Delaware
|
36-3688583
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
PART
I
|
||||||||
Item
1. Financial Statements
|
||||||||
KLEVER
MARKETING, INC.
|
||||||||
(a
Development Stage Company)
|
||||||||
BALANCE
SHEETS
|
||||||||
(Unaudited)
|
||||||||
September
30,
|
December
31,
|
|||||||
ASSETS
|
2007
|
2006
|
||||||
Current
Assets
|
||||||||
Cash
|
$ |
22,496
|
$ |
3,172
|
||||
Prepaid
Expense
|
726
|
3,850
|
||||||
Other
Receivable
|
25,865
|
25,865
|
||||||
Total
Current Assets
|
49,087
|
32,887
|
||||||
Fixed
Assets
|
||||||||
Office
Equipment
|
92,964
|
92,964
|
||||||
Less
Accumulated Depreciation
|
(92,964 | ) | (92,964 | ) | ||||
Net
Fixed Assets
|
-
|
-
|
||||||
Other
Assets
|
||||||||
Patents
|
775,045
|
775,045
|
||||||
Less
Accumulated Amortization
|
(775,045 | ) | (775,045 | ) | ||||
Net
Other Assets
|
-
|
-
|
||||||
Total
Assets
|
$ |
49,087
|
$ |
32,887
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable, Trade
|
$ |
259,013
|
$ |
379,491
|
||||
Accrued
Liabilities
|
706,210
|
2,608,007
|
||||||
Line
of Credit
|
23,473
|
-
|
||||||
Related
Party Payables
|
58,393
|
2,128,648
|
||||||
Notes
Payable
|
45,000
|
45,000
|
||||||
Total
Current Liabilities
|
1,092,089
|
5,161,146
|
||||||
Stockholders'
Equity
|
||||||||
Preferred
stock (par value $.01), 2,000,000 shares authorized
|
||||||||
168,434
issued and outstanding September 30, 2007
|
||||||||
and
December 31, 2006
|
1,684
|
1,684
|
||||||
Common
Stock (Par Value $.01), 50,000,000 shares
|
||||||||
authorized
48,714,967 shares issued and outstanding
|
||||||||
at
September 30, 2007 and 39,183,864 and December 31, 2006
|
487,150
|
391,839
|
||||||
Common
Stock to be issued, 469,752 shares at
|
||||||||
September
30, 2007 and December 31, 2006
|
4,698
|
4,698
|
||||||
Treasury
Stock, 1,000 shares at September 30, 2007
|
||||||||
and
December 31, 2006
|
(1,000 | ) | (1,000 | ) | ||||
Paid
in Capital in Excess of Par Value
|
15,900,651
|
13,643,186
|
||||||
Retained
Deficit
|
(3,333,785 | ) | (3,333,785 | ) | ||||
Deficit
Accumulated During Development Stage
|
(14,102,400 | ) | (15,834,881 | ) | ||||
Total
Stockholders' Equity
|
(1,043,002 | ) | (5,128,259 | ) | ||||
Total
Liabilities and Stockholders' Equity
|
$ |
49,087
|
$ |
32,887
|
||||
The
accompanying notes are an integral part of these financial
statements
|
KLEVER
MARKETING, INC.
