10QSB 1 form10qsb033106.txt [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, 2006 ------------------------------------------- [ ] 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.) 3785 S 700 E Salt Lake City, UT 84106 ---------------------------------------------------------------- (Address of principal executive offices) (801) 263-0404 Issuer's telephone number 419 1/2 West 500 South Bountiful, UT 84101 (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 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, 2006 38,523,120 Transitional Small Business Disclosure Format (check one). Yes ; No X ---- ----- PART I ITEM 1. FINANCIAL STATEMENTS KLEVER MARKETING, INC. (a Development Stage Company) BALANCE SHEETS

(Unaudited) March 31, December 31, ASSETS 2006 2005 ------ ------------------ ------------------ Current Assets Cash $ 5,161 $ 3,892 Prepaid Expense 750 750 Other Receivable 25,865 25,865 ------------------ ------------------ Total Current Assets 31,776 30,507 ------------------ ------------------ Fixed Assets Office Equipment 92,964 92,964 Less Accumulated Depreciation (92,964) (92,964) ------------------ ------------------ Net Fixed Assets - - ------------------ ------------------ Other Assets Patents 767,830 Less Accumulated Amortization (767,830) Net Other Assets - - ------------------ ------------------ Total Assets $ 31,776 $ 30,507 ================== ==================

3 KLEVER MARKETING, INC. (a Development Stage Company) BALANCE SHEETS (Continued)

(Unaudited) March 31, December 31, LIABILITIES AND STOCKHOLDERS' EQUITY 2006 2005 ------------------------------------ ------------------ ------------------- Current Liabilities Accounts Payable, Trade $ 320,749 $ 307,591 Accrued Liabilities 1,694,598 1,582,852 Related Party Payables 2,657,856 2,596,723 Notes Payable 45,000 45,000 ------------------ ------------------- Total Current Liabilities 4,718,203 4,532,166 ------------------ ------------------- Stockholders' Equity Preferred stock (par value $.01), 2,000,000 shares authorized 168,434 issued and outstanding March 31, 2006 and December 31, 2005 1,684 1,684 Common Stock (Par Value $.01), 50,000,000 shares authorized 38,523,120 shares issued and outstanding at March 31, 2006 and 38,523,120 and December 31, 2005 385,231 385,231 Common Stock to be issued, 469,752 shares at March 31, 2006 and December 31, 2005 4,698 4,698 Treasury Stock, 1,000 shares at March 31, 2006 and December 31, 2005 (1,000) (1,000) Paid in Capital in Excess of Par Value 13,440,954 13,440,954 Shareholder Receivable (15,000) (15,000) Retained Deficit (3,333,785) (3,333,785) Deficit Accumulated During Development Stage (15,169,209) (14,984,441) ------------------ ------------------- Total Stockholders' Equity (4,686,427) (4,501,659) ------------------ ------------------- Total Liabilities and Stockholders' Equity $ 31,776 $ 30,507 ================== ===================

The accompanying notes are an integral part of these financial statements 4 KLEVER MARKETING, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS

Cumulative From (Unaudited) July 5, 1996 For the Three Months Inception of Ended March 31, Development 2006 2005 Stage ------------------ ----------------- ---------------------- Revenue $ - $ - $ 256,000 ------------------ ----------------- ---------------------- Expenses Sales and Marketing 7,500 - 162,708 General and Administrative 94,058 114,224 9,495,505 Research and Development - - 4,529,656 ------------------ ----------------- ---------------------- Total Expenses 101,558 114,224 14,187,869 ------------------ ----------------- ---------------------- Other Income (Expense) Other Income - 150,073 428,717 Interest Income - - 18,902 Interest Expense (83,210) (91,327) (1,902,398) Gain (Loss) on sale of assets - - 26,947 Capital gain on sale of investments - - 191,492 ------------------ ----------------- ---------------------- Total Other Income (Expense) (83,210) 58,746 (1,236,340) ------------------ ----------------- ---------------------- Loss Before Taxes (184,768) (55,478) (15,168,209) Income Taxes - - 1,000 ------------------ ----------------- ---------------------- Net Loss After Taxes $ (184,768) $ (55,478) $ (15,169,209) ================== ================= ====================== Weighted Average Shares Outstanding 38,523,120 36,725,064 ================== ================= Loss per Common Share $ (0.01) $ - ================== =================

The accompanying notes are an integral part of these financial statements 5 KLEVER MARKETING, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS

