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3. RESTATEMENT
 12 Months Ended
Dec. 31, 2012
Restatement of Prior Year Income [Abstract]  
NOTE 3 - RESTATEMENT

NOTE 3 - RESTATEMENT

 

Klever Marketing, Inc. restated its financial statements as of and for the year ended December 31, 2011. The Company’s decision to restate the aforementioned financial information was made on August 9, 2012 as a result of management’s identification of an error related to the accounting for its uncertain tax positions and an error related to the classification of compensation paid to a related party for the year ended December 31, 2011.

 

The errors relate to management not identifying that the Company had uncertain tax positions as of December 31, 2011 that met the more-likely-than-not threshold for which the Company had not accrued liabilities. Upon discovering the error, management has measured the uncertain tax positions and recorded liabilities to reflect the impact. In addition, the Company incorrectly netted compensation paid to a related party against its gain on sale of assets resulting in the gain on sale of assets and general and administrative expenses being understated for the year ended December 31, 2011.

 

The Company’s internal controls were not designed or operating effectively to ensure that all uncertain tax positions were identified, evaluated, and when appropriate, measured and recorded in the Company’s financial statements and that all related party transactions were accounted for and properly disclosed in the financial statements. As a result the Company’s income tax expense, gain on sale of assets and general and administrative expense were misstated in the Statement of Operations for the year ended December 31, 2011. The effect of this error on the Statements or Operations for both of the aforementioned periods is to decrease the Company’s net income by $29,101 and to increase the Company’s gain on sale of assets and general and administrative expenses by $131,203.

 

The December 31, 2011 balance sheet and the statements of operations and statements of cash flows for the year ended December 31, 2011 have been restated as follows:

  

Balance Sheet  
                   
ASSETS  
                   
    December 31, 2011  
    As Previously              
    Reported     Adjustments     As Restated  
CURRENT ASSETS                        
Cash   $ 177,873     $ –     $ 177,873  
Prepaid expenses     –       –       –  
Total Current Assets     177,873       –       177,873  
                         
FIXED ASSETS                        
Capitalized software development     191,120       –       191,120  
Less accumulated depreciation     –       –       –  
Total Fixed Assets     191,120       –       191,120  
                         
OTHER ASSETS                        
Intangibles, net     28,124       –       28,124  
Total Other Assets     28,124       –       28,124  
TOTAL ASSETS   $ 397,117     $ –     $ 397,117  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  
                         
CURRENT LIABILITIES                        
Accounts payable   $ 455,860     $ –     $ 455,860  
Accrued liabilities     807,788       29,101       836,889  
Preferred stock dividends     323,968       –       323,968  
Related party notes payable     –       –       –  
Notes payable     15,000       –       15,000  
Stock deposits     –       –       –  
Total Current Liabilities     1,602,616       29,101       1,631,717  
Total Liabilities     1,602,616       29,101       1,631,717  
                         
STOCKHOLDERS' EQUITY (DEFICIT)                        
Convertible preferred stock - Class A ( par value $0.01; 150,000 shares authorized; 101,134 and 93,056 issued and outstanding at December 31, 2011 and December 31, 2010, respectively); aggregate liquidation preference of $2,629,484.     1,011       –       1,011  
Convertible preferred stock - Class B ( par value $0.01; 125,000 shares authorized; 76,651 and 70,529 issued and outstanding at December 31, 2011 and December 31, 2010, respectively); aggregate liquidation preference of $1,303,067.     767       –       767  
Convertible preferred stock - Class C ( par value $0.01; 200,000 shares authorized; 134,774  and 124,010 issued and outstanding at December 31, 2011 and December 31, 2010, respectively); aggregate liquidation preference of $889,508.     1,348       –       1,348  
Common stock (par value $0.01), 250,000,000 shares authorized, 45,512,933 and 45,921,640 shares issued and outstanding, at December 31, 2011 and December 31, 2010, respectively     455,129       –       455,129  
Treasury stock, 100,000 shares at December 31, 2011 and 2010     (1,000 )     –       (1,000 )
Due from related party payable in common stock     (16,100 )     –       (16,100 )
Paid in capital in excess of par value     16,601,968       –       16,601,968  
Retained deficit     (3,333,785 )     –       (3,333,785 )
Deficit accumulated during development stage     (14,914,837 )     (29,101 )     (14,943,938 )
Total Stockholders' Equity (Deficit)     (1,205,499 )     (29,101 )     (1,234,600 )
                         
TOTAL LIABILITIES AND STOCKHOLDERS'  EQUITY (DEFICIT)   $ 397,117     $ –     $ 397,117  

  

Statement of Operations  
   
   
    For the Year Ended December 31, 2011  
    As Previously                  
    Reported     Adjustments     As Restated  
    $ –     $ –     $ –  
REVENUES                        
                         
