[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1998
---------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission file number 0-18834
Klever Marketing, Inc.
(Exact name of small business issuer as
specified in its charter)
Delaware 36-3688583
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
350 West 30 South, Suite 201, Salt Lake City, Utah 84101
(Address of principal executive offices)
(801) 322-1221
Issuer's telephone number
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No X
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: March 31, 1998 10,035,401
Transitional Small Business Disclosure Format (check one). Yes ; No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KLEVER MARKETING, INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
March 31, December 31,
----------- -----------
ASSETS 1998 1997
- ------ ----------- -----------
Current Assets
Cash ....................................... $ 170,043 $ 10,536
Investments ................................ 8,250 --
Shareholder Receivables .................... 26,916 27,200
----------- -----------
Total Current Assets .................... 205,209 37,736
----------- -----------
Fixed Assets
Equipment .................................. 60,555 57,549
Less Accumulated Depreciation .............. (40,763) (38,469)
----------- -----------
Net Fixed Assets ........................ 19,792 19,080
----------- -----------
Other Assets
Patents .................................... 1,667,869 1,646,097
Organization Costs ......................... 152,662 152,662
Less Accumulated Amortization .............. (1,046,119) (1,004,422)
----------- -----------
Net Other Assets ........................ 774,412 794,337
----------- -----------
Total Assets ............................ $ 999,413 $ 851,153
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts Payable, Trade .................... $ 42,283 $ 97,467
Accrued Liabilities ........................ 35,175 34,822
Related Party Payables ..................... 68,385 15,031
Lease Obligation ........................... 218 862
----------- -----------
Total Current Liabilities ............... 146,061 148,182
----------- -----------
Other Liabilities
Deferred Income ............................ 229,000 229,000
----------- -----------
Total Other Liabilities ................. 229,000 229,000
----------- -----------
Total Liabilities ....................... 375,061 377,182
----------- -----------
3
<PAGE>
KLEVER MARKETING, INC.
(A Development Stage Company)
BALANCE SHEET
(Continued)
(Unaudited)
March 31, December 31,
----------- -----------
1998 1997
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
(Continued)
Stockholders' Equity
Preferred stock (par value $.01),
2,000,000 shares authorized
-0- issued and outstanding ..................... $ -- $ --
Common Stock (Par Value $.01),
20,000,000 shares authorized
10,035,401 shares issued and
outstanding March 31, 1998
and 9,795,314 shares issued
and outstanding December 31, 1997 .............. 100,354 97,953
Common Stock to be issued ........................ 4,364 4,903
Paid in Capital in Excess of Par
Value .......................................... 5,689,158 5,292,308
Retained Deficit ................................. (3,333,785) (3,333,785)
Deficit Accumulated During the
Development Stage .............................. (1,835,739) (1,587,408)
----------- -----------
Total Stockholders' Equity .................... 624,352 473,971
----------- -----------
Total Liabilities and Stockholders' Equity .... $ 999,413 $ 851,153
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
KLEVER MARKETING, INC.
(A Development Stage Company)
STATEMENT OF LOSS
(Unaudited)
Cumulative
For the Three Months During
Ended March 31, Development
-------------------------
1998 1997 Stage
----------- ----------- -----------
Revenue .............................. $ -- $ -- $ --
----------- ----------- -----------
Expenses
General and Administrative ......... 127,337 110,746 1,101,935
Research and Development ........... 120,783 44,864 719,023
----------- ----------- -----------
Total Expenses .................. 248,120 155,610 1,820,958
----------- ----------- -----------
Other Income (Expense)
Interest Income .................... -- -- 76
Interest Expense ................... (16) (1,856) (14,867)
Capital Loss on Sale of Investment . (194) -- (194)
Sale of Assets ..................... -- -- 404
----------- ----------- -----------
Total Other Income (Expense) ..... (210) (1,856) (14,581)
----------- ----------- -----------
Income (Loss) Before Taxes ........... (248,330) (157,466) (1,835,539)
Income Taxes ......................... -- -- 200
----------- ----------- -----------
Net Income (Loss) After Taxes ........ $ (248,330) $ (157,466) $(1,835,739)
=========== =========== ===========
Weighted Average Shares
Outstanding ........................ 9,937,682 9,243,995
=========== ===========
Loss Per Share ....................... $ (.03) $ (.02)
=========== ===========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
KLEVER MARKETING, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
Cumulative
For the Three Months During
Ended March 31, Development
---------------------
1998 1997 Stage
--------- --------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss ................................. $(248,330) $(157,466) $(1,835,739)
--------- --------- -----------
Adjustments used to reconcile
net loss to net cash provided
by (used in) operating activities:
