-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QOf9UYm32povPCAJlIBhqZNgeeIZR5GmLcDJnSEswkHs5vqrjNi4PgrcCE9zOmYw T8JgbIGxvBKKx9rNtYgb3A== 0000939802-99-000081.txt : 19990810 0000939802-99-000081.hdr.sgml : 19990810 ACCESSION NUMBER: 0000939802-99-000081 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KLEVER MARKETING INC CENTRAL INDEX KEY: 0000866439 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 363688583 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-18730 FILM NUMBER: 99681527 BUSINESS ADDRESS: STREET 1: 350 WEST 300 SOUTH SUITE 201 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 BUSINESS PHONE: 8013221221 MAIL ADDRESS: STREET 1: 350 WEWT SOUTH SUITE 201 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 FORMER COMPANY: FORMER CONFORMED NAME: VIDEOCART INC DATE OF NAME CHANGE: 19930328 10QSB 1 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: June 30, 1999 ----------------------------------- [ ] 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 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: June 30, 1999 10,944,792 Transitional Small Business Disclosure Format (check one). Yes ; No X PART I - FINANCIAL INFORMATION Item 1. Financial Statements KLEVER MARKETING, INC. BALANCE SHEETS (Unaudited) June 30, December 31, ----------- ----------- ASSETS 1999 1998 - ------ ----------- ----------- Current Assets Cash ................................... $ 15,479 $ 45,371 Shareholder Receivables ................ 28,550 136,821 ----------- ----------- Total Current Assets ................ 44,029 182,192 ----------- ----------- Fixed Assets Equipment .............................. 86,085 64,269 Leasehold Improvements ................. -- 2,550 Less Accumulated Depreciation .......... (52,384) (47,301) ----------- ----------- Net Fixed Assets .................... 33,701 19,518 ----------- ----------- Other Assets Patents ................................ 2,201,398 2,198,110 Less Accumulated Amortization .......... (1,161,594) (1,058,244) ----------- ----------- Net Other Assets .................... 1,039,804 1,139,866 ----------- ----------- Total Assets ........................ $ 1,117,534 $ 1,341,576 =========== =========== 3 KLEVER MARKETING, INC. BALANCE SHEETS (Continued) (Unaudited) June 30, December 31, ----------- ----------- 1999 1998 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities Accounts Payable, Trade ........................ $ 249,417 $ 613,081 Accrued Liabilities ............................ 60,281 65,058 Related Party Payables ......................... 271,850 347,100 Lease Obligation ............................... 13,716 -- ----------- ----------- Total Current Liabilities ................... 595,264 1,025,239 ----------- ----------- Total Liabilities ........................... 595,264 1,025,239 ----------- ----------- 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 ................. 10,944,792 shares issued and out- standing June 30, 1999 and 10,394,819 Shares issued and out- standing December 31, 1998 ................... 109,448 103,948 Common Stock to be issued ...................... 4,589 4,589 Paid in Capital in Excess of Par Value ........................................ 7,540,127 6,625,919 Retained Deficit ............................... (7,131,894) (6,418,119) ----------- ----------- Total Stockholders' Equity .................. 522,270 316,337 ----------- ----------- Total Liabilities and Stockholders' Equity .. $ 1,117,534 $ 1,341,576 =========== =========== The accompanying notes are an integral part of these financial statements. 4 KLEVER MARKETING, INC. STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Revenue .................... $ -- $ 229,000 $ -- $ 229,000 ------------ ------------ ------------ ------------ Expenses General and Administrative 248,255 159,740 480,820 287,077 Research and Development . 111,894 64,007 218,484 184,790 ------------ ------------ ------------ ------------ Total Expenses ........ 360,149 223,747 699,304 471,867 ------------ ------------ ------------ ------------ Other Income (Expense) Interest Income .......... 58 926 539 926 Interest Expense ......... (8,069) (647) (15,010) (663) Sale of Investments ...... -- 1,428 -- 1,234 ------------ ------------ ------------ ------------ Total Other Expense .... (8,011) 1,707 (14,471) 1,497 ------------ ------------ ------------ ------------ Loss Before Taxes .......... (368,160) 6,960 (713,775) (241,370) Income Taxes ............... -- -- -- -- ------------ ------------ ------------ ------------ Net Loss After Taxes ....... $ (368,160) $ 6,960 $ (713,775) $ (241,370) ============ ============ ============ ============ Weighted Average Shares Outstanding ................ 10,671,294 10,039,029 10,725,557 10,037,221 ============ ============ ============ ============ Net Loss Per Share ......... $ (0.03) $ -- $ (0.07) $ (0.02) ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 5 KLEVER MARKETING, INC. STATEMENT OF CASH FLOWS (Unaudited) For the Six Months Ended June 30, -------------------------- 1999 1998 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss ..................................... $(713,775) $(241,370) Adjustments used to reconcile net loss to net cash provided by (used in) operating activities: Non cash general and administrative ............................ 