Cumulative From (Unaudited) July 5, 1996 For the Three Months Ended Inception of March 31, Development 2006 2005 Stage ----------------- ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (184,768) $ (55,478) $ (15,169,209) Adjustments used to reconcile net loss to net cash provided by (used in) operating activities: Stock issued for general and administrative - - 986,785 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 - - 26,247 Stock issued for interest expense - - 119,701 Stock issued for accounts payable - - 208,473 Deferred income - - (214,000) Depreciation and amortization 2,862 16,456 1,908,530 (Increase) decrease in accounts receivable - - (413) (Increase) decrease in shareholder receivable - - 37,694 (Increase) decrease in other assets & prepaids - - 87,623 Increase (decrease) in accounts payable 13,157 (484) 235,044 Increase (decrease) in accrued liabilities 158,680 21,844 2,170,530 ----------------- ------------------ ------------------ Net Cash Used in Operating Activities (10,069) (17,662) (9,254,399) ----------------- ------------------ ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition/Sale of equipment, net - - (587,801) Acquisition/Sale of patents (2,862) - 29,442 Acquisition/Sale of stock, net - - 12,375 ----------------- ------------------ ------------------ Net Cash Used by Investing Activities (2,862) - (545,984) ----------------- ------------------ ------------------

6 KLEVER MARKETING, INC. (a Development Stage Company) STATEMENT OF CASH FLOWS (continued)

Cumulative From (Unaudited) July 5, 1996 For the Three Months Ended Inception of March 31, Development 2006 2005 Stage ----------------- ------------------ ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds capital stock issued - 7,700 6,619,173 Proceeds from loans 14,200 1,209 3,470,952 Loan receivables - - (15,000) Principal payments on lease obligations - - (18,769) Cash payments on notes payable - (458) (275,486) ----------------- ------------------ ------------------ Net Cash Provided by Financing Activities 14,200 8,451 9,780,870 ----------------- ------------------ ------------------ Net Increase (Decrease) in Cash and Cash Equivalents 1,269 (9,211) (19,513) Cash and Cash Equivalents at Beginning of the Year 3,892 23,174 24,674 ----------------- ------------------ ------------------ Cash and Cash Equivalents at End of the Year $ 5,161 $ 13,963 $ 5,161 ================= ================== ================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest $ - $ - $ - Income Taxes $ - $ - $ 900

