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, 2000
----------------
[ ] 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 300 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: March 31, 2000 11,919,078
----------------------------
Transitional Small Business Disclosure Format (check one).
Yes ; No X
---- ---
<PAGE>
PART I
Item 1. Financial Statements
INDEPENDENT ACCOUNTANT'S REPORT
Klever Marketing, Inc.
We have reviewed the accompanying balance sheets of Klever Marketing,
Inc. as of March 31, 2000, and the related statements of operations, and cash
flows for the three month period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
May 12, 2000
3
<PAGE>
KLEVER MARKETING, INC.
BALANCE SHEETS
March 31, December 31,
------------ ------------
ASSETS 2000 1999
------------ ------------
Current Assets
Cash $ 51,640 $ 203,232
Shareholder Receivables 203,635 34,892
Prepaid Expenses 32,194 --
------------ ------------
Total Current Assets 287,469 238,124
------------ ------------
Fixed Assets
Office Equipment 142,525 77,279
Phase 2 Equipment 815,665 445,330
Less Accumulated Depreciation (60,500) (56,798)
------------ ------------
Net Fixed Assets 897,690 465,811
------------ ------------
Other Assets
Patents 2,217,767 2,212,850
Less Accumulated Amortization (1,318,313) (1,266,201)
------------ ------------
Net Other Assets 899,454 946,649
------------ ------------
Total Assets $ 2,084,613 $ 1,650,584
============ ============
4
<PAGE>
KLEVER MARKETING, INC.
BALANCE SHEETS
(Continued)
March 31, December 31,
------------ ------------
2000 1999
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable, Trade $ 291,494 $ 401,708
Accrued Liabilities 464,269 458,563
Related Party Payables 128,750 191,250
Short-term Notes Payable 6,253 259,115
------------ ------------
Total Current Liabilities 890,766 1,310,636
------------ ------------
Total Liabilities 890,766 1,310,636
------------ ------------
Stockholders' Equity
Preferred stock (par value $.01),
2,000,000 shares authorized
47,245 shares issued and out-
standing March 31, 2000 and
-0- issued and outstanding
December 31, 1999 $ 472 $ --
Paid in Capital in Excess of Par
Value 1,227,903 --
Common Stock (Par Value $.01),
20,000,000 shares authorized
11,919,078 shares issued and out-
standing March 31, 2000 and
11,275,121 Shares issued and out-
standing December 31, 1999 119,191 112,751
Common Stock to be issued 4,589 4,589
Paid in Capital in Excess of Par
Value 9,063,692 8,375,350
Retained Deficit (9,222,000) (8,152,742)
------------ ------------
Total Stockholders' Equity 1,193,847 339,948
------------ ------------
Total Liabilities and Stockholders' Equity $ 2,084,613 $ 1,650,584
============ ============
See accompanying notes and accountants'
report.
5
<PAGE>
KLEVER MARKETING, INC.
STATEMENTS OF OPERATIONS
For the Three Months
Ended March 31,
-------------------------
2000 1999
----------- ----------
Revenue $ -- $ --
----------- ----------
Expenses
General and Administrative 1,126,679 232,565
Research and Development 129,870 106,590
----------- ----------
Total Expenses 1,256,549 339,155
----------- ----------
Other Income (Expense)
Interest Income 102 481
Interest Expense (7,134) (6,941)
Gain/Loss 193,677 --
Sale of Investments -- --
------------ ----------
Total Other Income (Expense) 186,645 (6,460)
------------ ----------
Loss Before Taxes (1,069,904) (345,615)
Income Taxes -- --
------------- ----------
Net Loss After Taxes $(1,069,904) $ (345,615)
============= ==========
Weighted Average Shares Outstanding
11,667,925 10,562,946
============ ==========
Loss per Common Share $ (.09) $ (.03)
============ ==========
See accompanying notes and accountants'
report.
6
<PAGE>
KLEVER MARKETING, INC.