6,218 32,988 (Increase) decrease in: shareholder receivable ................... 108,271 17,600 Increase (decrease) in: accounts payable .......................... (363,664) (33,070) accrued liabilities ....................... (4,778) 325 deferred income ........................... -- (229,000) lease obligation .......................... 15,404 -- related party payables .................... (75,250) 42,902 Sale of Investments .......................... -- (1,234) Depreciation and Amortization ................ 110,984 88,105 --------- --------- Net cash used in operating activities ................................ $(916,590) $(322,754) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of equipment ..................... $ (21,816) $ (3,006) Sale of investments ......................... -- 13,609 Acquisition of patents ....................... (3,288) (22,982) --------- --------- Net cash used by investing activities ................................ (25,104) (12,379) --------- --------- 6 KLEVER MARKETING, INC. STATEMENT OF CASH FLOWS (Continued) (Unaudited) For the Six Months Ended June 30, -------------------------- 1999 1998 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds From Capital Stock .................. 913,490 365,449 Principle Payments on Lease Obligations ............................... (1,688) (862) --------- --------- Net Cash Provided by Financing Activities ..................... 911,802 364,587 --------- --------- Net Increase (Decrease) in Cash and Cash Equivalents ................ (29,892) 29,454 Cash and Cash Equivalents at Beginning of the Period ................... 45,371 10,536 --------- --------- Cash and Cash Equivalents at End of the Period ......................... $ 15,479 $ 39,990 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest ..................................... $ 7,052 $ 663 Income Taxes ................................. $ 100 -- The accompanying notes are an integral part of these financial statements. 7 KLEVER MARKETING, INC. NOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED June 30, 1999 (Unaudited) 1. Interim Reporting The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles and with Form 10-QSB requirements. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three month period ended June 30, 1999, are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. 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, 1998. 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 process, Klever-Kart(R), which it has acquired. 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 and reported an average 46.84% incremental product movement. Phase II: Cost Reduction & Enhancement. In January 1998, the Company commenced development of the Phase II functional specification that will encompass cost reduction and system enhancements. Improvements that are in the process of design and development of the Klever-Kart(R) system include: a significantly smaller and more sleek design in the appearance and size of the display unit, smaller trigger units with improved sensitivity, more durable plastics, and improved sound fidelity. 8 Phase III: Installation of Stores. During 1999 the Company plans to place Klever-Kart(R) units in stores in targeted retail chains. Target stores include major national and regional chains. 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, including a minimum three month in-store test of system operation. Phase V: Future Development. The Klever-KardTM frequent shopper program 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 $917,000 and $323,000 for the six months ended June 30, 1999 and 1998, respectively. Investing activities have used cash of $25,000 and $12,000 for the six months ended June 30, 1999 and 1998, 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 $912,000 and $365,000 for the six months ended June 30, 1999 and 1998, respectively. Financing activities primarily represent sales of the Company's common stock. 9 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 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: 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 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 months ended June 30, 1999, 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 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. 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities The Company sold 274,190 shares of common stock during the three months ended June 30, 1999 to individuals and an employee for $1.95 to $2.50 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. Item 6. Exhibits and Reports on Form 8-K None. 11 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: August 9, 1999 By: /s/ Paul G. Begum Paul G. Begum Chief Executive officer & Director (Principal financial and Accounting Officer) 12 EX-27 2 FDS 06/30/99
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET OF KLEVER MARKETING, INC. AS OF JUNE 30, 1999 AND THE RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 6-MOS DEC-31-1999 JUN-30-1999 15 0 0 0 0 44 86 52 1118 595 0 0 0 109 413 1118 0 0 0 0 699 0 15 (718) 0 0 0 0 0 (718) (.07) (.07)
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