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None. The accompanying notes are an integral part of these financial statements 7 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN The accompanying financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations. Several conditions and events cast doubt about the Company's ability to continue as a "going concern". The Company has incurred net losses of $185,000 for the three months ended March 31, 2006 losses of $55,000 for the three months ended March 31,2005, and losses of $18,503,000 since inception. The Company has a liquidity problem and requires additional financing in order to finance its business activities on an ongoing basis. The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained. The Company's future capital requirements will depend on numerous factors including, but not limited to, continued progress in developing its products, and market penetration. These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a "going concern". While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the "going concern" assumption used in preparing these financial statements, there can be no assurance that these actions will be successful. If the Company were unable to continue as a "going concern", then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used. 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. During the period from July 5, 1996 to December 31, 2002, the Company has been in the development stage, except for an approximate 2-month period in 2000 when the Company generated revenue from installations of their Klever-Kart system in stores. 8 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS(Continued) NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (continued) 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. NOTE 2 - 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, 2006, and for the three month period 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. 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 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 2005 financial statements to conform with the 2006 presentation. 9 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued) Loss per Share Basic earnings per common share were computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share for the three months ended March 31, 2006 and 2005 are not presented as it would be anti- dilutive. At March 31, 2006 and 2005, the total number of potentially dilutive common stock equivalents was 8,109,807 and 9,242,589, respectively. Concentration of Credit Risk The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. 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. Depreciation expense was $0 and $3,644 for the three months ended March 31, 2006 and 2005, respectively. Intangibles Intangibles associated with certain technology agreements are amortized over 10 - 14 years. Amortization expense was $2,862 and $ 15,545 for the three months ended March 31, 2006 and 2005, respectively. 10 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 3 - INCOME TAXES The Company has accumulated tax losses estimated at $18,300,000 expiring in years 2007 through 2025. 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 4 - LEASE COMMITMENT The Company leased approximately 1,620 square feet of office space from Four Cabo's Enterprises, Ltd. on a month to month basis. The lease payments were approximately $2,042 per month. This lease was abandoned as of September 30, 2004. On October 1, 2004, the Company began leasing approximately 144 square feet of office space from Four Cabo's Enterprises, Ltd. on a month to month basis. The lease payments were approximately $225 per month. This lease was cancelled as of September 30, 2005. On November 1, 2005 the Company entered into a 12 month lease agreement with SJD, LLC at a rate of $1,500 per month. On March 1, 2006 the Company was able to cancel the remainder of the lease agreement. In August 2000, the Company entered into a lease agreement for the rental of a postage meter. The lease expires in August 2006. The monthly lease payments due on the above lease is approximately $110. During the third quarter of 2005, the Company settled this lease and is no longer making payments. The minimum future lease payments under these leases for the next five years are: Year Ended December 31, ------------------------------------------- 2006 $ - 2007 - 2008 - 2009 - 2010 - -------------- Total minimum future lease payments $ - ============== 11 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 5 - 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, 2006 and 2005, the Company expended $0 and $0 respectively for research and development of the technology involved with its patents. NOTE 6- RELATED PARTY TRANSACTIONS OLSON HOLDINGS, INC. LOANS TO THE COMPANY Olson Holdings, Inc. made a $150,000.00 unsecured loan to the Company on February 26, 2001. This note has a six-month term at 10% annual interest maturing on August 26, 2001. The maker of the note may give written notice within 10-days of maturity, to the Company, to convert the principal and interest into common stock with a convertible price of $1.05 (10-day weighted average from February 26, 2001 and the nine days prior). Olson Holdings made an unsecured loan to the Company on January 7, 2002 for $1,835.84. This note has an annual interest rate of 8% and matures on January 7, 2004. An option was granted in connection with this note for 3,060 shares at a strike price of $1.00 and an expiration date of January 7, 2005. At March 31, 2006, the total amount due on these notes was $297,139. OLSON FOUNDATION LOANS TO THE COMPANY Olson Foundation loaned the Company $60,000 on July 16, 2001, of which is secured by a blanket lien on the assets of the Company. An interest rate of 10% compounded monthly applies until January 15, 2002. Principal and all due and unpaid interest are to be paid on January 16, 2002, or the interest rate increases to 15% compounded daily. Warrants were issued in conjunction with this loan for 18,182 common shares at a strike price of $0.01 and an expiration date of July 16, 2006. This note is convertible to Class C convertible preferred shares or to Class D convertible preferred shares at the option of the note holder. 12 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 6- RELATED PARTY TRANSACTIONS (continued) Olson Foundation loaned the Company $90,000 on July 30, 2001, of which is secured by a blanket lien on the assets of the Company. An interest rate of 10% compounded monthly applies until January 30, 2002. Principal and all due and unpaid interest are to be paid on January 30, 2002, or the interest rate increases to 15% compounded daily. Warrants were issued in conjunction with this loan for 27,273 common shares at a strike price of $0.01 and an expiration date of July 30, 2006. This note is convertible to Class C convertible preferred shares or to Class D convertible preferred shares at the option of the note holder. Olson Foundation made unsecured loans to the Company on May 3, 2002, August 16, 2002, and October 29, 2002 for $7,359, $10,000, and $1,059.37, respectively. These notes are payable within two years plus interest at 8% per annum. In conjunction with the notes, Olson Foundation also received common stock options for each note at a ratio of 1.667 common shares for each dollar loaned. At March 31, 2006 the total amount due on these loans was $270,155. PRESIDIO INVESTMENTS, LLC LOAN TO THE COMPANY Presidio Investments, LLC has loaned the Company $1,000,000, which loan is secured by a blanket lien on the assets of the Company. The sole trustee of Presidio Investments, LLC is William J. Howard, trustee of the Olson Legacy Trust, whose residual beneficiary is the Olson Foundation. The Olson Foundation was the guarantor for funds borrowed from Northern Trust Bank which funds were used to make the loan to the Company. This note was amended on March 22, 2001 with an additional $500,000 loaned to the Company between January 1, 2001 and March 22, 2001. An Interest rate of 8% applies until March 31, 2001 and increases to 10% on April 1, 2001. Principal and all due and unpaid interest are to be paid on October 1, 2001. This note is convertible to Class C convertible preferred shares at the option of the note holder. At March 31, 2006 the total amount due on these loans was $2,593,723. THE SEABURY GROUP LOAN TO THE COMPANY The Seabury Group loaned the Company $60,000 on July 5, 2001, of which is secured by a blanket lien on the assets of the Company. An interest rate of 10% compounded monthly applies until January 5, 2002. Principal and all due and unpaid interest are to be paid on January 5, 2002, or the interest rate increases to 15% compounded daily. Warrants were issued in conjunction with this loan for 18,182 common shares at a strike price of $0.01 and an expiration date of July 5, 2006. This note is convertible to Class C convertible preferred shares or to Class D convertible preferred shares at the option of the note holder 13 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 6- RELATED PARTY TRANSACTIONS (continued) The Seabury Group loaned the Company $190,000 on August 22, 2001, of which is secured by a blanket lien on the assets of the Company. An interest rate of 10% compounded monthly applies until February 22, 2002. Principal and all due and unpaid interest are to be paid on February 22, 2002, or the interest rate increases to 15% compounded daily. Warrants were issued in conjunction with this loan for 57,576 common shares at a strike price of $0.01 and an expiration date of August 22, 2006. This note is convertible to Class C convertible preferred shares or to Class D convertible preferred shares at the option of the note holder. At March 31, 2006 the total amount due on these loans was $479,421. ARBINGER LOANS TO THE COMPANY The loans listed below were made to the Company by The Arbinger Institute. The Arbinger Institute is controlled by four equal partners, of which C. Terry Warner and D. Paul Smith are each a partner.

