U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


(MARK ONE)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

                    FOR FISCAL YEAR ENDED: DECEMBER 31, 2005

                                       OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from                  To
                              -----------------


Commission file number   0-18834

                             KLEVER MARKETING, INC.
                 (Name of small business issuer in its charter)

           Delaware                                                36-3688583
State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization                                Identification No.)


             3785 South 700 E Second Floor Salt Lake City, UT 84106
              (Address of principal executive offices) (zip code)


Issuer's telephone number                               (801) 263-0404
                                                       ---------------


Securities registered under Section 12(b) of the Act: NONE
Securities registered under Section 12(g) of the Act:

                          Common Stock Par Value $0.01
                                (Title of class)

<PAGE>

     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

     Check if there is no disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB. [ ]

     State issuer's revenues for its most recent fiscal year.        $0
                                                                     ---

     As of March 31,  2006,  there were  38,190,620  (1 vote per share)  Common,
3,931,920  Class  A,  21,996,372  Class  B, and  1,397,761  Class C  Convertible
Preferred,  for a preferred  and common  share total of  46,300,427  votes.  All
shares have a par value of $0.01. The aggregate market value of the Registrant's
voting  stock  held  by  non-affiliates  of  the  Registrant  was  approximately
$3,244,764  computed at the closing  price as of March 31,  2006.  The number of
preferred  and common  shares held by  non-affiliates  of the  Registrant  total
28,389,585votes.


                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (2) any proxy or information  statement;  and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"):
NONE

         Transitional Small Business Disclosure Format (check one): Yes [ ] ; No
[X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act. [ X ] Yes [ ] No












<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

Item Number and Caption                                                                                     Page
                                                   PART I

<S>         <C>                                                                                             <C>
Item 1.     Description of Business                                                                         1

Item 2.     Description of Property                                                                         1

Item 3.     Legal Proceedings                                                                               2

Item 4.     Submission of Matters to a Vote of Security Holders                                             2


                                                  PART II

Item 5.     Market for Common Equity and Related Stockholder Matters                                        2

Item 6.     Management's Discussion and Analysis or Plan of Operations                                      4

Item 7.      Financial Statements                                                                           6

Item 8.      Changes in and Disagreements With Accountants on Accounting and
                 Financial Disclosure                                                                       6

Item 8A.    Controls and Procedures                                                                         7

                                                  PART III

Item 9.     Directors, Executive Officers, Promoters and Control Persons;
                Compliance with Section 16(a) of the Exchange Act                                           7

Item 10.   Executive Compensation                                                                           10

Item 11.   Security Ownership of Certain Beneficial Owners and Management                                   12

Item 12.   Certain Relationships and Related Transactions                                                   16

Item 13.   Exhibits and Reports on Form 8-K                                                                 13

Item 14.   Principal Accountant Fees & Services                                                             21
</TABLE>



<PAGE>



                                     PART I

                         ITEM 1 DESCRIPTION OF BUSINESS

GENERAL

         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 development of the patented process, Klever-Kart(R).

HISTORY

         The Company began as a part of Information  Resources,  Inc. ("IRI") in
1987,  was  incorporated  as a subsidiary  of IRI under the laws of the State of
Delaware on December 8, 1989, and was fully  distributed to  stockholders of IRI
in a spinoff on October  31,  1990.  At the time of the spinoff a portion of the
business and assets of the Company  included a software  operation in Australia,
which was sold in March, 1993. The Company (VideOCart, Inc.) filed petitions for
relief under Chapter 11 bankruptcy  in December  1993.  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,  2003,  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.

         In February 2004, the Company signed an exclusive  partnership contract
with Fujitsu Transaction Solutions (Fujitsu).  Under this contract, Fujitsu will
manufacture  the  hardware  of  Klever-Kart  System and  provide  the  technical
installations,  IT  implementation,  and support for all retail  locations.  The
Company and  Fujitsu  will  jointly  share  responsibility  for  marketing  into
Fujitsu's  current retail client base for the initial  nationwide  sales effort.
The  Company  will  be  responsible  for  providing  the  Klever-Kart   software
technology  and upgrades,  as well as advertising  and promotion  space sales to
both  retailers and  manufacturers.  The Company needs to raise funds to perform
its obligations under the Fujitsu agreement.



                         ITEM 2 DESCRIPTION OF PROPERTY


         The Company  currently leases  approximately  700 square feet of office
space from Poulton & Associates..  The rent payments are approximately  $200 per
month. The office space is used as the corporate headquarters.  It is located at
3785 S 700 2nd Floor East Salt Lake City, UT 84106.




                                       1
<PAGE>

                            ITEM 3 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 judgment
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.  This  judgment  has  been  included  in  the  financial
statements as part of accrued liabilities at 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.  The
judgment was in relation to parts  purchased by the Company.  This  judgment has
been included in accounts payable as of 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 there complaint and filed a counter
claim  against  S&C  Medical.  This  matter  is  still in the  process  of being
resolved.



                        ITEM 4 SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS


         There were no matters submitted to a vote of shareholders during 2005.


                                     PART II



                       ITEM 5 MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS


         The stock is traded on the OTC Bulletin  Board with the trading  symbol
KLMK.



                                       2
<PAGE>


         The  following  table set  forth the high and low bid of the  Company's
Common Stock for each quarter within the past two years.  The information  below
was provided by S & P Comstock and reflects inter-dealer prices,  without retail
mark-up, mark-down or commission and may not represent actual transactions:

                 2005:                             HIGH                 LOW
First Quarter                                         $0.12               $0.04
Second Quarter                                        $0.15               $0.04
Third Quarter                                         $0.19               $0.04
Fourth Quarter                                        $0.12               $0.06

                 2004:                             HIGH                 LOW
First Quarter                                         $0.30               $0.10
Second Quarter                                        $0.15               $0.04
Third Quarter                                         $0.13               $0.04
Fourth Quarter                                        $0.15               $0.06

          The number of shareholders of record of the Company's  common stock as
of March 31, 2006 was approximately 847.

         The  Company  has not  paid  any  cash  dividends  to date and does not
anticipate  paying cash dividends in the foreseeable  future.  It is the present
intention of management to utilize all available  funds for the  development  of
the Company's business.

RECENT SALES OF UNREGISTERED SECURITIES.

         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.

         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.




                                       3
<PAGE>



         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.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section  16(a) of the Exchange Act  requires the  Company's  directors,
executive  officers,  and persons who own more than 10% of a registered class of
the Company's equity  securities,  to file with the Commission reports regarding
initial ownership and changes in ownership.  Directors,  executive officers, and
greater  than 10%  stockholders  are required by the  Commission  to furnish the
Company with copies of all Section 16(a) forms they file.

