[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/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 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 X No
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: September 30, 1998 10,289,052
Transitional Small Business Disclosure Format (check one). Yes ; No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KLEVER MARKETING, INC.
(Formerly a Development Stage Company)
BALANCE SHEETS
(Unaudited)
September 30, December 31,
------------- -------------
ASSETS 1998 1997
- ------ ----------- -----------
Current Assets
Cash ....................................... $ 40,484 $ 10,536
Prepaid Expense ............................ 5,085 --
Shareholder Receivables .................... 198,488 27,200
----------- -----------
Total Current Assets .................... 244,057 37,736
----------- -----------
Fixed Assets
Equipment .................................. 64,269 57,549
Less Accumulated Depreciation .............. (45,204) (38,469)
----------- -----------
Net Fixed Assets ........................ 19,065 19,080
----------- -----------
Other Assets
Patents .................................... 1,677,567 1,646,097
Organization Costs ......................... 152,662 152,662
Less Accumulated Amortization .............. (1,130,239) (1,004,422)
----------- -----------
Net Other Assets ........................ 699,990 794,337
----------- -----------
Total Assets ............................ $ 963,112 $ 851,153
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable, Trade .................... $ 190,680 $ 97,467
Accrued Liabilities ........................ 38,333 34,822
Related Party Payables ..................... 69,600 15,031
Lease Obligation ........................... -- 862
----------- -----------
Total Current Liabilities ............... 298,613 148,182
----------- -----------
Other Liabilities
Deferred Income ............................ -- 229,000
----------- -----------
Total Other Liabilities ................. -- 229,000
----------- -----------
Total Liabilities ....................... 298,613 377,182
----------- -----------
3
<PAGE>
KLEVER MARKETING, INC.
(Formerly a Development Stage Company)
BALANCE SHEETS
(Continued)
(Unaudited)
September 30, 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 ...................
10,289,052 shares issued and out-
standing September 30, 1998 and
9,795,314 shares issued and out-
standing December 31, 1997 ..................... 102,891 97,953
Common Stock to be issued ........................ 4,389 4,903
Paid in Capital in Excess of Par
Value .......................................... 6,094,613 5,292,308
Retained Deficit ................................. (3,333,785) (3,333,785)
Deficit Accumulated During the
Development Stage .............................. (2,203,609) (1,587,408)
----------- -----------
Total Stockholders' Equity .................... 664,499 473,971
----------- -----------
Total Liabilities and Stockholders' Equity .... $ 963,112 $ 851,153
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
KLEVER MARKETING, INC.
(Formerly a Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue ................................... $ -- $ -- $ 229,000 $ --
------------ ------------ ------------ ------------
Expenses
General and Administrative .............. 218,253 264,024 505,330 536,240
Research and Development ................ 56,594 557 241,384 49,071
------------ ------------ ------------ ------------
Total Expenses ....................... 274,847 264,581 746,714 585,311
------------ ------------ ------------ ------------
Other Income (Expense)
Interest Income ......................... 128 31 1,055 31
Interest Expense ........................ (111) (538) (775) (5,204)
Capital Gain on Sale of Investment ...... -- -- 1,234 --
------------ ------------ ------------ ------------
Total Other Income (Expense) .......... 17 (507) 1,514 (5,173)
------------ ------------ ------------ ------------
Loss Before Taxes and Extraordinary Item .. (274,830) (265,088) (516,200) (590,484)
Income Taxes .............................. -- -- -- --
Extraordinary Item - Litigation Settlement (100,000) -- (100,000) --
------------ ------------ ------------ ------------
Net Loss After Taxes and Extraordinary Item $ (374,830) $ (265,088) $ (616,200) $ (590,484)
============ ============ ============ ============
Weighted Average Shares Outstanding ....... 10,244,671 9,687,775 10,109,945 9,390,179
============ ============ ============ ============
Loss Per Common Share
Loss per Share Before Extraordinary Item .. $ (.03) $ (.03) $ (.05) $ (.06)
Extraordinary Item ........................ $ (.01) $ -- $ (.01) $ --
------------ ------------ ------------ ------------
Net Loss Per Share- Basic and Diluted ..... $ (.04) $ (.03) $ (.06) $ (.06)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
KLEVER MARKETING, INC.
(Formerly a Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
----------------------
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ............................................. $(616,200) $(590,484)
--------- ---------
Adjustments used to reconcile
net loss to net cash provided
by (used in) operating activities:
Non cash general and administrative .............. 48,190 --
(Increase) decrease in employee receivable ....... -- (32,500)
(Increase) decrease in shareholder receivable .... 18,477 --
(Increase) decrease in prepaid expense ........... (6,205) --
Increase (decrease) in accounts payable .......... (7,519) 20,170
Increase (decrease) in accrued liabilities ....... 3,511 8,953
Increase (decrease) in related party payables .... 94,569 --
Checks written in excess of cash ................. -- 6,185
Increase (decrease) in Deferred income ........... (229,000) --
Loss on Extraordinary Item ....................... 100,000 --
Gain on Sale of Stock Investment ................. (1,234) --
Depreciation and Amortization .................... 132,553 126,594
--------- ---------
Net Adjustment ....................................... 153,342 132,402
--------- ---------
Net cash used in operating activities ................ (462,858) (458,082)
--------- ---------
6
<PAGE>
KLEVER MARKETING, INC.