EXPENSES                        
Sales and marketing     –       –       –  
General and administrative     455,865       131,203       587,068  
Research and development     27,063       –       27,063  
Total Expenses     482,928       131,203       614,131  
                         
OTHER INCOME (EXPENSE)                        
Other income     177,000       –       177,000  
Interest income     250       –       250  
Interest expense     (44,378 )     –       (44,378 )
Forgiveness of debt     67,566       –       67,566  
Gain on sale of assets     492,031       131,203       623,234  
Capital gain on sale of investments     –       –       –  
                         
Total Other Income (Expense)     692,469       131,203       823,672  
                         
NET INCOME (LOSS) BEFORE INCOME TAXES     209,541       –       209,541  
                         
INCOME TAXES     900       29,101       30,001  
                         
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS     208,641       (29,101 )     179,540  
                         
EXTRAORDINARY ITEM - TROUBLED DEBT RESTRUCTURING     –       –       –  
                         
NET INCOME (LOSS)   $ 208,641     $ (29,101 )   $ 179,540  
                         
BASIC EARNINGS PER COMMON SHARE   $ –             $ –  
                         
FULLY DILUTED EARNINGS PER COMMON SHARE   $ –             $ –  
                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC     45,150,293               45,150,293   
                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED     63,343,152               63,343,152  

 

Statement of Cash Flows

 

   For the Year Ended December 31, 2011 
   As Previously Reported   Adjustments   As Restated 
             
CASH FLOWS FROM OPERATING ACTIVITIES:               
                
Net income (loss)  $208,641   $(29,101)  $179,540 
Adjustments to reconcile net loss to net cash used by operating activities:               
Stock issued for general and administrative   28,986    –    28,986 
Stock issued for research and development   –    –    – 
Stock returned for services not rendered   (175,100)   –    (175,100)
(Gain) loss on sale/disposal of assets   (492,031)   –   (492,031)
Compensation expense from stock options and warrants   –    –    – 
Stock issued for interest   –    –    – 
Stock issued for accounts payable   –    –    – 
Deferred income   –    –    – 
Depreciation and amortization   –    –    – 
Write-off bad debts   –    –    – 
Debt forgiveness   (67,566)   –    (67,566)
Services contributed by officers   –    –    – 
Changes in operating assets and liabilities:   –           
(Increase) decrease in accounts receivable   –    –    – 
(Increase) decrease in other assets and prepaids   35    –    35 
(Increase) in deferred stock offering costs   –    –    – 
Increase (decrease) in accounts payable   30,110    –    30,110 
Increase (decrease) in accrued liabilities   291,440    29,101    320,541 
                
Net Cash Used by Operating Activities   (175,485)   –   175,485)
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
                
Acquisition/sale of equipment, net   –    –    – 
Capitalized software development costs   (104,720)   –    (104,720)
Proceeds from sale of intangibles   492,031    –    492,031 
Acquisition of intangibles   (27,574)   –    (27,574)
Acquisition/sale of stock, net   –    –    – 
                
Net Cash Provided (Used) by Investing Activities  $359,737   $–   $359,737 

  

Statement of Cash Flows

 

  For the Year Ended December 31, 2011 
  As Previously Reported   Adjustments   As Restated 
CASH FLOWS FROM FINANCING ACTIVITIES:            
               
Stock deposit  $–   $–   $– 
Stock subscription received   –    –    – 
Proceeds from capital stock issued   37,500    –    37,500 
(Payments)/proceeds from loans   (44,950)   –    (44,950)
Change in line-of-credit   –    –    – 
Loan receivables   –    –    – 
Principal payments on lease obligations   –    –    – 
Cash payments on note payable   –    –    – 
               
Net Cash Provided by Financing Activities   (7,450)   –    (7,450)
               
NET INCREASE (DECREASE) IN CASH   176,802        176,802  
               
CASH AT BEGINNING OF PERIOD   1,071        1,071 
               
CASH AT END OF PERIOD  $177,873       $177,873 
              
SUPPLEMENTAL DISCLOSURES              
              
Cash Paid For:              
              
Interest  $–       $– 
              
Income taxes  $100       $100 
              
Non-Cash Transactions for Investing and  Financing Activities:              
              
Common stock issued to pay accounts payable  $9,568       $9,568 
              
Common stock issued to for stock deposit  $11,000       $11,000 
               
Common stock issued in lieu of debt  $–       $– 
Common stock issued in lieu of debt with  related parties  $–       $– 
Common stock issued for capitalized software development consulting services to a related party  $13,900       $13,900 
              
Common stock issued to pay accrued liabilities  $–       $– 
Accrual for preferred stock dividends payable with preferred shares  $323,968       $323,968 
Preferred stock issued to pay preferred stock  dividends  $385,144       $385,144