         To the best of the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ending December 31, 2005,
the Company believes that all reporting  persons complied with all Section 16(a)
filing  requirements,  except that: Olson Foundation  missed and a Form 5; Olsen
Legacy Trust missed a Form 5 filing; Presidio

                                        8
                                        9
 missed one a Form 5; Michael L. Mills missed a Form 5; C. Terry Warner missed a
Form 5; D. Paul Smith missed a Form 5;  William C. Bailey  missed a Form 5;; and
Seabury missed a Form 5, Danny Warner missed a Form 4 and a Form 5, Richard King
missed a Form 3 and a From 5, Arthur  Portugal missed a Form 3, a Form 4 for two
transactions  and a  Form  5,  Paul  Begum  missed  a  form  4  filing  for  two
transactions and missed s Form 5,


                       ITEM 6 MANAGEMENT'S DISCUSSION AND
                         ANALYSIS OR PLAN OF OPERATIONS




                                       4
<PAGE>

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  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 one month. 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 to approximately 35
store in the fourth quarter of 2006; 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 years
ended  December  31, 2005 and 2004,  the Company had net losses of $736,913  and
$632,293,  respectively.  This  increase  in  the  loss  is  primarily  due to a
write-off of assets.

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


                                       5
<PAGE>

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 used cash of approximately  $280,000
and $349,000 for 2005 and 2004 respectively.  The decrease in the use of cash is
due primarily to a decrease in operations.

         Investing activities have used cash of approximately  $13,000 for 2005,
and  provided  cash of  approximately  $314,000 for 2004.  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. The cash provided in 2004 was primarily due to the sale of the
Company's patents.

         Financing  activities  provided  cash  of  approximately  $274,000  and
$56,000  for  2005  and  2004,  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   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 7 FINANCIAL STATEMENTS


         The  financial  statements  of the Company and  supplementary  data are
included beginning  immediately following the signature page to this report. See
Item 13 for a list of the financial statements and financial statement schedules
included.



              ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE


         There are not and have not been any  disagreements  between the Company
and its  accountants  on any  matter  of  accounting  principles,  practices  or
financial statements disclosure.

                         ITEM 8A 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.



                                       6
<PAGE>

         (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  covered  by  this  report,  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 this evaluation as of December 31, 2005, there were no changes
in the  Company's  internal  controls over  financial  reporting or in any other
areas that  occurred  during  the  fourth  fiscal  quarter  that has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.

                                    PART III


               ITEM 9 DIRECTORS EXECUTIVE OFFICERS, PROMOTERS AND
                CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF
                                THE EXCHANGE ACT


EXECUTIVE OFFICERS AND DIRECTORS

         The  following  table sets forth the name,  age,  and  position of each
executive officer and director of the Company:

DIRECTOR'S NAME    AGE      OFFICE             TERM EXPIRES

Arthur Portugal    64       President          Next annual shareholder meeting
Daniel Warner      33       EVP Business       (resigned as of 3-31-06)
                            Development        Next annual shareholders meeting
D. Paul Smith      59       CFO/Secretary/
                            Treasurer          Next annual shareholder meeting


                               7
<PAGE>

William C. Bailey  70       Chairman           Next annual shareholder meeting
Michael L. Mills   42       Director           Next annual shareholder meeting
C. Terry Warner    68       Director           Released on 3-24-06
Dick King          53       Director          Next annual shareholder meeting
John T. Zaccheo    79       Director           Next annual shareholder meeting
-------------------------------------------------------------------------------

Arthur  Portugal,  age 64,  joined the company in November  2005 as President of
Klever Marketing, He brings with him more then 20 years experience in the retail
merchandising and marketing industries with a strong emphasis in sales, customer
management  and  operations.  Most  recently  Art  served as Vice  President  of
Business  Development for Storecast  Merchandising Corp., a retail merchandising
company,  responsible for expanding the companies business,  targeting potential
acquisitions,  securing new merchandising  assignments and developing new vendor
relationships.  Art also served for three year as President of Fieldflex  USA, a
third  party  in-store  merchandising  and reset  organization  and two years as
President and CEO of One-Source Industries, LLC, a company specializing in point
of purchase design,  point of sale displays and custom packaging.  He also spent
fourteen years Executive Vice President of Client Services for PIA Merchandising
Company.  Art is a current advisor and former President of The  Illuminators,  a
grocery industry trade  association  affiliated with the Western  Association of
Food Chains and the California Grocers Association.  Art also serves on a number
of other retail, merchandising and trade associations.

         D.  Paul  Smith,  age 59,  served as a  director  of the  company  from
November  2000 until July 2005 , he served as Chairman of the board from January
2001 until July 2005.  Smith continues to serve as served as CFO,  Secretary and
Treasurer and has since October 2001. On November 18, 2002,  Mr. Smith  resigned
his  position  as  Vice-President  when  William  J. Dupre  assumed  the role of
Executive Vice-President.

         Daniel  L.   Warner,   age  33,   joined  the   Company  as   Executive
Vice-President  of Business  Development  in February  2004.  From July of 2005,
until  November  2005,  Warner  served as Interim  President.  On March 31, 2006
Warner resigned as Executive Vice-President of Business Development.

         William J. Dupre, age 53, joined the Company as Chief Operating Officer
and Executive Vice-President in November 2002. Mr. Dupre was appointed President
and COO in December 2003, and in May 2005 resigned.

         William C. Bailey,  age 70, was elected as a director of the Company in
June 1994.  Since July of 2005,  Mr.  Bailey has been serving as Chairman of the
Board. Mr. Bailey is also President and owner of Mount Olympus Waters,  Inc. and
founder  of Water  and Power  Technologies.  Mr.  Bailey  served on the Board of
Directors  for the American  Bottled  Water  Association  and the  International
Bottled Water Association from 1975 to 1996, and was the Association's President
in 1978 and again in 1990. He received the industry's  first award of Excellence


                                       8
<PAGE>

from IWBA in 1987 and was  elected to the  Beverage  World Water Hall of Fame in
1989.  He serves as a member of the Board of Trustees for the Utah Food Industry
Associations  Insurance  Trust. He is a lifetime member of the Board of Trustees
for the Utah Symphony Opera,  having served as Chairman from  1999-2002.  He has
been a member of the Board of Directors for KUED 1990- 1996,  University of Utah
Alumni  Board  1990-1994,  and a member of the  University  of Utah's Fine Art's
Advisory  Board.  He is also a member  of the Salt  Lake  Rotary  and  served as
Secretary 1999-2000.

         Michael L.  Mills,  age 42, was elected as a director of the Company in
December 1998. Mr. Mills is  President/CEO  of Olson  Holdings,  Inc.  (formerly
known as Olson Farms, Inc.). Olson Holdings, Inc. is a diversified  agricultural
and real estate holding  company with  operations  throughout the western United
States,  dealing  primarily in the  distribution of eggs,  with  headquarters in
Riverside,  California.  Mr.  Mills has been with that company  since 1989.  Mr.
Mills began his career with  Deloitte & Touche in Los Angeles  after  graduating
from the University of Utah SUMMA CUM LAUDE in accounting and mathematics.

         C. Terry Warner,  Ph.D., age 68, became a member of the Company's Board
in September  2001 and was release from the board on March 31, 2006.  Mr. Warner
is a longtime  shareholder  in the  Company.  Mr.  Warner is the  founder of The
Arbinger  Institute.  He received his Ph.D. in philosophy from Yale  University,
and has been a senior member of Linacre College, Oxford University. He taught at
the  university  level for over thirty years and has been Dean of the College of
General  Studies  at  Brigham  Young  University.  Mr.  Warner  has  served as a
consultant and advisor to executives and managers of about fifty companies,  and
has  served on boards in the  steel,  petrochemical,  thrift,  and  health  care
industries.