|
||||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||||
STATEMENTS
OF OPERATIONS
|
||||||||||||||||||||
Cumulative
|
||||||||||||||||||||
From
|
||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
5-Jul-96
|
||||||||||||||||||
For
the Three Months
|
For
the Nine Months
|
Inception
of
|
||||||||||||||||||
Ended
September 30,
|
Ended
September 30,
|
Development
|
||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
Stage
|
||||||||||||||||
Revenue
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
256,000
|
||||||||||
Expenses
|
||||||||||||||||||||
Sales
and Marketing
|
-
|
185
|
-
|
7,571
|
163,306
|
|||||||||||||||
General
and Administrative
|
226,317
|
56,989
|
385,263
|
177,370
|
10,186,790
|
|||||||||||||||
Research
and Development
|
-
|
-
|
-
|
-
|
4,529,656
|
|||||||||||||||
Total
Expenses
|
226,317
|
57,174
|
385,263
|
184,941
|
14,879,752
|
|||||||||||||||
Other
Income (Expense)
|
||||||||||||||||||||
Other
Income
|
25,000
|
-
|
25,000
|
-
|
453,717
|
|||||||||||||||
Interest
Income
|
-
|
-
|
126
|
-
|
19,028
|
|||||||||||||||
Interest
Expense
|
(81,574 | ) | (81,484 | ) | (305,913 | ) | (249,630 | ) | (2,567,263 | ) | ||||||||||
Forgiveness
of debt
|
46,689
|
-
|
127,137
|
-
|
127,137
|
|||||||||||||||
Gain
(Loss) on sale of assets
|
-
|
-
|
-
|
-
|
26,947
|
|||||||||||||||
Capital
gain on sale of investments
|
-
|
-
|
-
|
-
|
191,492
|
|||||||||||||||
Total
Other Income (Expense)
|
(9,885 | ) | (81,484 | ) | (153,650 | ) | (249,630 | ) | (1,748,942 | ) | ||||||||||
Loss
Before Taxes
|
(236,202 | ) | (138,658 | ) | (538,913 | ) | (434,571 | ) | (16,372,694 | ) | ||||||||||
Income
Taxes
|
-
|
-
|
-
|
-
|
1,100
|
|||||||||||||||
Net
Loss before extraordinary items
|
(236,202 | ) | (138,658 | ) | (538,913 | ) | (434,571 | ) | (16,373,794 | ) | ||||||||||
Extraordinary
item - troubled debt restructuring
|
2,271,394
|
-
|
2,271,394
|
-
|
2,271,394
|
|||||||||||||||
Net
Income (loss)
|
$ |
2,035,192
|
$ | (138,658 | ) | $ |
1,732,481
|
$ | (434,571 | ) | $ | (14,102,400 | ) | |||||||
Loss
per Common Share
|
||||||||||||||||||||
Income
(loss) before extraordinary item
|
$ | (0.01 | ) | $ |
-
|
$ | (0.01 | ) | $ | (0.01 | ) | |||||||||
Extraordinary
item
|
0.06
|
-
|
0.05
|
-
|
||||||||||||||||
Loss
per share
|
$ |
0.05
|
$ |
-
|
$ |
0.04
|
$ | (0.01 | ) | |||||||||||
Weighted
Average Shares Outstanding
|
40,067,068
|
38,699,435
|
39,662,696
|
38,623,431
|
||||||||||||||||
The
accompanying notes are an integral part of these financial
statements
|
KLEVER
MARKETING, INC.
|
||||||||||||
(A
Development Stage Company)
|
||||||||||||
STATEMENT
OF CASH FLOWS
|
||||||||||||
Cumulative
|
||||||||||||
From
|
||||||||||||
(Unaudited)
|
5-Jul-96
|
|||||||||||
For
the Nine Months Ended
|
Inception
of
|
|||||||||||
September
30,
|
Development
|
|||||||||||
2007
|
2006
|
Stage
|
||||||||||
CASH
FLOWS FROM OPERATING
|
||||||||||||
ACTIVITIES:
|
||||||||||||
Net
Loss
|
$ |
1,732,481
|
$ | (434,571 | ) | $ | (14,102,400 | ) | ||||
Adjustments
used to reconcile net loss to net
|
||||||||||||
cash
provided by (used in) operating activities:
|
||||||||||||
Stock
issued for general and administrative
|
7,500
|
-
|
