting Agreement between the Company and Donald Giebler, dated May
14, 2003 (included as Exhibit 10.35 to the Form 10-QSB filed August 18,
2003, and incorporated herein by reference).
19
10.27 Consulting Agreement between the Company and Benchmark Consulting Inc.,
dated May 30, 2003 (included as Exhibit 10.36 to the Form 10-QSB filed
August 18, 2003, and incorporated herein by reference).
10.28 Consulting Agreement between the Company and W. Andrew Stack, dated July
22, 2003 (included as Exhibit 10.39 to the Form 10-QSB filed August 18,
2003, and incorporated herein by reference).
10.29 Consulting Agreement between the Company and Gust C. Kepler, dated
September 17, 2003 (included as Exhibit 4.1 to the Form S-8 filed
September 19, 2003, and incorporated herein by reference).
10.30 Compensation Agreement between the Company and Wenthur & Chachas, LLP,
dated September 17, 2003 (included as Exhibit 4.2 to the Form S-8 filed
September 19, 2003, and incorporated herein by reference).
10.31 BMA Ventures, Inc. Agreement between the Company and BMA Ventures, Inc.,
dated November 11, 2003 (included as Exhibit 10.42 to the Form 10-QSB
filed November 17, 2003, and incorporated herein by reference).
10.32 Distribution Agreement between the Company and NPI Management Group,
Inc., dated October 10, 2003 (included as Exhibit 99.1 to the Form
10-QSB filed November 17, 2003, and incorporated herein by reference).
10.33 Consulting Services Agreement between the Company and Stanton, Walker &
Company, dated November 5, 2003 (included as Exhibit 4.1 to the Form S-8
filed November 10, 2003, and incorporated herein by reference).
10.34 Consulting Services Agreement between the Company and Wenthur & Chachas,
LLP, dated November 5, 2003 (included as Exhibit 4.2 to the Form S-8
filed November 10, 2003, and incorporated herein by reference).
10.35 2004 Stock Option Plan (included as Exhibit 4.1 to the Form S-8 filed
April 5, 2004, and incorporated herein by reference).
10.36 Non-Employee Director Agreement between the Company and Dick Meador,
dated December 24, 2003 (included as Exhibit 10.47 to the Form 10-KSB
filed April 23, 2004, and incorporated herein by reference).
10.37 Promissory Note from the Company to Deanna Slater, dated December 31,
2003 (included as Exhibit 10.48 to the Form 10-KSB filed April 23, 2004,
and incorporated herein by reference).
10.38 Promissory Note from the Company to Joel Pickell, dated December 31,
2003 (included as Exhibit 10.49 to the Form 10-KSB filed April 23, 2004,
and incorporated herein by reference).
10.39 Referral Fee Agreement between the Company and Michael Aczon, dated
January 19, 2004 (included as Exhibit 10.50 to the Form 10-KSB filed
April 23, 2004, and incorporated herein by reference).
10.40 Notice of Default and Termination Letter from the Company to NPI
Management Group, Inc., dated February 5, 2004 (included as Exhibit
10.51 to the Form 10-KSB filed April 23, 2004, and incorporated herein
by reference).
20
10.41 Consulting Agreement between the Company and Z.A. Consulting, LLC, dated
February 27, 2004 (included as Exhibit 10.52 to the Form 10-KSB filed
April 23, 2004, and incorporated herein by reference).
10.42 Investor Relations Agreement between the Company and FOCUS Partners LLC,
March 12, 2004 (included as Exhibit 10.53 to the Form 10-KSB filed April
23, 2004, and incorporated herein by reference).
10.43 First Amendment to Consulting Services Agreement between the Company and
Stanton, Walker & Company, dated March 29, 2004 (included as Exhibit
10.54 to the Form 10-KSB filed April 23, 2004, and incorporated herein
by reference).
10.44 Consulting Agreement between the Company and Isabella Elliott, dated
March 26, 2004 (included as Exhibit 10.56 to the Form 10-KSB filed April
23, 2004, and incorporated herein by reference).