         Richard L. King joined  Klever's  Board of  Directors  in July of 2005,
bringing with him extensive  experience in the retail food  industry,  including
36-years at Albertsons, where he last served as the grocery retailer's President
and COO. As President, King was responsible for a $16 billion operation,  nearly
1,000  stores  and  100,000  employees.  King has also  served as  President  of
Associated Retail Stores, as well as President and CEO of Labor Ready, a leading
provider  of  dependable  temporary  manual  labor to light  industry  and small
business markets.  King has served on the Board of Directors for Albertsons,  TJ
International,  and Deluxe Ice Cream, and is currently on the Board of Directors
for Western Association of Food Chains, and the Associated Retail Stores.

         JOHN T.  ZACCHEO  JOINTED THE BOARD OF  DIRECTORS  IN MARCH,  2006.  HE
CURRENTLY  SERVES AS  President  of the  Equity  Capital  Management,  Inc.,  an
investment company managing trust holdings. John also owns Mr. Z's restaurant in
Salt Lake  City.  For 22 years he was  corporate  manager of  engineering  for a
division of Tenneco,  with responsibility for managing a team of engineers and a
yearly  expansion  program  ranging from $56 million to $61 million per year. He
has also been a land  developer  in Aspen,  CO. John  participated  in extensive
management development courses and training while at Tenneco. John has also been
a member of Rotary International for 40 years.




                                       9
<PAGE>

AUDIT COMMITTEE

         As of December  31, 2005,  the Company had one active board  committee,
the Audit and Compliance  Committee.  D. Paul Smith,  Michael L. Mills and Terry
Warner are on this committee. The committee meets annually to determine auditors
and  scope  of the  audit,  as well as  reviews  of the  10KSB  and all  audited
financials.

AUDIT COMMITTEE FINANCIAL EXPERT

         The  Company's  board of  directors  does not have an "audit  committee
financial   expert,"  within  the  meaning  of  such  phrase  under   applicable
regulations  of the  Securities  and Exchange  Commission,  serving on its audit
committee.  The  board of  directors  believes  that all  members  of its  audit
committee are financially literate and experienced in business matters, and that
one or more  members of the audit  committee  are  capable of (i)  understanding
generally accepted accounting principles ("GAAP") and financial statements, (ii)
assessing the general  application  of GAAP  principles  in connection  with our
accounting for estimates,  accruals and reserves, (iii) analyzing and evaluating
our  financial   statements,   (iv)  understanding  our  internal  controls  and
procedures  for  financial  reporting;  and (v)  understanding  audit  committee
functions,  all of which are attributes of an audit committee  financial expert.
However,  the board of directors  believes that there is not any audit committee
member who has obtained these attributes through the experience specified in the
SEC's definition of "audit committee financial expert." Further, like many small
companies,  it is difficult  for the Company to attract and retain board members
who qualify as "audit  committee  financial  experts," and competition for these
individuals is significant.  The board believes that its current audit committee
is able to  fulfill  its  role  under  SEC  regulations  despite  not  having  a
designated "audit committee financial expert."



                         ITEM 10 EXECUTIVE COMPENSATION



SUMMARY COMPENSATION

         The following  table set forth,  for the last three fiscal  years,  the
annual  and  long  term  compensation  earned  by,  awarded  to,  or paid to the
individuals who were chief executive officer and chief operations officer at any
time during the last fiscal year.


                                       10
<PAGE>

<TABLE>
<CAPTION>
          (a)               (b)          (c)              (d)       (e)           (f)          (g)             (h)         (i)
                                                                   Other                   Securities
                           Year                                    Annual      Restricted  Underlying                   All Other
                           Ended                                  Compen-        Stock      Options/           LTIP      Compen-
       Name and            Dec.        Salary            Bonus     sation       Award(s)      SAR's          Payouts      sation
  Principal Position        31         ($)(1)             ($)       ($)           ($)         (no.)            ($)         ($)


<S>                        <C>         <C>               <C>      <C>          <C>          <C>              <C>         <C>
RICHARD J. TROUT           2003                 -              -         -              -    1,027,616   1           -           -
 Former President          2004                                                                200,000

D. PAUL SMITH              2005                 -              -         -              -            -               -           -
 Chairman/CFO/             2004                 -              -         -              -      200,000   2           -           -
 Sec/Treasurer             2003                 -              -         -              -    1,168,333               -           -
 Exec Vice-President

WILLIAM J. DUPRE           2005         $  62,000  3           -         -              -            -               -           -
 President/COO             2004         $ 122,250              -         -              -            -               -           -
                           2003         $  50,000              -         -              -      400,000               -           -

ARTHUR PORTUGAL            2005                 -              -         -        $23,822      195,288   4           -           -
 President
</TABLE>



(1) Richard J. Trout was named  President in October 2001. Mr. Trout resigned as
President on December 3, 2003.
(2) D. Paul Smith joined the Company in October 2001 as Chief Financial Officer,
Vice-President,  Corporate  Secretary,  and  Treasurer.  Mr.  Smith  resigned as
Vice-President  when William J. Dupre assumed that position in November 2002. Mr
Smith served as Chairman of the Board from January 2001 until July 2005.
(3) William Dupre joined the Company in November 2002 as Chief Operating Officer
and  Executive  Vice-President,  on December 3, 2003 was named  President of the
Company.  On May 1, 2005, Mr Dupre resigned from the Company.
(4) Arthur  Portugal  joined the company as  President in  Novemeber  2005.  The
$23,822 worth of restricted  stock that  Portugal  received in 2005,  equates to
195,288 in Klever  restricted  stock,  which was granted in place of the payroll
that he had accrued from  November  14, 2005 until  December 31, 2005 at a share
price of $0.25. As part of the same transaction, Portugal also received the same
amount of options for a three year period and a strike price of $0.50.


AGGREGATE  OPTION/SAR  EXERCISES IN THE LAST FISCAL YEAR AND YEAR END OPTION/SAR
VALUES

         The following  table sets forth  information  respecting all individual
grants of options  and SARs made  during the last  completed  fiscal year to the
chief executive officer, chief financial officer, and directors of the Company.




                                       11
<PAGE>

<TABLE>
<CAPTION>
--------------------------- ---------------- -------------- ----------------------------------- -----------------------------------
           Name                 Shares           Value       Number of Securities Underlying    Value of Unexercised in-the-money
                              Acquired on    Realized ($)          Unexercised Options                   options ($) (a)
                               exercise

--------------------------- ---------------- -------------- ----------------------------------- -----------------------------------
--------------------------- ---------------- -------------- --------------- ------------------- --------------- -------------------
                                                             Exercisable      Unexercisable      Exercisable      Unexercisable
--------------------------- ---------------- -------------- --------------- ------------------- --------------- -------------------
<S>                         <C>              <C>            <C>             <C>                 <C>             <C>
Arthur Portugal                    0              $0           150,288            75,000            $4,000              $0
--------------------------- ---------------- -------------- --------------- ------------------- --------------- -------------------
Richard King                       0              $0           225,000      -                       $4,000              $0
--------------------------- ---------------- -------------- --------------- ------------------- --------------- -------------------
</TABLE>

(a)      Based on the closing price of the  Company's  Common Stock on March 31,
         2006 at $.16 per share

Executive Compensation and Benefits

         The Company provides to three of its full time employees, including the
Chief Operating Officer, health insurance and miscellaneous other benefits.