994,982
|
|||||||||
Stock
issued for research and development
|
-
|
-
|
62,850
|
|||||||||
Stock
returned for services not rendered
|
-
|
-
|
(200,790 | ) | ||||||||
(Gain)
loss on sale/disposal of assets
|
-
|
-
|
486,536
|
|||||||||
Compensation
expense from stock options
|
-
|
-
|
69,900
|
|||||||||
Stock
issued for interest
|
15,525
|
-
|
135,226
|
|||||||||
Stock
issued for accounts payable
|
16,996
|
-
|
243,458
|
|||||||||
Deferred
income
|
-
|
-
|
(214,000 | ) | ||||||||
Depreciation
and amortization
|
-
|
3,186
|
1,912,883
|
|||||||||
Write-off
bad debts
|
-
|
-
|
15,000
|
|||||||||
(Increase)
decrease in accounts receivable
|
-
|
-
|
(413 | ) | ||||||||
(Increase)
decrease in shareholder receivable
|
-
|
-
|
37,694
|
|||||||||
(Increase)
decrease in other assets & prepaids
|
3,124
|
-
|
87,647
|
|||||||||
Increase
(decrease) in accounts payable
|
(120,478 | ) |
27,920
|
173,308
|
||||||||
Increase
(decrease) in accrued liabilities
|
(1,901,797 | ) |
278,806
|
654,879
|
||||||||
Net
Cash Used in Operating Activities
|
(246,649 | ) | (124,659 | ) | (9,643,240 | ) | ||||||
CASH
FLOWS FROM INVESTING
|
||||||||||||
ACTIVITIES:
|
||||||||||||
Acquisition/Sale
of equipment, net
|
-
|
-
|
(587,801 | ) | ||||||||
Acquisition/Sale
of patents
|
-
|
(3,186 | ) |
25,089
|
||||||||
Acquisition/Sale
of stock, net
|
-
|
-
|
12,375
|
|||||||||
Net
Cash Used by Investing Activities
|
-
|
(3,186 | ) | (550,337 | ) | |||||||
CASH
FLOWS FROM FINANCING
|
||||||||||||
ACTIVITIES:
|
||||||||||||
Proceeds
capital stock issued
|
242,500
|
48,750
|
7,008,173
|
|||||||||
Proceeds
from loans
|
-
|
80,293
|
3,473,252
|
|||||||||
Proceeds
from line of credit
|
23,473
|
-
|
23,473
|
|||||||||
Loan
receivables
|
-
|
-
|
(15,000 | ) | ||||||||
Principal
payments on lease obligations
|
-
|
-
|
(18,769 | ) | ||||||||
Cash
payments on notes payable
|
-
|
-
|
(279,730 | ) | ||||||||
Net
Cash Provided by Financing Activities
|
265,973
|
129,043
|
10,191,399
|
|||||||||
Net
Increase (Decrease) in Cash and Cash
|
||||||||||||
Equivalents
|
19,324
|
1,198
|
(2,178 | ) | ||||||||
Cash
and Cash Equivalents at Beginning of the
|
||||||||||||
Year
|
3,172
|
3,892
|
24,674
|
|||||||||
Cash
and Cash Equivalents at End of the Year
|
$ |
22,496
|
$ |
5,090
|
$ |
22,496
|
KLEVER
MARKETING, INC.
|
||||||||||||
(A
Development Stage Company)
|
||||||||||||
STATEMENT
OF CASH FLOWS
|
||||||||||||
(continued)
|
||||||||||||
Cumulative
|
||||||||||||
From
|
||||||||||||
(Unaudited)
|
5-Jul-96
|
|||||||||||
For
the Nine Months Ended
|
Inception
of
|
|||||||||||
September
30,
|
Development
|
|||||||||||
2007
|
2006
|
Stage
|
||||||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||||||
Interest
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||
Income
Taxes
|
$ |
-
|
$ |
-
|
$ |
1,100
|
||||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||
On
September 30, 2007, the Company issued 8,281,016 shares of common
stock in
exchange for
|
||||||||||||
notes
payable totaling $2,070,254. As part of the agreements, accrued
interest related to these notes
|
||||||||||||
totaling
$2,190,946 was forgiven, and recorded as extraordinary gain at
September
30, 2007.