(Formerly a Development Stage Company)
STATEMENT OF CASH FLOWS
(Continued)
For the Nine Months
Ended September 30,
------------------------
1998 1997
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition/sale of equipment, net ............... $ (6,720) $ (4,176)
Acquisition/sale of stock investments, net ....... 13,609 --
Acquisition of patents ........................... (31,470) (6,794)
--------- ---------
Net cash used by investing activities ............ (24,581) (10,970)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Capital Stock Issued ............... 518,249 418,560
Proceeds From Loans .............................. -- 55,000
Principle Payments on Lease Obligations ......... (862) (2,865)
Related Party Payables ........................... -- (46,006)
Shareholder Receivable ........................... -- 57,250
Cash Payments on Notes Payable ................... -- (42,339)
--------- ---------
Net Cash Provided by Financing Activities ....... 517,387 439,600
--------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents ............................... 29,948 (29,452)
Cash and Cash Equivalents at
Beginning of the Year .......................... 10,536 29,452
--------- ---------
Cash and Cash Equivalents at
End of the Year ................................ $ 40,484 $ --
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest ......................................... $ 775 $ 5,885
Income Taxes ..................................... $ -- $ --
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
KLEVER MARKETING, INC.
(Formerly a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 nine month period
ended September 30, 1998, are not necessarily indicative of the results that may
be expected for the year ended December 31, 1998.
2 . Contingencies
On November 14, 1995, the Company entered into an agreement with Dentsu Prox,
Inc. for product movement tests in Japan resulting in $214,000 in deferred
income. On June 30, 1998 the Company determined Dentsu Prox, Inc. was in breach
of contract, therefore recognizing $214,000 in income.
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. During
the period July 5, 1996 through March 31, 1998 the Company remained in the
development stage. The period ending June 30, 1998 is the first period during
which it is considered an operating company.
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.
8
<PAGE>
The Company generates and uses cash flows through three activities: operating,
investing, and financing. During the nine months ended September 30, 1998,
operating activities used cash of $463,000 as compared to net cash used of
$458,000 for the nine months ended September 30, 1997.
Cash flows used in investing activities is primarily due to the acquisition of
patents. During the nine months ended September 30, 1998 and 1997, investing
activities used cash of $25,000 and $11,000, respectively.
Financing activities provided $517,000 and $440,000 for the nine months ended
September 30, 1998 and 1997. The increase in cash flow from financing activities
was primarily from the sale of common stock.
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.
Factors That May Affect Future Results
Management's Discussion and Analysis contains information based on management's
beliefs and forward-looking statements that involve a number of risks,
uncertainties, and assumptions. There can be no assurance that actual results
will not differ materially for the forward-looking statements as a result of
various factors, including but not limited to the following:
Year 2000 Date Conversion
In general, the Year 2000 issue relates to computers and other systems being
unable to distinguish between the years 1900 and 2000 because they use two
digits, rather than four, to define the applicable year. Systems that fail to
properly recognize such information will likely generate erroneous data or cause
a system to fail to properly recognize such information will likely generate
erroneous data or cause a system to fail possibly resulting in a disruption of
operations. The Company's products do incorporate such date coding but the
Company believes all of its product systems are Year 2000 compliant. The Company
has also undertaken efforts to address the Year 2000 issue in the following
three areas: (i) the Company's information technology ("IT") systems; (ii) the
Company's non-IT systems (i.e., machinery, equipment and devices which utilize
technology which is "built in" such as embedded microcontrollers); and (iii)
third-party suppliers.
The Company is currently working to resolve the potential impact of the Year
2000 issue on the processing of date-sensitive data by the Company's
computerized information systems. Specifically, the Company is analyzing all of
its accounting and financial software to ensure no interruption in the Company's
financial systems. The Company is analyzing all other IT and non-IT systems to
determine if any other modification or upgrades are necessary to be Year 2000
compliant. The Company believes it will be Year 2000 compliant. The amount
charged to expense during the three and nine months ended September 30, 1998, as
well as the amounts anticipated to be charged to expense related to the Year
2000 computer modifications, have not been and are not expected to be
9
<PAGE>
material to the Company's financial position, results of operations or cash
flows.
The Company is also evaluating and taking steps to resolve Year 2000 compliance
issues that may be created by suppliers and financial institutions with whom the
Company does business. The Company is examining third party suppliers and may
send out confirmation letters of Year 2000 compliance if the Company determines
such action is necessary. In the event the Company determines that any third
party presents a risk arising from failure to be Year 2000 compliant, then the
Company will seek to replace such third party. The Company cannot, however,
guarantee that the systems of other entities will be converted on a timely
basis. Failure of such third party entities to be Year 2000 compliant may cause
interruptions in the Company's operations.
The foregoing statements are based upon management's current assumptions.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The lawsuit filed by Larry Hodges in the 2nd quarter 1998 was counter filed by
Klever Marketing, Inc. during the 3rd quarter 1998 alleging a breach of
contract. An out of court settlement was reached in September for $100,000 to be
paid in four (4) installments, the first of which was paid on October 26, 1998
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
10
<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: February 8, 1999
By: /s/
Paul G. Begum
Chief Executive officer & Director
(Principal financial and Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE OF KLEVER MARKETING, INC. AS OF SEPTEMBER 30, 1998 AND THE RELATED
STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE NINE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 40
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 244
<PP&E> 64
<DEPRECIATION> 45
<TOTAL-ASSETS> 963
<CURRENT-LIABILITIES> 299
<BONDS> 0
0
0
<COMMON> 103
<OTHER-SE> 561
<TOTAL-LIABILITY-AND-EQUITY> 963
<SALES> 229
<TOTAL-REVENUES> 229
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 747
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> (516)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (100)
<CHANGES> 0
<NET-INCOME> (616)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