         The Company adopted a stock incentive plan for its employees, executive
officers, directors, and consultants.



                 ITEM 11 SECURITY OWNERSHIP OF BENEFICIAL OWNERS
                                 AND MANAGEMENT

PRINCIPAL SHAREHOLDERS

         The table  below sets forth  information  as to each  person  owning of
record or who was known by the Company to own beneficially  shares of stock that
have  more  than 5% of the  46,722,144  votes as of March  31,  2006,  including
options to acquire stock of the Company that are currently  exercisable  or will
be within the next 60 days, and information as to the ownership of the Company's
Stock by each of its directors  and executive  officers and by the directors and
executive  officers as a group.  Except as otherwise  indicated,  all shares are
owned  directly,  and the  persons  named in the  table  have  sole  voting  and
investment power with respect to shares shown as beneficially owned by them.




                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                                # OF
NAME AND ADDRESS                NATURE OF                       SHARES
OF BENEFICIAL OWNERS            OWNERSHIP                       OWNED                   PERCENT
DIRECTOR

PRINCIPAL SHAREHOLDERS
----------------------
<S>                             <C>                             <C>                     <C>
Paul G. Begum                   Direct (2)                       3,158,807
P.O. Box 58045                  Preferred Shares (2)               126,302
Salt Lake City, UT 84158        Options/Warrants                   257,000
                                                                ----------
                                            Total                 3,542,109                7.61%
                                                                ==============================

Olson Foundation                Direct (1)                       4,101,838
2220 Eastridge Ave              Preferred Shares (1)             3,946,953
Riverside, CA 92507             Convertible Debt (1)             9,242,163
                                                                 ---------
                                            Total                17,908,409               31,89%
                                                                ================================

C. Terry Warner                 Direct (3)                       2,526,574
1278 Locust Lane                Options (3)                        575,033
Provo, UT 84604                 Convertible Debt (3)                12,373
                                                                ----------
                                            Total                3,114,980                6.64%
                                                                ===============================

Presidio Investments LLC        Direct (4)                       1,266,708
3200 North Central Ave          Preferred Shares (4)               347,332
Suite 1560                      Options/Warrants (4)                     0
Phoenix, AZ 85012               Convertible Debt (1)(4)          8,083,344
                                                                ----------
                                            Total                9,697,384               17.83%
                                                                ===============================

Olson Legacy Trust              Direct (4)                       1,266,708
3200 North Central Ave          Preferred Shares (4)               347,332
Suite 1560                      Options/Warrants (1)(4)                  0
Phoenix, AZ 85012               Convertible Debt (4)             8,083,344
                                                                ----------
                                            Total                 9,697,384              17.83%
                                                                ===============================

Olson Holdings                  Direct (1)                         759,765
2220 Eastridge Ave.             Preferred Shares (1)             2,999,684
Suite B                         Options/Warrants (1)               239,613
                                                               -----------
Riverside, CA 92507                         Total                3,999,062                8.59%
                                                               ================================


Seabury Investors III           Preferred Shares                 4,036,552
540 Madison Avenue              Warrants                           106,061
New York, NY 10022              Convertible Debt (5)             1,521,487
                                                               -----------
                                            Total                5,664,100               11.82%
                                                               ================================
</TABLE>


                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                                # OF
NAME AND ADDRESS                NATURE OF                       SHARES
OF BENEFICIAL OWNERS            OWNERSHIP                       OWNED                   PERCENT
DIRECTOR

PRINCIPAL SHAREHOLDERS
----------------------
<S>                             <C>                             <C>                     <C>

Zedeka. LLC                     Direct                           3,252,771
(formerly Primavera)                                                                      7.03%
1278 Locust Lane                                               ================================
Provo, UT 84604

Arbinger                        Direct                           3,490,756
Gateway Park Tower              Options/Warrants                    47,733
563 W 500 S                     Convertible Debt                    49,491
Suite 200                                                      -----------
Woods Cross, UT 84087                       Total                3,587,980                7.73%
                                                               ================================

William Bailey                  Direct                           3,244,914
3889 E. Brockbank Dr.           Options/Warrants                   520,000
Salt Lake City, UT 84124                                       -----------
Salt Lake City, UT 84124                    Total                3,764,914                8.04%
                                                               ================================

D. Paul Smith                   Direct (6)                       1,041,301
747 W. Sheringham Ct.           Options/Warrants (6)             1,183,867
Farmington, UT 84025            Convertible Debt (6)                15,398
                                                               -----------
                                            Total                2,240,566                4.72%
                                                               ================================

DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------

William Bailey                  Direct                           3,244,914
3889 E. Brockbank Dr.           Options/Warrants                   520,000
                                                                ----------
Salt Lake City, UT 84124            Total                        3,764,914                8.04%
                                                                ===============================

C. Terry Warner                 Direct (3)                       2,526,574
1278 Locust Lane                Options (3)                        575,533
Provo, UT 84604                 Convertible Debt (3)                12,373
                                                                ----------
                                            Total                3,114,980                6.64%
                                                                ===============================

D. Paul Smith                   Direct (6)                      1,041,301
747 W. Sheringham Ct.           Options/Warrants (6)            1,183,867
Farmington, UT 84025            Convertible Debt (6)               15,398
                                                                ---------
                                            Total                2,240,566                4.72%
                                                                ===============================

Richard King                    Direct                                  0
 2688 W. Primeland Dr.          Options/Warrants                  225,000
N. Salt Lake City, UT 84054                 Total                 425,000                 0.50%
                                                                ===============================
</TABLE>

                                       14

<PAGE>

<TABLE>
<CAPTION>
                                                                # OF
NAME AND ADDRESS                NATURE OF                       SHARES
OF BENEFICIAL OWNERS            OWNERSHIP                       OWNED                   PERCENT
DIRECTOR

DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
<S>                             <C>                             <C>                     <C>

Arthur Portugal                 Direct                                  0
515 Vista Montana               Options/Warrants                  235,288
                                                                ---------
Salt Lake City, UT 84124                    Total                 370,576                 0.51%
                                                                ===============================

ALL EXECUTIVE OFFICERS AND
DIRECTORS AS A GROUP (5
PERSONS)                        Direct                          6,812,789
                                Options/Warrants                2,739,688
                                Convertible Debt                   27,771
                                                                ---------
                                            Total               9,580,248                20.41%
                                                                ===============================
</TABLE>

(1)      Michael  Mills is president of Olson  Holdings,  Inc.,  executor of the
         Estate of Peter Dean  Olson,  trustee of the Olson  Foundation,  he has
         voting and investment control but disclaims any pecuniary interest. For
         The Olson  Foundation,  Mr. Mills is one of four  trustees and does not
         have  voting  or  investment  power  because  of a  majority-vote  rule
         relation to the Foundation. The Olson ownership includes 759,765 Shares
         held by Olson Holdings,  1,123,603 Shares held by the Olson Foundation,
         928,580 Shares held by the Estate of Peter D. Olson,  and 23,182 Shares
         held by Mr. Mills.  The Olson  ownership also includes  Preferred Stock
         that,  as of March 31,  2005  would  convert  3,946,953  votes  held by
         Presidio  (347,332 votes),  Olson Holdings  (2,999,684 votes) and Olson
         Foundation  (598,937  votes).   Ownership  includes  warrants  covering
         105,455 Shares held by Olson  Foundation,  and options covering 512,000
         Shares held by Mr. Mills. Convertible debt held by Olson Foundation and
         affiliates  in the amount of 9,242,163  shares may also be converted as
         of March 31 2005 into  1,152,819  Shares held by Olson  Foundation  and
         8,083,344 shares held by Presidio.