Common Annual Stock Option Interest Option # Strike DATE Principal Rate Maturity Date Shares Price ------------ ---------------- ---------------------------------------------------------------- 09/12/03 $10,040.00 8.00% 09/12/05 16,733 $1.00 09/17/03 $471.73 8.00% 09/17/05 786 $1.00 09/25/03 $4,500.00 8.00% 09/25/05 7,500 $1.00 09/26/03 $80.95 8.00% 09/26/05 135 $1.00 10/01/03 $79.00 8.00% 10/01/05 132 $1.00 11/01/03 $79.00 8.00% 11/01/05 132 $1.00 11/26/03 $10,000.00 8.00% 11/26/05 16,667 $1.00 12/02/03 $79.00 8.00% 12/02/05 132 $1.00 12/15/03 $13,000.00 8.00% 12/15/05 21,667 $1.00 12/24/03 $2,750.00 8.00% 12/24/05 4,583 $1.00 ---------------- -------------- Total $41,079.68 68,467 ================ ==============

During 2004, the Arbinger Institute loaned the Company an additional $2,260 to pay general and administrative expenses. At March 31, 2006, the total amount due on these loans is $49,929. 14 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 6- RELATED PARTY TRANSACTIONS (continued) DIRECTOR AND OFFICER LOANS TO THE COMPANY On February 17, 2006 Art Portugal advanced the company $9,000. On February 28, 2006 Paul Smith advanced the company $200. PAUL G. BEGUM On January 10, 2006 Paul Begum advanced the company $5,000. NOTE 7 - NOTES PAYABLE During 2002, the Company received loans of $45,000 from third parties. The loans are demand loans and carry an interest rate of 8% per annum. At March 31, 2006, the total amount due on these loans is $61,075. NOTE 8- STOCK OPTIONS The shareholders approved, by a majority vote, the adoption of the 1998 Stock Incentive Plan (the "Plan"). As amended on August 11, 2003, the Plan reserves 20,000,000 shares of common stock 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. On August 18, 2003, the Company registered its "Amended Stock Incentive Plan of Klever Marketing, Inc." on Form S-8. As of March 31, 2006, 7,326,053 options were outstanding. Compensation expense charged to operations for the three months ended March 31, 2006 and 2005 is $0 and $0. 15 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 8- STOCK OPTIONS (continued) The following table sets forth the options and warrants outstanding as of December 31, 2005.

Weighted Option / Average Weighted Warrants Exercise Average Shares Price Fair Value ----------------- ------------------ ----------------- Options & warrants outstanding, December 31, 2004 6,861,584 $ 0.77 Granted, Exercise price more than fair value 1,310,288 0.43 0.08 Granted, Exercise price less than fair value - - - Expired (845,819) 0.06 Exercised - - ----------------- Options & warrants outstanding, December 31, 2005 7,326,053 $ 0.54 ================= ==================

The following table sets forth the options and warrants outstanding as of March 31, 2006.

Weighted Option / Average Weighted Warrants Exercise Average Shares Price Fair Value ----------------- ------------------ ----------------- Options & warrants outstanding, December 31, 2005 7,326,053 $ 0.54 Granted, Exercise price more than fair value - - - Granted, Exercise price less than fair value - - - Expired - - Exercised - - ----------------- Options & warrants outstanding, March 31, 2006 7,326,053 $ 0.54 ================= ==================

Exercise prices for optioned shares and warrants outstanding as of December 31, 2005 ranged from $0.01 to $2.75. A summary of these options by range of exercise prices is shown as follows: 16 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 8- STOCK OPTIONS (continued)