Non cash general and administrative .. 21,338 -- 51,075
Compensation Expense from
Stock Options ........................ -- -- 15,000
Stock issued for Interest Expense .... -- -- 3,885
(Increase) decrease in shareholder
receivable ........................... (166) -- (166)
Increase (decrease) in accounts
payable .............................. (55,185) (7,178) (43,421)
Increase (decrease) in accrued
Liabilities .......................... 353 (105) 1,714
Increase (decrease) in
related party payables ............... 53,354 -- 18,219
Deferred income ...................... -- -- 15,000
Loss on Sale of Stock Investment ..... 194 -- 194
Depreciation and Amortization ........ 43,991 42,991 379,633
--------- --------- -----------
Net Adjustment ........................... 63,879 35,708 441,133
--------- --------- -----------
Net cash used in operating activities .... (184,451) (121,758) (1,394,606)
--------- --------- -----------
6
<PAGE>
KLEVER MARKETING, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Continued)
Cumulative
For the Three Months During
Ended March 31, Development
--------------------
1998 1997 Stage
--------- -------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition/sale of equipment, net ........ $ (3,006) $ -- $ (13,093)
Acquisition/sale of stock investments, net 3,931 -- 3,931
Acquisition of patents .................... (21,772) -- (89,973)
--------- -------- -----------
Net cash used by investing activities ..... (20,847) -- (99,135)
--------- -------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds From Capital Stock Issued ........ 365,449 58,250 1,624,857
Proceeds From Loans ....................... -- 55,000 90,000
Principle Payments on Lease Obligations .. (644) (931) (7,968)
Related Party Payables .................... -- (2,166) --
Cash payments on notes payable ............ -- (15,911) (67,779)
--------- -------- -----------
Net Cash Provided by Financing Activities 364,805 94,242 1,639,110
--------- -------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents ........................ 159,507 (27,516) 145,369
Cash and Cash Equivalents at
Beginning of the Year ................... 10,536 29,452 24,674
--------- -------- -----------
Cash and Cash Equivalents at
End of the Year ......................... $ 170,043 $ 1,936 $ 170,043
========= ======== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest .................................. $ 16 $ 2,537 $ 13,514
Income Taxes .............................. $ -- $ -- $ 200
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
KLEVER MARKETING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
1. Interim Reporting
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles and with Form 10-QSB requirements.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1998, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998.
Item 2. Management's Discussion and Analysis or Plan of Operation.
General - This discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's annual report on Form 10-KSB for the year ended December 31, 1997.
Results of Operations - From December 8, 1993 to July 5, 1996 VideOcart, Inc.
was in Bankruptcy. On July 5, 1996 VideOcart, Inc. was reorganized, changed its
name to Klever Marketing, Inc. and became a development stage company and has
not begun principal operations.
Liquidity and Capital Resources
The Company requires working capital principally to fund its current operations.
From time to time in the past the Company has relied on short-term borrowing and
the issuance of restricted common stock to fund current operations. There are no
formal commitments from banks or other lending sources for lines of credit or
similar short-term borrowing, but the Company has been able to borrow any
additional working capital that has been required. From time to time in the
past, required short-term borrowing have been obtained from a principal
shareholder or other related entities.
The Company generates and uses cash flows through three activities: operating,
investing, and financing. During the three months ended March 31, 1998,
operating activities used cash of $184,000 as compared to net cash used of
$122,000 for the three months ended March 31, 1997.
Cash flows used in investing activities is primarily due to the acquisition of
$21,000 and $0 of computer equipment and office furniture and patents for the
three months ended March 31, 1998 and March 31, 1997.
Financing activities provided $365,000 and $94,000 for the three months ended
March 31, 1998 and 1997. The increase in cash flow from financing activities was
primarily from the sale of common stock.
8
<PAGE>
The Company may be required to supplement its available cash and other liquid
assets with proceeds from borrowing, the sale of additional securities, or other
sources. There can be no assurance that any such required additional funding
will be available or, if available, that it can be obtained on terms favorable
to the Company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Klever Marketing, Inc.
(Registrant)
DATE: May 13, 1998
--------------------------------
By: /s/ Paul G. Begum
---------------------------------
Paul G. Begum
Chief Executive officer & Director
(Principal financial and Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE OF KLEVER MARKETING, INC. AS OF MARCH 31, 1998 AND THE RELATED
STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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