STATEMENT OF CASH FLOWS
For the Three Months
Ended March 31,
---------------------------
2000 1999
----------- ------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss $(1,069,904) $ (345,615)
Adjustments used to reconcile
net loss to net cash provided
by (used in) operating
activities:
Non cash general and
administrative 604,189 3,108
(Increase) decrease in:
shareholder receivable (168,743) 69,744
prepaid expense (32,194) --
Increase (decrease) in:
accounts payable (110,214) (335,247)
accrued liabilities 5,706 (13,121)
deferred income -- --
lease obligation (2,862) --
related party payables (62,500) (119,000)
Loss on Extraordinary Item -- --
Sale of Investments -- --
Depreciation and Amortization 56,205 53,628
----------- ------------
Net cash used in operating
activities (780,317) (686,503)
------------ ------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Acquisition of equipment (435,326) (9,690)
Non cash equipment 7,809 --
Acquisition of patents (4,917) (1,072)
------------ ------------
Net cash used by investing
activities (432,434) (10,762)
------------ ------------
7
<PAGE>
KLEVER MARKETING, INC
STATEMENT OF CASH FLOWS
(Continued)
For the Three Months
Ended March 31,
-----------------------------
2000 1999
------------ ------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds From Capital Stock 1,311,159 659,826
Principle Payments on Lease
Obligations -- --
Non Cash Capital Stock (250,000) --
------------- ------------
Net Cash Provided by
Financing Activities 1,061,159 659,826
------------- ------------
Net Increase (Decrease) in
Cash and Cash Equivalents (151,592) (37,439)
Cash and Cash Equivalents at
Beginning of the Period 203,232 45,371
------------ -----------
Cash and Cash Equivalents at
End of the Period $ 51,640 $ 7,932
============ ===========
SUPPLEMENTAL
DISCLOSURE OF CASH
FLOW INFORMATION:
Interest $ 7,134 $ 6,941
Income Taxes $ -- $ --
See accompanying notes and accountants'
report.
8
<PAGE>
KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
This summary of accounting policies for Klever Marketing, Inc. is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
The unaudited financial statements as of March 31, 2000 and for the
three months then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the three months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full years.
Organization and Basis of Presentation
The Company was organized under the laws of the State of Delaware in
December 1989. The Company was in the Development stage from 1989 to 1991. The
Company was an operating company from 1992 to December 8, 1993 when it filed
petitions for relief under Chapter 11 bankruptcy. The Company was inactive until
July 5, 1996 when the Company merged with Klever Kart, Inc. in a reverse merger
and changed its name to Klever Marketing, Inc. The company was in the
development stage until June 30, 1998.
Nature of Business
The Company was formed for the purpose of creating a vehicle to obtain
capital, to file and acquire patents, to seek out, investigate, develop,
manufacture and market electronic in-store advertising, directory and coupon
services which have potential for profit. The Company is currently in the
process of the commercialization of the patented process it has acquired.
Cash Equivalents
For the purpose of reporting cash flows, the Company considers all
highly liquid debt instruments purchased with maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts
9
<PAGE>
KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES(continued):
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Reclassifications
Certain reclassifications have been made in the 1998 financial
statements to conform with the 1999 presentation.
Loss per Share
The reconciliations of the numerators and denominators of the basic
earnings per share computations are as follows:
Per-Share
Loss Shares Amount
For the three months ended March 31, 2000
-----------------------------------------
Basic Earnings per Share
Income available to common shareholders $(1,069,904) 11,667,925 $ (0.09)
============= ============ ========
For the three months ended March 31, 1999
-----------------------------------------
Basic Earnings per Share
Income available to common shareholders $ (345,615) 10,562,946 $ (0.03)
============ =========== ========
Basic earnings per common share were computed by dividing net income by
the weighted average number of shares of common stock outstanding during the
period. Diluted earnings per common share for the three months ended March 31,
2000 and 1999 are not presented as it would be anti-dilutive.
10
<PAGE>
KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES(continued):
Fixed Assets
Fixed assets are stated at cost. Depreciation and amortization are
computed using the straight- line method over the estimated economic useful
lives of the related assets as follows:
Computer equipment 3 years
Office furniture and fixtures 5-10 years
Upon sale or other disposition of property and equipment, the cost and
related accumulated depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.
Expenditures for maintenance and repairs are charged to expense as
incurred. Major overhauls and betterments are capitalized and depreciated over
their estimated economic useful lives.
Intangibles
Intangibles associated with certain technology agreements are amortized
over 10 -14 years.
NOTE 2 - INCOME TAXES
The Company has accumulated tax losses estimated at $8,000,000 expiring
in years 2007 through 2014. Current tax laws limit the amount of loss available
to be offset against future taxable income when a substantial change in
ownership occurs. The amount of net operating loss carryforward available to
offset future taxable income may be limited if there is a substantial change in
ownership.