Weighted- Weighted- Weighted- Shares/ Average Average Shares / Average Warrants Exercise Price Contractual Exercise Warrants Exercise Currently Currently Remaining Price Outstanding Price Exercisable Exercisable Life ------------------ ------------------ --------------- ------------------ --------------------- ----------------- $ 0.01 121,213 $ 0.01 121,213 $ 0.01 8 months 0.06 3,867,000 0.06 3,867,000 0.06 1.75 years 0.07 400,000 0.07 400,000 0.07 2.1 years 0.08 100,000 0.08 100,000 0.08 2.9 years 0.10 125,000 0.10 50,000 0.10 2.75 years 0.23 200,000 0.23 200,000 0.23 2 years 0.50 985,288 0.50 985,288 0.50 2.25 years 0.54 60,000 0.54 60,000 0.54 4.2 years 0.66 30,303 0.66 30,303 0.66 5 months 1.00 500,249 1.00 500,249 1.00 7 months 2.75 937,000 2.75 937,000 2.75 1 year

NOTE 9 - PREFERRED STOCK On February 7, 2000 the Board of Directors authorized and established "Class A Voting Preferred Stock" ("Class A Shares") as a class of its $.01 par value, 2,000,000 shares authorized, preferred stock. Class A Shares consisted of 1,000,000, 125,000 shares thereof were designated as Series 1 shares. On May 20, 2002, the Board of Directors amended the number of authorized shares of Class A voting preferred stock to 55,000 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 17 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 9 - PREFERRED STOCK (continued) 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 Share 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. On September 24, 2000 the Board of Directors authorized and established "Class B Voting Preferred Stock" ("Class B Shares") as a class of its $.01 par value, 2,000,000 shares authorized, preferred stock. Class B Shares consisted of 250,000, 125,000 shares thereof were designated as Series 1 shares. On May 20, 2002, the Board of Directors amended the number of authorized shares of Class B voting preferred stock to 42,000 shares. Class B Shares are convertible into Common Stock at an initial conversion price of $1.70 (subject to adjustment). Holders of Class B Shares shall be entitled to receive when and as declared by the Board of Directors of the Corporation out of any funds at the time legally available therefore dividends at the rate of the Original Issue Price divided by 11.8181818 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 dividends shall be cumulative and may be paid in cash or in kind through the distribution of .0425 Class B Shares, of the same Series for which the dividend is accrued, for each outstanding Class B Share, on each dividend payment date; provided, that if such dividends in respect of any period shall not have been paid or declared and set apart for payment for all 18 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 9 - PREFERRED STOCK (continued) outstanding Class B Shares by each payment date, then until all unpaid dividends thereon shall be paid or set apart for payment to the holders of such shares, the Corporation may not pay, declare or set apart any dividend or other distribution on its shares of Common Stock or other shares junior to the Class B Shares, nor may any other distributions, redemptions or other payments be made with respect to the shares of Common Stock or other junior shares. In addition to the foregoing, each holder of a Class B Share 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, so the holders of the Class B Shares shall be entitled to participate equally on a share for share basis with the holders of the shares of Common Stock. If there is a share split or dividend on the Common Stock, then the Class B Share dividends shall be adjusted as if a similar split or dividend had occurred with respect to the Class B Shares. Class B Shareholders shall be entitled to one vote for each share of Common Stock into which such Class B Shares could then be converted and shall have voting rights and powers equal to the voting rights and powers of a holder of shares of Common Stock. The holders of Class B Shares shall vote with the holders of shares of Common Stock and not as a separate class. Class B Shares shall carry a liquidation preference of $17 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 B 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 March 24, 2004 for Series 1, and such date as determined by the Board of Directors for each additional Series. The redemption price shall be $17.00 per share together with accrued but unpaid dividends on such shares, if any. On January 2, 2001 the Board of Directors authorized and established "Class C Voting Preferred Stock" ("Class C Shares") as a class of its $.01 par value, 2,000,000 shares authorized, preferred stock. Class C Shares consisted of 500,000, 125,000 shares thereof were designated as Series 1 shares and 125,000 shares thereof were designated as Series 2 shares. On May 20, 2002, the Board of Directors amended the number of authorized shares of Class C voting preferred stock to 150,000 shares. Class C Shares are convertible into Common Stock at an initial conversion price of $.66 (subject to adjustment). 