10.45 Second Amended and Restated Consulting Agreement between the Company and
Harvey Levin, dated October 11, 2004 (included as Exhibit 99.6 to the
Form S-8 filed October 19, 2004, and incorporated herein by reference).
10.46 Second Amended and Restated Consulting Agreement between the Company and
Jon Pearman, dated October 11, 2004 (included as Exhibit 99.5 to the
Form S-8 filed October 19, 2004, and incorporated herein by reference).
10.47 Third Amended and Restated Consulting Agreement between the Company and
Lisa L. Fincher, dated October 11, 2004 (included as Exhibit 99.4 to the
Form S-8 filed October 19, 2004, and incorporated herein by reference).
10.48 Third Amended and Restated Consulting Agreement between the Company and
Ted Davis, dated October 11, 2004 (included as Exhibit 99.1 to the Form
S-8 filed October 19, 2004, and incorporated herein by reference).
10.49 Third Amended and Restated Consulting Agreement between the Company and
D. Scott Elliott, dated October 11, 2004 (included as Exhibit 99.2 to
the Form S-8 filed October 19, 2004, and incorporated herein by
reference).
10.50 Stock and Warrant Purchase Agreement between the Company and D. Scott
Elliot, dated April 5, 2004 (included as Exhibit 10.30 to the Form
10-QSB filed August 18, 2004, and incorporated herein by reference).
10.51 Amended and Restated Consulting Agreement between the Company and Linda
Davis, dated June 3, 2004 (included as Exhibit 10.16 to the Form 10-QSB
filed August 18, 2004, and incorporated herein by reference).
10.52 Consulting Agreement between the Company and Deanna Slater, dated May
14, 2004 (included as Exhibit 10.68 to the Form 10-QSB filed May 19,
2004, and incorporated herein by reference).
21
10.53 Promissory Note between the Company and Elaine Leonard, dated February
28, 2004 (included as Exhibit 10.62 to the Form 10-QSB filed May 19,
2004, and incorporated herein by reference).
10.54 Promissory Note between the Company and Joel Pickell, dated March 31,
2004 (included as Exhibit 10.63 to the Form 10-QSB filed May 19, 2004,
and incorporated herein by reference).
10.55 Promissory Note between the Company and Deanna Slater, dated March 31,
2004 (included as Exhibit 10.64 to the Form 10-QSB filed May 19, 2004,
and incorporated herein by reference).
10.56 Promissory Note between the Company and Harvey Levin, dated April 2,
2004 (included as Exhibit 10.65 to the Form 10-QSB filed May 19, 2004,
and incorporated herein by reference).
10.57 Promissory Note between the Company and Jon Pearman, dated April 2, 2004
(included as Exhibit 10.66 to the Form 10-QSB filed May 19, 2004, and
incorporated herein by reference).
10.58 Promissory Note between the Company and Ted Davis, dated April 2, 2004
(included as Exhibit 10.67 to the Form 10-QSB filed May 19, 2004, and
incorporated herein by reference).
10.59 Investment Agreement between the Company and Dutchess Private Equities
Fund, II, L.P., dated June 23, 2004 (included as Exhibit 10.69 to the
Form 8-K filed June 29, 2004, and incorporated herein by reference).
10.60 Purchase Agreement between the Company and Sunil Nariani, dated June 16,
2004 (included as Exhibit 2.1 to the Form 8-K filed June 23, 2004, and
incorporated herein by reference).
10.61 Amended Purchase Agreement between the Company and Sunil Nariani, dated
June 18, 2004 (included as Exhibit 2.2 to the Form 8-K filed June 23,
2004, and incorporated herein by reference).
10.62 Consulting Agreement between the Company and Sunil Nariani, dated July
15, 2004 (included as Exhibit 10.72 to the Form 8-K filed July 28, 2004,
and incorporated herein by reference).
10.63 Employment Agreement between Stellar Software Network, Inc. and Sunil
Nariani, dated July 15, 2004 (included as Exhibit 10.71 to the Form 8-K
filed July 28, 2004, and incorporated herein by reference).