NOTE 3 - LEASE COMMITMENT
The Company's lease commitments for office space with Tree of Stars,
Inc./P.D.O. consist of two leases with payments of $26,743 and $10,496 per year.
Both lease commitments expired December 31, 1998 and have continued on a month
to month basis since that time.
11
<PAGE>
KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 4 - RESEARCH AND DEVELOPMENT
Research and development of the Klever-Kart System began with the sole
purpose of reducing thefts of shopping carts. A voice-activated alarm system was
envisioned. As time and technology progressed, the present embodiment of the
Klever-Kart System evolved into a "product specific" point-of-purchase
advertising system consisting of an easily readable electronic display that
attaches to any shopping cart, a shelf mounted message sending unit that
automatically sends featured products' ad-message to the display and a host
computer using proprietary software.
During the three months ended March 31, 2000 and 1999, the Company
expended $129,870 and $106,590, respectively for research and development of the
technology involved with its patents.
On February 1, 1997 the Company entered into an agreement with ETC and
Digital Radio Communications Corp. ("DRCC")where by the Company exchanged
electronic components for a promissory note of $97,093 together with interest at
eight percent calculated on the basis of the actual number of days elapsed but
computed on a 360 day year. The principal balance, together with interest
thereon will be amortized over 18 monthly installments, commencing on the day
the "cost reduction and manufacturing" ("Commercial Service Agreement") contract
is executed and the first payment is made by the Company to ETC/DRCC and
continuing on the last day of each month thereafter until paid in full.
On February 13, 1998 the Company entered into the Commercial Service
Agreement (see above) with World Wireless Communications ("WWC") where WWC
agrees to provide consulting and engineering services related to the development
of a wireless shopping data display system. WWC may also offer alternative
approaches to design, construct and performance of the product.
The Company is required to pay a $10,000 deposit in connection with the
agreement, retained by WWC, which will be credited during final billing received
from WWC. The Company has agreed to provide WWC a bonus of $2,000 if the project
is completed by March 31, 1998. If the project duration is beyond April 15,
1998, WWC will be required to pay the Company a penalty of $2,000.
On February 13, 1998 the Company entered into a settlement agreement
with WWC (formerly Electronic Technology Corp.) pursuant to which the company
paid $30,000 and issued 46,364 shares of common stock to WWC in satisfaction of
any and all claims in connection with the September 26,
12
<PAGE>
KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 4 - RESEARCH AND DEVELOPMENT (continued):
1994 contract. The agreement also provides for 10,000 shares of WWC restricted
common stock in exchange for a promissory note in the amount of $97,093.
On March 29, 2000 the Company entered into a settlement agreement with
WWC pursuant to which WWC is to transfer 7,000 common shares of the Company's
stock back to the Company by April 14, 2000 in satisfaction of any and all
claims in connection with the Klever Kart project.
NOTE 5- RELATED PARTY TRANSACTIONS
During 1998 various shareholders loaned the Company $347,100. The notes
are payable within one year plus interest at 10% and 12% per annum. During 1999
and 1998 principle payments of $155,850 and $12,500 were paid toward these
loans. During the three months ended March 31, 2000, principal payments of
$62,500 were paid towards these loans. The balance due as of March 31, 2000 is
$128,750.
On February 1, 2000 an accrued liability in the amount of $306,666.64
was converted to common shares by exercise of options for the purchase of
579,585 shares at $.86 per share and a note receivable in the amount of
$191,776.46. The note is payable in thirty-six equal installments with interest
at the rate of eight percent. The note is collateralized by 100,000 shares of
the Company's common shares.