19 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 9 - PREFERRED STOCK (continued) Holders of Class C Shares shall be entitled to receive when and as declared by the Board of Directors of the Corporation out of any funds at the time legally available therefore dividends at the rate of the Original Issue Price divided by 11.8181818 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 dividends shall be cumulative and may be paid in cash or in kind through the distribution of .0425 Class C Shares, of the same Series for which the dividend is accrued, for each outstanding Class C Share, on each dividend payment date; provided, that if such dividends in respect of any period shall not have been paid or declared and set apart for payment for all outstanding Class C Shares by each payment date, then until all unpaid dividends thereon shall be paid or set apart for payment to the holders of such shares, the Corporation may not pay, declare or set apart any dividend or other distribution on its shares of Common Stock or other shares junior to the Class C Shares, nor may any other distributions, redemptions or other payments be made with respect to the shares of Common Stock or other junior shares. In addition to the foregoing, each holder of a Class C Share 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, so the holders of the Class C Shares shall be entitled to participate equally on a share for share basis with the holders of the shares of Common Stock. If there is a share split or dividend on the Common Stock, then the Class C Share dividends shall be adjusted as if a similar split or dividend had occurred with respect to the Class C Shares. Class C Shareholders shall be entitled to one vote for each share of Common Stock into which such Class C Shares could then be converted and shall have voting rights and powers equal to the voting rights and powers of a holder of shares of Common Stock. The holders of Class C Shares shall vote with the holders of shares of Common Stock and not as a separate class. Class C Shares shall carry a liquidation preference of $6.60 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 C 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 2, 2004 for Series 1, and such date as determined by the Board of Directors for each additional Series. The redemption price shall be $6.60 per share together with accrued but unpaid dividends on such shares, if any. 20 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 9 - PREFERRED STOCK (continued) On May 20, 2002, the Board of Directors authorized and established "Class D Voting Preferred Stock" ("Class D Shares") as a class of its $.01 par value, 2,000,000 shares authorized, preferred stock. Class D Shares consist of 500,000 shares thereof are designated as "Class D Voting Preferred Stock" (the "Class D Shares"). Class D Shares are convertible into Common Stock at an initial conversion price of $1.05 (subject to adjustment). Holders of Class D Shares shall be entitled to receive when and as declared by the Board of Directors of the Corporation out of any funds at the time legally available therefore dividends at the rate of the Original Issue Price divided by 11.8181818 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 dividends shall be cumulative and may be paid in cash or in kind through the distribution of .0425 Class D Shares for each outstanding Class D Share, on each dividend payment date; provided, that if such dividends in respect of any period shall not have been paid or declared and set apart for payment for all outstanding Class D Shares by each payment date, then until all unpaid dividends thereon shall be paid or set apart for payment to the holders of such shares, the Corporation may not pay, declare or set apart any dividend or other distribution on its shares of Common Stock or other shares junior to the Class D Shares, nor may any other distributions, redemptions or other payments be made with respect to the shares of Common Stock or other junior shares. In addition to the foregoing, each holder of a Class D Share 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, so the holders of the Class D Shares shall be entitled to participate equally on a share for share basis with the holders of the shares of Common Stock. If there is a share split or dividend on the Common Stock, then the Class D Share dividends shall be adjusted as if a similar split or dividend had occurred with respect to the Class D Shares. Class D Shareholders shall be entitled to one vote for each share of Common Stock into which such Class D Shares could then be converted and shall have voting rights and powers equal to the voting rights and powers of a holder of shares of Common Stock. The holders of Class D Shares shall vote with the holders of shares of Common Stock and not as a separate class. 21 KLEVER MARKETING, INC. (a Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 9 - PREFERRED STOCK (continued) Class D Shares shall carry a liquidation preference of $10.50 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 D 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 May 14, 2007. The redemption price shall be $10.50 per share together with accrued but unpaid dividends on such shares, if any. NOTE 10 - LITIGATION On October 27, 2003, Thomas J. LaLanne, assignee of eiKart, LLC., filed against the Company in the Third Judicial District Court of Utah under the provisions of the Utah Foreign Judgment Act a judgment from the Superior Court of California, in and for the County of San Francisco Jurisdiction. Pursuant to the Judgment Information Statement, also filed on October 27, 2003, the amount of the above judgment is $81,124. The relief sought is collection from the Company in Utah of the amount of said judgment. The Company has filed an action to dismiss said Utah judgment on the grounds that the Superior Court of California did not have jurisdiction over the Company when the original judgment was granted. This judgment has been included in the financial statements as part of accrued liabilities at March 31, 2006 and December 31, 2005. On September 6, 2002, an entry of judgment was entered against the Company by Micropower Direct, LLC. The total judgment was for $17,167.18. This judgment has been included in accounts payable as of March 31, 2006 and December 31, 2005. On December 12, 2005 Klever Marketing was summoned, and a complaint was filed in the Third District Court of the State of Utah, by Dennis Shepard, one of the partners of S&C Medical. The complaint contested Klever Marketing's cancellation of an attempted deal with S&C medical in December of 2001. On January 13, 2006, Klever Marketing answered their complaint and filed a counter claim against S&C Medical. This matter is still in the process of being resolved. NOTE 11 - STOCK TRANSACTIONS On January 20, 2005, the Company issued 50,000 shares of common stock for cash of $2,400. On February 3, 2005, the Company issued 50,000 shares of common stock for cash of $1,700. 