(2)      Mr. Begum's ownership  includes 2,427,089 shares held by Tree of Stars,
         Inc.,  a  corporation  of which Mr.  Begum is a  director,  officer and
         principal shareholder;  and 506,864 shares held by PSF, Inc., a private
         company of which Mr. Begum is President and principal shareholder.  Mr.
         Begum's  ownership also includes Class A Convertible  Preferred  Shares
         that would convert to 126,302 Shares as of March 31, 2006

(1)      Mr. Warner's  ownership includes 12,500 Shares held by C. Terry Warner;
         3,252,771  Shares held by Primavera,  Ltd, (now called Zedeka,  LLC), a
         limited  partnership of which Mr. Warner is a passive member owning one
         (1) percent and Susan  Warner,  his spouse,  who owns  forty-nine  (49)
         percent;  15,000 shares by Susan Warner,  his spouse and 872,689 shares
         held by the  Arbinger  Institute,  a private  corporation  of which Mr.
         Warner is a director and twenty-five (25) percent shareholder;  options
         covering  576,033 shares and  convertible  debt held by Mr. Warner that
         may be converted into 12,373 shares as of March 31 2005.
(2)      Presidio Investments,  of which William J. Howard is the single member,
         and Olson Legacy Trust, of which William J. Howard is the sole trustee,
         ownership  includes  94,858 Shares held by Presidio  Investments  LLC.;
         347,332 Shares should the Class A Convertible  Preferred Shares held by


                                       15
<PAGE>

         Presidio  Investments  LLC. be converted  as of March 31,  2005;  Olson
         Legacy  Trust,  of which  William J.  Howard is the sole  trustee,.  In
         addition  to the total  Presidio  and  Olson  Legacy  Trust  ownership,
         convertible  debt held by Presidio  Investments  may be converted  into
         8,083,344 Shares as of March 31, 2005.

(3)      In addition to the total Seabury  ownership,  convertible  debt held by
         Seabury  Investors  III,  Limited  Partnership  could be converted into
         1,521,487Shares as of March 31, 2005

(4)      Mr. Smith's  ownership  includes  168,612 shares held by D. Paul Smith;
         872,689 shares held by the Arbinger Institute, a private corporation of
         which Mr.  Smith is a director,  officer and  twenty-five  (25) percent
         shareholder;  options  covering  1,183,867  shares and convertible debt
         held by Mr. Smith that may be converted  into 15,398 shares as of March
         31,2005.


             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED 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.

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.

         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.



                                       16
<PAGE>

         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.

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.

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

         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.

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.



                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                  COMMON
                                                                  STOCK
                               ANNUAL                            OPTION #     OPTION STRIKE
    DATE      PRINCIPAL     INTEREST RATE    MATURITY DATE        SHARES         PRICE
---------------------------------------------------------------------------------------------
<S>          <C>             <C>             <C>               <C>          <C>
  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
             =============                                   ===============
</TABLE>

         During 2004,  the Arbinger  Institute  loaned the Company an additional
$2,260 to pay general and administrative expenses.

DIRECTOR AND OFFICER LOANS TO THE COMPANY

         On October 8, 2003, D. Paul Smith,  a member of the Board of Directors,
loaned to the Company $2,500 In conjunction with this loan, Mr. Smith received a
common stock option at a ratio of 1.667 common  shares for each dollar loaned to
the  Company.  The  option has a strike  price of $1.00 and a 3-year  expiration
date.


                             ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K


      (a) The following documents are filed as part of this report.

1. FINANCIAL STATEMENTS PAGE
<TABLE>
<CAPTION>
<S>                                                                                      <C>
Independent Auditor's Report..............................................................F-1

Balance Sheets
   December 31, 2005 and 2004.............................................................F-2

Statements of Operations
   For the Years Ended December 31, 2005 and 2004
   And for the Cumulative Period from July 5, 1996 (inception of development stage)
   To December 31, 2005...................................................................F-4
</TABLE>



                                       18
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                      <C>
Statement of Stockholders' Equity
   From July 5, 1996 (inception of development stage) to December 31, 2005 ...............F-5

Statements of Cash Flows
   For the Years Ended December 31, 2005 and 2004
   And for the Cumulative Period from July 5, 1996 (inception of development stage)
   To December 31, 2005..................................................................F-13

Notes to the Financial Statements........................................................F-15
</TABLE>

2.     FINANCIAL STATEMENT SCHEDULES

     All schedules are omitted  because they are not  applicable or the required
information is shown in the financial statements or notes thereto.

3.     EXHIBITS
                        The  following  exhibits  are  included  as part of this
report:
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  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)



                                       19
<PAGE>

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)

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.

         (b)      REPORTS FILED ON FORM 8-K

         On July 27,  2005,  the  Company  filed a Form  8-K  under  Item  5.02,
Departure of Directors or Principal Officers; Election of Directors; Appointment
of Principal  Officers.  The 8-K reported  that Paul Smith was stepping  down as
Chairman and as a director,  Bill Dupre had resigned as President,  Richard King
was appointed to the board, .and Danny Warner was appointed as Interim-President

         On December  19,  2005,  the Company  filed a Form 8-K under Item 8.01,
Other Events.  The 8-K announced that Klever Marketing received notice that they
were  named  in a  lawsuit  filed  by  Dennis  Shepherd,  one of two  individual
shareholders of S&C Medical

         On  January  6,  2006,  the  Company  filed a Form 8-K under Item 5.02,
Departure of Directors or Principal Officers; Election of Directors; Appointment
of Principal  Officers,  announcing  that Arthur  Portugal had been appointed as
President  of the  Company,  replacing  Danny  Warner  who has been  serving  as
Interm-President  and will  continue on as EVP of Business  Development.  It was
also announced that Ted File has been appointed to the board.



                                       20
<PAGE>

         On January  25,  2006,  the  Company  filed a Form 8-K under Item 5.02,
Departure of Directors or Principal Officers; Election of Directors; Appointment
of Principal  Officers,  announcing that they have moved their office,  and that
Ted File had not yet accepted the board position..