10.64 Employment Agreement between the Company and Julie Maranto, dated August
19, 2004 (included as Exhibit 10.22 to the Form 10-QSB filed November
22, 2004, and incorporated herein by reference).
10.65 Referral Fee Agreement between the Company and Shay Kronfeld, dated July
23, 2004 (included as Exhibit 10.23 to the Form 10-QSB filed November
22, 2004, and incorporated herein by reference).
10.66 Consulting Agreement between the Company and Richard Russotto, dated
September 13, 2004 (included as Exhibit 99.3 to the Form S-8 filed
October 19, 2004, and incorporated herein by reference).
10.67 Sublease Agreement between the Company and 432 Group, LLC, dated October
1, 2004 (included as Exhibit 10.25 to the Form 10-QSB filed November 22,
2004, and incorporated herein by reference).
22
10.68 Letter re: Agreement to retain Rubenstein Investor Relations, Inc.,
dated September 15, 2004 (included as Exhibit 99.2 to the Form 8-K filed
September 27, 2004, and incorporated herein by reference).
10.69 Referral Fee Agreement between the Company and Wade Brooks, dated August
30, 2004 (included as Exhibit 10.27 to the Form 10-QSB filed November
22, 2004, and incorporated herein by reference).
10.70 Referral Fee Agreement between the Company and Barry Bergman, dated
September 9, 2004 (included as Exhibit 10.28 to the Form 10-QSB filed
November 22, 2004, and incorporated herein by reference).
10.71 Referral Fee Agreement between the Company and Hantman & Associates
and/or Robert Hantman, dated August 27, 2004 (included as Exhibit 10.29
to the Form 10-QSB filed November 22, 2004, and incorporated herein by
reference).
10.72 Amended Consulting Services Agreement between the Company and Diya
Systems, Inc., dated November 19, 2004 (included as Exhibit 10.1 to the
Form 8-K filed November 23, 2004, and incorporated herein by reference).
10.73 Amended 2004 Stock Option Plan (included as Exhibit 4.1 to the Form S-8
filed December 28, 2004, and incorporated herein by reference).
10.74 Purchase Agreement between the Company and Evert Wilbrink and Bert De
Ruiter, dated January 17, 2005 (included as Exhibit 10.1 to the Form 8-K
filed February 16, 2005, and incorporated herein by reference).
10.75 Purchase Agreement between the Company and Ronald C. Rodgers and W. R.
Slaughter, dated March 2, 2005 (included as Exhibit 10.1 to the Form 8-K
filed March 10, 2005, and incorporated herein by reference).
10.76 Employment Agreement between the Company and RS Entertainment, Inc. and
William R. Slaughter, dated February 28, 2005 (included as Exhibit 10.1
to the Form S-8 filed March 30, 2005, and incorporated herein by
reference).
10.77 Consulting Agreement between the Company and Randall Hicks, dated March
21, 2005 (included as Exhibit 10.2 to the Form S-8 filed March 30, 2005,
and incorporated herein by reference).
10.78 Employment Agreement between the Company and RS Entertainment, Inc. and
Ronald C. Rodgers, dated February 28, 2005 (included as Exhibit 10.3 to
the Form S-8 filed March 30, 2005, and incorporated herein by
reference).
10.79 Purchase Agreement between the Company and Royce D. Bybee and Stephen
Elderkin, dated April 7, 2005 (included as Exhibit 10.1 to the Form 8-K
filed April 14, 2005, and incorporated herein by reference).
31.1** Certification of C.E.O. Pursuant to Section 302 of the Sarbanses-Oxley
Act of 2002.
31,2** Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanses-Oxley Act of 2002.
32.1** Certification of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
23
32.2** Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
** Filed herewith.
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.
M POWER ENTERTAINMENT, INC. AND SUBSIDIARIES
(FKA GK INTELLIGENT SYSTEMS, INC.)
Dated: June 21, 2005 /s/ Gary F. Kimmons
By____________________________________
Gary F. Kimmons
President, Chief Executive Office and
Chief Financial Officer
24