22 KLEVER MARKETING, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 11 - STOCK TRANSACTIONS (continued) On February 11, 2005, the Company issued 100,000 shares of common stock for cash of $3,600. On April 5, 2005, the Company issued 350,000 shares of common stock for cash of $10,106. On April 12, 2005, the Company issued 100,000 shares of common stock for cash of $3,000. On April 22, 2005, the Company issued 150,000 shares of common stock for cash of $4,320. On June 6, 2005, the Company issued 200,000 shares of common stock for cash of $50,000. On June 7, 2005, the Company issued 200,000 shares of common stock for cash of $50,000. On July 2, 2005, the Company issued 200,000 shares of common stock for cash of $50,000. On July, 5, 2005, the Company issued 50,000 shares of common stock for cash of $12,500. On August 4, 2005, the Company issued 100,000 shares of common stock for cash of $25,000. On August 26, 2005, the Company issued 200,000 shares of common stock for cash of $50,000. On December 28, 2005, the Company issued 40,000 shares of common stock for cash of $10,000. On December 31, 2005, the Company issued 92,500 shares of common stock for expenses of $23,125. NOTE 12 - PURCHASE AGREEMENT On July 29, 2003, the Company entered into an agreement to purchase 80% of the issued and outstanding shares of S&C Medical, Inc. (S&C). The Company agreed to issue 3,000,000 restricted shares of the Company's common voting stock to acquire the S&C shares. The Company also sent S&C $15,000 in cash. As of December 31, 2003, the Company cancelled the agreement. The 3,000,000 shares have not yet been returned to the Company. The Company is in the process of cancelling these shares. The $15,000 has been recorded as a shareholder receivable. 23 KLEVER MARKETING, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 13 - LICENSE AGREEMENT On May 11, 2004, Media Cart, Inc. acquired from the Company a limited exclusive license to use the Company's United States patent portfolio for electronic display devices specific to Media Cart's product design. Under the license agreement, Media Cart paid the Company $200,000 and will pay ongoing royalties for all Media Cart products that utilize the Company's licensed technology. On February 15, 2005 ModStream Digital Messaging Products, LLC acquired from the Company limited non-exclusive licensees to use the Company's United States patent portfolio for electronic display devices specific to ModStreams product design. This product design is limited to a 80 character dot-matrix LCD-type screen with limited alerts, and does not include full motion video or product scanning. Under the license agreement, ModStream paid the Company $150,000 and will pay ongoing royalties for all ModStream products that utilize the specific components of the Company's licensed technology. NOTE 14 - EMPLOYMENT AGREEMENT On November 14, 2005, the Company entered into an employment agreement with Arthur Portugal. Under the terms of the agreement, Mr. Portugal will receive a base salary of $185,000 per year. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS PLAN OF OPERATION - The Company's plan of operations is subject to obtaining financing. The Company's goal is to become the leading supplier of in-store promotions and advertising technology for grocery and other mass-merchandise retailers. To accomplish this goal, the Company intends to expand its product offerings to include: (i) electronic couponing to eliminate the need for and reduce the costs related to paper coupons (including fraud, mis-redemption and mal-redemption); (ii) the establishment of targeted Internet-type content to enhance customer loyalty; (iii) capturing Point-of- Selection data in the aggregate for providing data warehousing and mining services to various interested parties; (iv) certain other in-store services. Additionally, the Company intends to expand the Klever-Kart system, now being sold under the Fujitsu internal brand, U-SCAN Shopper, to other retail outlets including superstores, discount toy and warehouse stores. BUSINESS DEVELOPMENT, NEXT 12 MONTHS As a result of the current financial condition of the Company, the plan of the Company for the next twelve months is to obtain sufficient financing to permit the Company to commence active 24 business operations. Absent obtaining such financing, the Company's plan is to continue to obtain sufficient smaller financing to permit the Company to continue to prevent the loss or wasting of its assets and to continue to seek such operation's financing. Currently, the Company has sufficient liquid assets to permit current restricted operations to continue for six months. If such smaller interim financing is not obtained, it is likely that the Company will cease being a going concern at the end of such period. In the event such operational funding is obtained, then the Company plans to work with Fujitsu Transaction Solutions to: 1) sign up two pilot store retail