         On  April 5,  2006,  the  Company  filed a Form 8-K  under  Item  5.02,
Departure of Directors or Principal Officers; Election of Directors; Appointment
of Principal Officers, and Item 8.01, Other Events, announcing that Terry Warner
had  been  released  from the  board of  Directors,  and John  Zaccheo  had been
appointed to the board.  As of March 31, 2006 Danny Warner resigned as Executive
Vice  President of Business  Development.  They also  announced  that Klever had
moved their corporate headquarters.

                  ITEM 14. PRINCIPAL ACCOUNTANT FEES & SERVICES

         The following is a summary of the fees billed to us by Robison,  Hill &
Company for professional services rendered for the years ended December 31, 2005
and 2004:

                         Service               2005                   2004
              Audit Fees                        $16,475                $20,375
              Audit-Related Fees                      -                      -
              Tax Fees                              192                    150
              All Other Fees                          -                      -
              Total                             $16,667                $20,525

AUDIT FEES.  Consists of fees billed for professional  services rendered for the
audits  of  our  consolidated  financial  statements,  reviews  of  our  interim
consolidated  financial  statements  included  in  quarterly  reports,  services
performed in connection  with filings with the Securities & Exchange  Commission
and related  comfort  letters and other  services that are normally  provided by
Robison,  Hill & Company in connection with statutory and regulatory  filings or
engagements.

TAX FEES. Consists of fees billed for professional  services for tax compliance,
tax  advice  and tax  planning.  These  services  include  assistance  regarding
federal,  state and local tax compliance  and  consultation  in connection  with
various transactions and acquisitions.

Audit  Committee  Pre-Approval of Audit and  Permissible  Non-Audit  Services of
Independent Auditors



                                       21
<PAGE>

         The Audit Committee, is to pre-approve all audit and non-audit services
provided by the independent auditors. These services may include audit services,
audit-related  services,  tax services  and other  services as allowed by law or
regulation.  Pre-approval  is  generally  provided  for up to one  year  and any
pre-approval  is detailed as to the  particular  service or category of services
and is generally  subject to a specifically  approved  amount.  The  independent
auditors  and  management  are  required  to  periodically  report  to the Audit
Committee regarding the extent of services provided by the independent  auditors
in accordance  with this  pre-approval  and the fees incurred to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.

         The Audit Committee pre-approved 100% of the Company's 2003 audit fees,
audit-related  fees,  tax fees,  and all other fees to the  extent the  services
occurred  after May 6, 2003,  the effective  date of the Securities and Exchange
Commission's final pre-approval rules.
































                                       22
<PAGE>











                             KLEVER MARKETING, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                       -:-

                              FINANCIAL STATEMENTS

                           DECEMBER 31, 2005 AND 2004























<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                             Page

<S>                                                                                          <C>
Independent Auditor's Report...................................................................F-1

Balance Sheets
   December 31, 2005 and 2004..................................................................F-2

Statements of Operations
   For the Years Ended December 31, 2005 and 2004
   And for the Cumulative Period from July 5, 1996 (inception of development stage)
   To December 31, 2005........................................................................F-4

Statement of Stockholders' Equity
   From July 5, 1996 (inception of development stage) to December 31, 2005 ....................F-5

Statements of Cash Flows
   For the Years Ended December 31, 2005 and 2004
   And for the Cumulative Period from July 5, 1996 (inception of development stage)
   To December 31, 2005.......................................................................F-13

Notes to the Financial Statements.............................................................F-15
</TABLE>


<PAGE>




                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
Klever Marketing, Inc.
(A Development Stage Company)
Salt Lake City, Utah

         We have audited the  accompanying  balance sheets of Klever  Marketing,
Inc. (a  development  stage  company) as of December 31, 2005 and 2004,  and the
related statements of operations and cash flows for the two years ended December
31, 2005, and the cumulative  period from July 5, 1996 (inception of development
stage) to December 31, 2005, and the statement of stockholders' equity from July
5, 1996 (inception of development  stage) to December 31, 2005.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

         We conducted our audits in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material  respects,  the financial  position of Klever Marketing,
Inc. (a development  stage  company),  as of December 31, 2005 and 2004, and the
results  of its  operations  and its cash  flows for the two years then ended in
conformity with accounting principles generally accepted in the United States of
America.

         The accompanying  financial statements have been prepared assuming that
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
financial statements,  the Company has suffered recurring losses from operations
and has a net capital  deficiency that raise substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 1. The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

                                                    Respectfully submitted,


                                                    /s/ Robison, Hill & Co.
                                                    Certified Public Accountants
Salt Lake City, Utah
April 28, 2006

                                      F - 1

<PAGE>



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


                                                      December 31,
ASSETS                                          2005                2004
------
                                         ------------------  ------------------
Current Assets
     Cash                                $            3,892  $           23,174
     Prepaid Expense                                    750                 750
     Other Receivable                                25,865              25,865
                                         ------------------  ------------------
          Total Current Assets                       30,507              49,789
                                         ------------------  ------------------

Fixed Assets
     Office Equipment                                92,964              92,964
     Less Accumulated Depreciation                  (92,964)            (89,319)
                                         ------------------  ------------------
          Net Fixed Assets                                -               3,645
                                         ------------------  ------------------

Other Assets
     Patents                                        767,830             755,089
     Less Accumulated Amortization                 (767,830)           (727,938)
                                         ------------------  ------------------
          Net Other Assets                                -              27,151
                                         ------------------  ------------------

          Total Assets                   $           30,507  $           80,585
                                         ==================  ==================















                                      F - 2

<PAGE>



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

<TABLE>
<CAPTION>
                                                                                          December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                                                2005                2004
------------------------------------
                                                                             ------------------  ------------------
Current Liabilities
<S>                                                                          <C>                 <C>
     Accounts Payable, Trade                                                 $          307,591  $          343,765
     Accrued Liabilities                                                              2,050,447           1,624,295
     Related Party Payables                                                           2,129,128           2,127,564
     Notes Payable                                                                       45,000              45,000
     Short-term Notes Payable                                                                 -                 458
                                                                             ------------------  ------------------

          Total Current Liabilities                                                   4,532,166           4,141,082
                                                                             ------------------  ------------------

Stockholders' Equity
     Preferred stock (par value $.01), 2,000,000 shares authorized
          168,434 issued and outstanding December 31, 2005
          and December 31, 2004                                                           1,684               1,684
     Common Stock (Par Value $.01), 20,000,000 shares
          authorized 38,523,120 shares issued and outstanding
          at December 31, 2005 and 36,640,620 shares issued
          and outstanding at December 31, 2004                                          385,231             366,406
     Common Stock to be issued, 469,752 shares at
          December 31, 2005 and 2004                                                      4,698               4,698
     Treasury Stock, 1,000 shares at December 31, 2005 and 2004                          (1,000)             (1,000)
     Paid in Capital in Excess of Par Value                                          13,440,954          13,164,028
     Shareholder Receivable                                                             (15,000)            (15,000)
     Retained Deficit                                                                (3,333,785)         (3,333,785)
     Deficit Accumulated During Development Stage                                   (14,984,441)        (14,247,528)
                                                                             ------------------  ------------------