NOTE 6- STOCK OPTIONS
The shareholders approved, by a majority vote, the adoption of the 1998
Stock Incentive Plan (the "Plan"). Under the Plan, 3,500,000 shares of common
stock are reserved for issuance upon the exercise of options which may be
granted from time-to-time to officers, directors and certain employees and
consultants of the Company or its subsidiaries. The Plan permits the award of
both qualified and non-qualified incentive stock options. Under the Plan, an
additional 500,000 shares of common stock are reserved for issuance in the form
of restricted stock grants. As of December 31, 1998, no options had been granted
under the Plan. Compensation expense charged to operations in 1999 and 1998 is
$24,010 and $11,247. Compensation expense charged to operations for the three
months ending March 31,2000 is $297,522. The following is a summary of
transactions:
13
<PAGE>
KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 6- STOCK OPTIONS (continued):
Shares Under Option
----------------------------
March 31, December 31,
----------------------------
2000 1999
-------------- -----------
Outstanding, beginning of year 2,898,059 1,675,355
Granted during the year 272,672 1,284,641
Canceled during the year (125,392) --
Exercised during the year (74,608) (61,937)
-------------- -----------
Outstanding, end of year (at prices
ranging from $.86 to $3.61 per share) 2,970,731 2,898,059
============== ===========
Eligible, end of year for exercise currently (at prices
ranging from $.86 to $3.61 per share) 2,970,731 2,898,059
============== ===========
NOTE 7 - CONTINGENCIES
On May 24, 1996, in consideration of the assignment in September 1993
to the company, certain technologies and patents relating to the electronic
couponing ("Electronic Coupon Patent") by Mr. Paul G. Begum, President/CEO and
Mr. Mark Geiger, V.P. Operations, the Board of Directors agreed to pay Mr. Begum
and Mr. Geiger 200,000 and 25,000 shares, respectively at a price of $.01 per
share for the electronic coupon patent. $132,750 was capitalized in 1996 as
patents. The shares are valued at $.60 per share as this was the value the
Company's stock was selling for when the assignment was made in September 1993.
As additional consideration for the Electronic Coupon Patent, the Board of
Directors has agreed to pay PSF, Inc.(as Mr. Begum's assign) and Mr. Geiger
$50,000 and $10,000, respectively upon receipt by the Company of $2,000,000 in
equity funding and when the Company has the necessary financing to conduct its
operations.
On February 25, 1997 Mr. Begum and Mr. Geiger received 200,000 and 25,000
shares respectively. On December 22, 1997 pursuant to the merger, Mr. Begum and
Mr. Geiger received an additional 31,834 and 3,979 shares respectively. As of
March 31, 2000 the Company has fulfilled its obligation to Mr. Begum and Mr.
Geiger, respectively.
NOTE 8 - PREFERRED STOCK
On February 7, 2000 the Board of Directors authorized and established
"Class A Voting
14
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KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 8 - PREFERRED STOCK (continued):
Preferred Stock Series 1. " ("Class A Shares") as a class of its $.01 par value,
2,000,000 shares authorized, preferred stock. Class A Shares consist of
1,000,000 shares, 125,000 shares thereof are designated as Series 1 shares.
Class A Shares are convertible into Common Stock at an initial
conversion price of $2.60 (subject to adjustment).
Holders of Class A Shares shall be entitled to receive when and as
declared by the Board of Directors of the Company out of any funds at the time
legally available therefor dividends at the rate of $2.20 per share per annum,
payable semi-annually on the first day of January and July of each year. Such
dividends shall accrue on each such share from the date of its original issuance
and shall accrue from day to day, whether or not earned or declared. Such
dividend shall be cumulative and may be paid in cash or in kind through the
distribution of .0425 Class A Shares, Series 1, for each outstanding Class A
Share, on each dividend payment date. In addition, each holder of Class A Shares
shall be entitled to receive, when and as declared, a dividend equal to each
dividend declared and paid on the shares of Common Stock, on a share for share
basis. If there is a split or dividend on the Common Stock, then the Class A
Shares dividends shall be adjusted as if a similar split or dividend had
occurred with respect to the Class A Shares.
Class A Shareholders shall be entitled to one vote for each share of
Common Stock into which such Class A Shares could then be converted, and shall
have voting rights and powers equal to that of a holder of Common Stock. The
Holders of Class A Shares shall vote with the holders of Common Stock and not as
a separate class.
Class A Shares carry a liquidation preference of $26 per share plus any
accrued but unpaid dividends on such shares, if any, and adjusted for
combinations, splits, dividends or distributions of shares of stock with respect
to such shares.
The Class A Shares shall be redeemable by the Company, in whole or in
part, at the option of the Board of Directors of the Company, at any time and
from time to time on or after July 1, 2002. The redemption price shall be $26
per share together with accrued but unpaid dividends on such shares, if any.
NOTE 9 - SUBSEQUENT EVENTS
On April 4, 2000 the Company received a short term loan of $25,000 at
12% interest per
15
<PAGE>
KLEVER MARKETING, INC
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 9 - SUBSEQUENT EVENTS (continued):
annum from shareholders.
On April 7, 2000 the Company sold 40,312 shares of common stock for
cash at $2.50 per share.