chains to test the U-SCAN Shopper system for an initial 60-90 days; 2) begin expanding the installed base within the pilot store retailer; 3) Develop additional revenue generating products including electronic couponing; 4) Continue defense of the Klever patent portfolio where violations are evident. Absent such financing, the Company has no plans to employ additional employees or to purchase additional equipment. If such financing is obtained, there would be additional employees employed and additional equipment purchased. The number of each is dependent upon the amount of such financing. RESULTS OF OPERATIONS - 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 is in the development stage. For the three months ended March 31, 2006 and 2005, the Company had net losses of $184,768 and $55,478, respectively. LIQUIDITY AND CAPITAL RESOURCES - The Company requires working capital principally to fund its proposed 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 minimal additional working capital that has been required to prevent the assets from wasting away. 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 for the three months ended March 31, 2006 and 2005 used cash of approximately $10,069 and $17,662, respectively. The decrease in the use of cash is due primarily to a decrease in operations. Investing activities for the three months ended March 31, 2006 and 2005 have used cash of approximately $2,862 and $0, respectively. Investing activities primarily represent purchases of Phase III equipment, patents relating to the electronic in-store advertising, directory and coupon devices, and purchases of office equipment. Financing activities for the three months ended March 31, 2006 and 2005 provided cash of approximately $14,200 and $8,451, respectively. Financing activities primarily represent sales of the Company's restricted stock, and short term borrowings. FACTORS THAT MAY AFFECT FUTURE RESULTS - Management's Discussion and Analysis contains 25 information based on management's beliefs and forward-looking statements that involved 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: The foregoing statements are based upon management's current assumptions. ITEM 3. CONTROLS AND PROCEDURES The Company's Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company. (a) Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's President, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon the evaluation, the Company's President concluded that, as of the end of the period, the Company's disclosure controls and procedures were effective in timely alerting him to material information relating to the Company required to be included in the reports that the Company files and submits pursuant to the Exchange Act. (b) Changes in Internal Controls Based on his evaluation as of March 31, 2006, there were no significant changes in the Company's internal controls over financial reporting or in any other areas that could significantly affect the Company's internal controls subsequent to the date of his most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On October 27, 2003, Thomas J. LaLanne, assignee of eiKart, LLC., filed against the Company in the Third Judicial District Court of Utah under the provisions of the Utah Foreign Judgment Act a judgment from the Superior Court of California, in and for the County of San Francisco Jurisdiction. The judgement is in relation to a consulting agreement between eiKart, LLC. and the Company. Pursuant to the judgment Information Statement, also filed on October 27, 2003, the amount of the above judgment is $81,124. The relief sought is collection from the Company in Utah of the amount of said judgment. The Company has filed an action to dismiss said Utah judgment on the grounds that the Superior Court of California did not have jurisdiction over the Company when the original judgment was granted. 26 On September 6, 2002, an entry of judgment was entered against the Company by Micropower Direct, LLC. The total judgment was for $17,167.18. The judgment was in relation to parts purchased by the Company. On December 12, 2005 Klever Marketing was summoned, and a complaint was filed in the Third District Court of the State of Utah, by Dennis Shepard, one of the partners of S&C Medical. The complaint contested Klever Marketing's cancellation of an attempted deal with S&C medical in December of 2001. On January 13, 2006, Klever Marketing answered their complaint and filed a counter claim against S&C Medical. This matter is still in the process of being resolved. 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 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 27 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. (1) Incorporated herein by reference from Registrant's Form 10KSB, dated June 20, 1997. (2) Incorporated herein by reference from Registrant's Form 10KSB, dated March 29, 2001 (3) Incorporated herein by reference from Registrant's Form 10QSB, dated May 15, 2001. (4) Incorporated herein by reference from Registrant's Form 10QSB, dated May 15, 2002. (5) Incorporated herein by reference from Registrant's Form 10QSB, dated August 19, 2002. (6) Incorporated herein by reference from Registrant's Form 10QSB, dated November 19, 2004. (b) Reports on Form 8-K filed. On May 19, 2006, the Company filed a report on Form 8-K, under Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. 28 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: June 29, 2006 By: /s/ John T. Zaccheo ------------------------------------- John T.Zaccheo Interim President By: /s/ D. Paul Smith ------------------------------------- D. Paul Smith C.F.O., Secretary, Treasurer 29