          Total Stockholders' Equity                                                 (4,501,659)         (4,060,497)
                                                                             ------------------  ------------------

          Total Liabilities and Stockholders' Equity                         $           30,507  $           80,585
                                                                             ==================  ==================
</TABLE>






    The accompanying notes are an integral part of these financial statements

                                      F - 3

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                    Cumulative
                                                                                                       From
                                                                                                   July 5, 1996
                                                                  For the Year Ended               Inception of
                                                                     December 31,                  Development
                                                               2005                2004               Stage
                                                        ------------------  ------------------  ------------------
<S>                                                     <C>                 <C>                 <C>
Revenue                                                 $                -  $                -  $          256,000
                                                        ------------------  ------------------  ------------------

Expenses
  Sales and marketing                                               37,662                   -             155,208
  General and administrative                                       461,066             686,776           9,401,447
  Research and development                                               -              69,765           4,529,656
                                                        ------------------  ------------------  ------------------

     Total Expenses                                                498,728             756,541          14,086,311
                                                        ------------------  ------------------  ------------------

Other income (expense)
  Other income                                                     150,082             278,635             428,717
  Interest income                                                        -                   -              18,902
  Interest expense                                                (388,167)           (415,425)         (1,819,188)
  Gain (Loss) on disposal of assets                                      -             261,138              26,947
  Capital gain on sale of investments                                    -                   -             191,492
                                                        ------------------  ------------------  ------------------

     Total Other Income (Expense)                                 (238,085)            124,348          (1,153,130)
                                                        ------------------  ------------------  ------------------

Income (Loss) Before Taxes                                        (736,813)           (632,193)        (14,983,441)

Income Taxes                                                           100                 100               1,000
                                                        ------------------  ------------------  ------------------

Net Income (Loss) After Taxes                           $         (736,913) $         (632,293) $      (14,984,441)
                                                        ==================  ==================  ==================

Weighted Average Shares
  Outstanding                                                   37,672,182          34,899,606
                                                        ==================  ==================

Loss Per Share                                          $           (0.02)  $           (0.02)
                                                        ==================  ==================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F - 4

<PAGE>


                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                                                         Deficit
                                                                                                                       Accumulated
                                                                                                                           From
                                                                               Common      Paid in                     July 5, 1996
                                                                               Stock      Capital in                   Inception of
                               Preferred Stock     Common Stock     Treasury   to be      Excess of       Retained     Development
                              ---------------- -------------------
                               Shares   Amount    Shares    Amount    Stock    Issued     Par Value        Deficit        Stage
                              -------- ------- ---------- --------  -------- -------- ----------------  -------------  ------------
<S>                           <C>      <C>     <C>        <C>       <C>      <C>      <C>               <C>            <C>
Balance December 31, 1995      247,100 $ 2,471 12,210,949 $122,109  $      - $      - $     74,022,028  $(103,351,248) $          -
January 1996 shares issued
   in connection with merger  (247,100) (2,471)(3,784,905) (37,849)        -    5,059      (70,257,358)   100,017,463

Shares issued for cash at
   $0.50 - 3.00  per share           -       -    314,287    3,143         -        -          507,932              -             -

Shares issued in exercise of
   options at $1.00 - $1.25
   per share                         -       -    130,000    1,300         -        -          136,200              -             -

Shares issued for services at
   $1.25 per share                   -       -     14,282      143         -        -           17,710              -             -

Shares issued for receivable
   at $1.00 - 3.00 per share         -       -          -        -         -      407          101,543              -             -

Shares issued to officer and
   employee for patents              -       -          -        -         -    2,250          130,500              -             -

Net Loss                             -       -          -        -         -        -                -              -      (831,814)
                              -------- ------- ---------- --------  -------- -------- ----------------  -------------  ------------

Balance December 31, 1996            -       -  8,884,613   88,846         -    7,716        4,658,555     (3,333,785)     (831,814)
</TABLE>


                                     F - 5


<PAGE>

                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                             Deficit
                                                                                                            Accumulated
                                                                                                                From
                                                                          Common   Paid in                  July 5, 1996
                                                                           Stock Capital in                Inception of
                               Preferred Stock    Common Stock   Treasury  to be  Excess of    Retained      Development
                               --------------- -----------------
                                Shares  Amount   Shares   Amount   Stock  Issued  Par Value     Deficit         Stage
                               ------- ------- --------- -------  ------ ------- -----------  ----------- ----------------
<S>                            <C>     <C>     <C>       <C>      <C>    <C>     <C>          <C>         <C>
Shares issued for cash at
   $0.01 - 3.00 per share            - $      -  228,150 $ 2,282  $    - $    49 $   449,976  $         - $              -
Shares issued to officers for
   loans at $0.08 - 1.82
   per share                         -       -   249,444   2,494       -       -      74,287            -                -
Shares issued for services at
   $0.50 - 2.59 per share            -       -    10,398     104       -       -       7,391            -                -
Shares issued to officers for
   patents                           -       -   260,813   2,608       -  (2,250)      1,892            -                -
Shares issued for cash and
   receivables at $1.75 - 2.00
   per share                         -       -    58,286     583       -    (100)     85,267            -                -
Shares issued to VideOcart
   creditors                         -       -    97,610     976       -    (976)          -            -                -
Shares issued for research &
   development at par                -       -         -       -       -     464           -            -                -
Shares issued for employee
   compensation at $2.50
   per share                         -       -     6,000      60       -       -      14,940            -                -
Net Loss                             -       -         -       -       -       -           -            -         (755,594)
                               ------- ------- --------- -------  ------ ------- -----------  ----------- ----------------

Balance December 31, 1997            -       - 9,795,314  97,953       -   4,903   5,292,308   (3,333,785)      (1,587,408)
</TABLE>




                                     F - 6


<PAGE>

                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                       Deficit
                                                                                                                     Accumulated
                                                                                                                       From
                                                                                   Common    Paid in                July 5, 1996
                                                                                    Stock   Capital in              Inception of
                                Preferred Stock        Common Stock     Treasury    to be   Excess of    Retained    Development
                              ------------------- --------------------
                               Shares      Amount   Shares     Amount     Stock     Issued  Par Value     Deficit       Stage
                              ------- ----------- ---------- ---------  --------- -------- ------------  ----------  -------------
<S>                           <C>     <C>         <C>        <C>        <C>       <C>      <C>           <C>         <C>
Shares issued for cash at
   $1.50 - 3.00 per share           - $         -    294,059 $   2,941  $       - $   (100)$    612,416           -              -
Shares issued for services at
   $2.00 - 7.80 per share           -           -     13,648       136          -        -       43,590           -              -
Shares issued for employee
   compensation at $2.19 -
   3.06 per share                   -           -      4,363        44          -        -        9,954           -              -
Shares issued for accounts
   receivable at $1.50 - 2.12
   per share                        -           -    129,437     1,294          -        -      209,671           -              -
Shares issued for 1,500
   shares of Avtel stock at
   $3.00 per share                  -           -      4,125        41          -        -       12,334           -              -
Shares issued for research &
   development contract             -           -     46,366       464          -     (464)           -           -              -
Shares issued to officer for
   patent at $2.94 per share        -           -    150,000     1,500          -      250      512,313           -              -
Shares returned at $1.58
   per share                        -           -    (42,493)     (425)         -        -      (66,667)          -              -
Net Loss                            -           -          -         -          -        -            -           -     (1,496,926)
                              ------- ----------- ---------- ---------  --------- -------- ------------  ----------  -------------