|
||||||||||||
The
accompanying notes are an integral part of these financial
statements
|
Computer
equipment
|
3
years
|
Office
furniture and fixtures
|
5-10
years
|
2006
|
2005
|
|||||||
Net
Operating Losses
|
$ |
2,860,236
|
$ |
2,740,329
|
||||
Valuation
Allowance
|
(2,860,236 | ) | (2,740,329 | ) | ||||
$ |
-
|
$ |
-
|
2006
|
2005
|
|||||||
Provision
(Benefit) at US Statutory Rate
|
$ |
119,907
|
$ |
110,207
|
||||
Increase
(Decrease) in Valuation Allowance
|
(119,907 | ) | (110,207 | ) | ||||
$ |
-
|
$ |
-
|
Weighted
|
||||||||||||
Option
/
|
Average
|
Weighted
|
||||||||||
Warrants
|
Exercise
|
Average
|
||||||||||
Shares
|
Price
|
Fair
Value
|
||||||||||
Options
& warrants outstanding,
|
||||||||||||
December
31, 2006
|
5,070,388
|
$ |
0.25
|
|||||||||
Granted,
Exercise price more than fair value
|
-
|
-
|
-
|
|||||||||
Granted,
Exercise price less than fair value
|
-
|
-
|
-
|
|||||||||
Expired
|
-
|
-
|
||||||||||
Exercised
|
-
|
-
|
||||||||||
Options
& warrants outstanding,
|
||||||||||||
September
30, 2007
|
5,070,388
|
$ |
0.25
|
|||||||||
Weighted-
|
Weighted-
|
|||||||||
Weighted-
|
Shares/
|
Average
|
Average
|
|||||||
Shares
/
|
Average
|
Warrants
|
Exercise
Price
|
Contractual
|
||||||
Exercise
|
Warrants
|
Exercise
|
Currently
|
Currently
|
Remaining
|
|||||
Price
|
Outstanding
|
Price
|
Exercisable
|
Exercisable
|
Life
|
|||||
$0.06
|
2,557,000
|
$0.06
|
2,557,000
|
$0.06
|
5
months
|
|||||
0.08
|
100,000
|
0.08
|
100,000
|
0.08
|
23
months
|
|||||
0.10
|
125,000
|
0.10
|
125,000
|
0.10
|
21
months
|
|||||
0.23
|
200,000
|
0.23
|
200,000
|
0.23
|
10
months
|
|||||
0.50
|
1,396,688
|
0.50
|
1,396,688
|
0.50
|
26
months
|
|||||
1.00
|
291,400
|
1.00
|
291,400
|
1.00
|
20
months
|
|||||
United
States (a)
|
2003
– Present
|
|
(a)
Includes federal as well as state or similar local jurisdictions,
as
applicable.
|
Exhibit
Number
|
Title
of Document
|
3.01
|
Restated
Certificate of Incorporation of Klever Marketing, Inc. a Delaware
corporation (1)
|
3.02
|
Certificate
of Designation of Rights, Privileges and Preferences: Rights of A
Class
Voting Preferred Stock, Series 1, of Klever Marketing, Inc., dated
February 7, 2000 (2)
|
3.03
|
Bylaws,
as amended (2)
|
4.01
|
Amended
Certificate of Designation of Rights, Privileges and Preferences:
Rights
of A Class of Voting Preferred Stock, Series 1, of Klever Marketing,
Inc.,
Dated February 7, 2000 (3)
|
4.02
|
Certificate
of Designation of Rights, Privileges and Preferences of Class B Voting
Preferred Stock, of Klever Marketing, Inc., dated September 24, 2000
(3)
|
4.03
|
Certificate
of Designation of Rights, Privileges and Preferences of Class C Voting
Preferred Stock, of Klever Marketing, Inc., dated January 2, 2001
(3)
|
4.04
|
Certificate
of Designation of Rights, Privileges and Preferences of Class D Voting
Preferred Stock, of Klever Marketing, Inc., dated June 14, 2002
(5)
|
4.05
|
Amendment
to the Certificates of Designation of Rights, Privileges and Preferences
of Class A, B, and C Voting Preferred Stock, of Klever Marketing,
Inc.,
dated June 12, 2002 (5)
|
10.01
|
Separation
Agreement between Paul G. Begum and the Registrant Dated January
8, 2001
(2)
|
10.02
|
Stock
Incentive Plan, effective June 1, 1998 (2)
|
10.03
|
Amended
and Restated Promissory Note (Secured) of the Registrant payable
to
Presidio Investments, LLC, dated June 27, 2000, with Financing Statement
and Exhibit “A” (2)
|
10.04
|
Intercreditor
Agreement between Seabury Investors III, Limited Partnership, The
Olson
Foundation, Presidio Investments, LLC, and the Registrant dated August
27,
2001 (4)
|
10.05
|
Asset
Purchase Agreement, dated August 27, 2004 (6)
|
31.1
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|