On April 17, 2000 the Company received a short term loan of $260,000 at
10% interest per annum from shareholders.
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, 2000.
Plan of Operations - The Company was formed for the purpose of creating a
vehicle to obtain capital, to file and acquire patents, to seek out, investigate
develop, manufacture and market electronic in-store advertising, directory and
electronic coupon services which have potential for profit. The Company is
currently in the process of the commercialization of the patented system,
Klever-Kart(R). The commercialization process is divided into five phases as
follows:
Phase I: System Development and Product Movement Test.
The product movement test was completed during third quarter 1997. The test took
place in a Smith's Food and Drug store located in Salt Lake City, Utah.
Information Resources, Inc., an independent company, audited the results of the
test which concluded an average 46.8% incremental product movement.
Phase II: Cost Reduction & Enhancement.
In January 1998, the Company commenced development of the Phase II functional
specification that encompassed cost reductions and system enhancements.
Improvements on the Klever-Kart(R) system included: a significantly smaller and
more sleek design in the appearance and size of the display unit;
16
<PAGE>
smaller trigger units with improved sensitivity, more durable plastics, and
improved sound fidelity. Upon completion of the Phase II functional
specification, the Company began phase II engineering design and development. In
September 1999, the Company began parts procurement and other manufacturing
processes.
Phase III: Installation of Stores.
In December 1999, the Company plans to commence installation of the
Klever-Kart(R) units in Ralph's Grocery Company stores in Southern California.
Phase IV: Electronic Coupon Integration.
Definition of the Electronic Coupon system is scheduled to commence during
fourth quarter 1999. This process consists of working with retailers and
point-of-sale transaction processing system manufacturers to ensure the
appropriate degree of interface and integration necessary to implement the
Electronic Coupon system. Because the Klever-Kart(R) system was designed with
the eventual implementation of Electronic Coupons in mind, the Company does not
expect significant hardware modifications will be necessary. The Electronic
Coupon system design and initial manufacture is scheduled for completion during
the year 2000, followed by a minimum three month in-store test of system
operation.
Phase V: Future Development.
The Klever-KardTM frequent shopper program enhancement is scheduled for
introduction in 2000. This dynamic micro-marketing capability will be added to
the Klever-Kart(R) system, allowing targeted promotions to individual customers
according to demographics and personal buying history.
In order to satisfy its cash requirements, the company will have to raise
additional funds through the sale of restricted stock, joint ventures or short
term borrowings..
Liquidity and Capital Resources - The Company requires working capital
principally to fund its current research and development and operating expenses
for which the Company has relied on short- term borrowings and the issuance of
restricted common stock. There are no formal commitments from banks or other
lending sources for lines of credit or similar short-term borrowings, 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 borrowings have
been obtained from a principal shareholder or other related entities.
Cash flows. Operating activities used cash of $ 780,000 and $ 687,000 for the
three months ended March 31, 2000 and 1999, respectively.
Investing activities have used cash of $ 432,000 and $ 11,000 for the three
months ended March 31,
17
<PAGE>
2000 and 1999, respectively. Investing activities primarily represent purchases
of patents relating to the electronic in-store advertising, directory and coupon
devices, and purchases of office equipment.
Financing activities provided cash of $ 1,061,000 and $660,000 for the three
months ended March 31, 2000 and 1999, respectively. Financing activities
primarily represent sales of the Company's 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
The Company sold 743,957 shares of common stock during the three months ended
March 31, 2000 to individuals for $ .86 to $3.99 per share. The Company also
sold 47,245 shares of preferred stock during the three months ended March 31,
2000 to other companies for $26 per share. The stock was not sold through an
underwriter and was not sold through a public offer. These sales are exempt
under Regulation D Rule 506 of the Securities Act of 1933
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
18
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
None.
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 12, 2000
-------------------
By: /s/ Paul G. Begum
Paul G. Begum
Chief Executive officer & Director
(Principal financial and Accounting Officer)
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF KLEVER MARKETING, INC. AS OF MARCH 31,2000 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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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 52
<SECURITIES> 0
<RECEIVABLES> 204
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 287
<PP&E> 958
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<TOTAL-ASSETS> 2085
<CURRENT-LIABILITIES> 891
<BONDS> 0
0
0
<COMMON> 119
<OTHER-SE> 1070
<TOTAL-LIABILITY-AND-EQUITY> 2085
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1257
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> (1070)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1070)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1070)
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
</TABLE>
