Replies to post #12072 on American Green Inc (ERBB)

[tnew2004]

Interesting read...

November 08, 2004 05:10 PM US Eastern Timezone

GK Intelligent Systems Pursues Acquisitions in the Music Sector

HOUSTON--(BUSINESS WIRE)--Nov. 8, 2004--GK Intelligent Systems Inc (OTCBB:GKIG), a next-generation media and entertainment corporation, is pursuing acquisitions in the music sector to enhance growth through the accretive acquisition of positive cash flow. In addition, to capitalize on what the Company perceives to be a significant investment opportunity, the Company has previously launched a new music entity called Recording Artists Worldwide Inc. (RAWW !)


GK Intelligent Systems is seeking and actively negotiating to acquire successful privately held music ventures. Within the last six months, the company has completed two acquisitions of profitable technology ventures totaling approximately $3.5 million in net revenues for 2003. The acquisitions, Stellar Software Network Inc. and Ascendant TSG, were undertaken to create positive initial cash flow for the company and to create an internal architecture for managing future acquisitions.

GK Intelligent Systems' new business model is to acquire privately held entertainment entities, initially in the music sector, that share a common element because they have survived and done well during difficult times in the industry and that are synergistic in nature, according to CEO Gary Kimmons. In addition, the entities share a common interest in the Company's startup venture, RAWW !.

"All of our acquisition candidates see the need for the establishment of a new business model in the music industry, one that takes into account the current issues music faces such as product theft and changing consumer preferences. The RAWW ! lifestyle model takes these factors into consideration by offering new opportunities for revenue generation," Kimmons said. "One source of revenue is the introduction of the well-established television sponsorship model whereby music production is underwritten by advertising entities which acquire exclusive right to product distribution for a specified period of time."

As an example of an identical business model, he further stated that a company such as Starbucks Coffee Company could sponsor the download exclusively of a new artist's recording for two weeks before full release to other download sites. On Sept. 9, 2004, Starbucks announced that in an unprecedented shift for music production, marketing and distribution, they helped take "Genius Loves Company," the final recording from music legend and 12-time GRAMMY(R) Award-winner Ray Charles, to the number two spot on the Billboard Top 200 charts for the first week of sales in the United States. The landmark CD was a collaboration between Starbucks Hear Music(TM) (which it paid $8M to acquire) and Concord Records Inc. Starbucks also reported that its Company-operated locations in North America sold more than 44,000 CDs in only a two-week period, which is approximately 22% of the total sales for the album. The numbers generated by the Company significantly outpace those achieved by other individual record retailers, both traditional and mass-merchants -- making Starbucks the number one seller during the CD's first week of sales.

"The RAWW ! lifestyle business model is unique because it effectively changes two key aspects of the music business model, the production element and how product is distributed," Kimmons said. "Artists will be empowered in ways never before possible. They will be fairly compensated and will have clear ownership of work they create using the best production ideas of yesterday's MoTown and the Brill Building artists. Distribution will be consumer-based, with an emphasis on giving music fans exactly what they want. For instance, a fan will be able to buy a customized version of an artist's work tailored exactly to the fan's needs and interests. The old system of forcing the consumer to pay for unwanted music will not apply."

In addition, RAWW ! will introduce a new form of cable programming featuring new interactive, or "personalization," technologies designed to bring the consumer and artists closer together. When successful, Kimmons said, the technology could effectively open the door to the next generation of marketing in the industry by giving branded artists and product marketers unprecedented access to consumer information. The RAWW ! cable initiative will be based on South Beach in Miami, Florida.

Competition in the entertainment field consists of such companies as Disney, Sony, EMI, Time Warner, AOL, Bertlesman, Viacom and AT&T. While there are no complete figures on sales for entertainment, various genre figures include $112B in recording music sales, $16B in DVD sales and rentals, movie ticket purchases of $9.2B in 2003, $10B for digital computer games and $250B for the book industry.

The Company has a $43 million loss carry-forward that it may be able to use in the future and has a $10 million equity line with Dutchess Private Equity Fund, LP in Boston. It has been offered an additional $40 million in equity lines. At this time, the Company is electing not to use the lines and is in the process of establishing longer-term institutional sources. The company does not view being traded on the OTCBB as a long-term strategy and plans to seek alternatives in early 2005.

Historically, GK Intelligent Systems was established in 1993 as an educational software development company in Houston, Texas. In conjunction with AT&T and the US Department of Transportation, the Company created an advanced teaching technology called Smart One(SM) that was selected by the United Nations as a Flagship Technology in 1997 based on its potential impact on the world. In 1998, the Company was listed on the AMEX, where it reached a high of $19 3/4 over a period of a few months. In 1999, the Smart One technology was incorporated into the Company's first product, an educational software for learning the Internet called Around the Web in 80 Minutes. The retail product was extremely well-received both in the market and by US retailers, who selected the product, the Company, and the Smart One technology as an award winner at its 1999 Retail Exchange in Miami, Florida. In June, 1999, GK Intelligent Systems ceased operations due to internal difficulties. It remained dormant until mid-2002, when it resumed operations under a new business model and management.

Recording Artists Worldwide (RAWW !) is located in Aventura, Florida.

GK Intelligent Systems Inc. is located at New York, NY.

For more information on GK Intelligent Systems please visit the corporate Web site, www.gkis.com, and its music entertainment subsidiary's Web site, www.RAWW.com.