Balance December 31, 1998           -           - 10,394,819   103,948          -    4,589    6,625,919  (3,333,785)    (3,084,334)
</TABLE>


                                     F - 7


<PAGE>

                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                     Deficit
                                                                                                                   Accumulated
                                                                                                                      From
                                                                                Common   Paid in                  July 5, 1996
                                                                                 Stock   Capital in                Inception of
                               Preferred Stock     Common Stock       Treasury   to be   Excess of    Retained     Development
                               --------------- --------------------
                               Shares  Amount   Shares     Amount      Stock    Issued  Par Value      Deficit         Stage
                               ------ -------- ---------- ---------  -------- -------- -----------  ----------- ---------------
<S>                            <C>    <C>      <C>        <C>        <C>      <C>      <C>          <C>         <C>
Shares issued for cash at
   $1.96 - 3.00 per share           - $     -     701,525 $   7,015  $      - $      - $ 1,649,949  $         -               -
Shares issued for employee
   compensation at $1.95 -
   2.34 per share                   -       -       2,995        30         -        -       6,187            -               -
Shares issued for exercise of
   options at $0.52 - .86
   per share                        -       -     238,271     2,383         -        -     200,342            -               -
Shares returned at $0.67-1.58
   per share                        -       -     (62,489)     (625)        -        -    (107,047)           -               -
Net Loss                            -       -           -         -         -        -           -            -      (1,734,623)
                               ------ ------- ----------- ---------  -------- -------- -----------  ----------- ---------------

Balance December 31, 1999           -       -  11,275,121   112,751         -    4,589   8,375,350  $(3,333,785)$    (4,818,957)

Shares issued for cash at
   $1.07 - 2.75 per share           -       -     279,742     2,798         -        -     532,754            -               -
Preferred shares issued for
   cash at $17 - 26 per share  84,576     846           -         -         -        -   1,827,529            -               -
Shares issued for employee
   compensation at $3.99
   per share                        -       -      74,608       746         -        -     296,939            -               -
</TABLE>




                                     F - 8

<PAGE>

                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                        Deficit
                                                                                                                      Accumulated
                                                                                                                         From
                                                                                  Common   Paid in                   July 5, 1996
                                                                                   Stock  Capital in                 Inception of
                                 Preferred Stock       Common Stock      Treasury  to be  Excess of     Retained     Development
                                ----------------- --------------------
                                  Shares   Amount   Shares     Amount     Stock   Issued  Par Value     Deficit         Stage
                                --------- ------- ---------- ---------  -------- ------- -----------  ------------ ---------------
<S>                             <C>       <C>     <C>        <C>        <C>      <C>     <C>          <C>          <C>
Shares issued for exercise of
   stock options at $0.86 -
   1.07 per share                       - $     -    597,778 $   5,978  $      - $       $   511,931  $          - $             -
Shares issued for accounts
   payable at $2.75 - 3.00
   per share                            -       -      9,488        95         -       -      26,649             -               -
Paid-in capital from treasury
   stock transaction                    -       -          -         -         -       -      16,180             -               -
Shares canceled & converted
   to preferred shares at
   $2.75 per share                      -       -   (100,000)   (1,000)        -       -    (274,000)            -               -
Conversion of note payable


   to preferred shares at
   $26 per share                    9,615      96          -         -         -       -     249,904             -               -
Shares issued that were paid
   for in 1997                          -       -     23,334       233         -    (233)          -             -               -
Shares issued for services at
   $0.89 per share                      -       -      2,697        27         -       -       2,373             -               -
Shares returned at $1.73 -
   2.12 per share                       -       -    (10,000)     (100)        -       -     (19,150)            -               -
Net Loss                                -       -          -         -         -       -           -             -      (4,066,283)
                                --------- ------- ---------- ---------  -------- ------- -----------  ------------ ---------------

Balance December 31, 2000          94,191     942 12,152,768   121,528         -   4,356  11,546,459    (3,333,785)     (8,885,240)
</TABLE>


                                      F - 9

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                    Deficit
                                                                                                                  Accumulated
                                                                                                                      From
                                                                                 Common   Paid in                 July 5, 1996
                                                                                  Stock   Capital in               Inception of
                                   Preferred Stock       Common Stock   Treasury  to be   Excess of    Retained    Development
                                ------------------ -------------------
                                  Shares    Amount    Shares    Amount    Stock   Issued  Par Value     Deficit        Stage
                                --------- -------- ---------- --------  ------- ------- -----------  ----------- --------------
<S>                             <C>       <C>      <C>        <C>       <C>     <C>     <C>          <C>         <C>
Shares issued for cash at
   $0.82 per share                      - $      -      4,685 $     47  $     - $     - $     3,795  $         - $            -
Preferred shares issued for
   cash at $6.60 per share          6,061       60          -        -        -       -      39,940            -              -
Preferred shares issued for
   payment of note payable
-49,3186.60 per share              68,182                                                     682
Shares canceled for
   nonpayment                           -        -     (4,694)     (47)       -       -      (9,903)           -              -
Shares issued for research &
   development expenses at
   $1.00 per share                      -        -     15,000      150        -       -      14,850            -              -
Shares issued for general &
   administrative expenses at
   $0.66 per share                      -        -    507,048    5,070        -       -     329,581            -              -
Shares returned to Company
   for accounts receivable of
   $98,375                              -        -          -        -   (1,000)      -     (97,375)           -              -
Net Loss                                -        -          -        -        -       -           -            -     (2,342,405)
                                --------- -------- ---------- --------  ------- ------- -----------  ----------- --------------

Balance December 31, 2001         168,434    1,684 12,674,807  126,748   (1,000)  4,356  12,276,665   (3,333,785)   (11,227,645)
</TABLE>




                                     F - 10

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (continued)


<TABLE>
<CAPTION>
                                                                                                                     Deficit
                                                                                                                   Accumulated
                                                                                                                      From
                                                                                Common   Paid in                  July 5, 1996
                                                                                 Stock  Capital in                Inception of
                                 Preferred Stock        Common Stock   Treasury  to be  Excess of     Retained     Development
                                 --------------- --------------------
                                  Shares  Amount   Shares     Amount     Stock  Issued  Par Value      Deficit         Stage
                                 ------- ------- ---------- ---------  -------- ------ -----------  ----------- ---------------
<S>                              <C>     <C>     <C>        <C>        <C>      <C>    <C>          <C>         <C>
Shares canceled for services
   not rendered                        - $     -   (304,229)$  (3,042) $      - $    - $  (197,749) $         - $             -
Cash received for shares that
   have not yet been issued            -       -          -         -         -  3,333      21,667            -               -
Net Loss                               -       -          -         -         -      -           -            -      (1,025,837)
                                 ------- ------- ---------- ---------  -------- ------ -----------  ----------- ---------------

Balance December 31, 2002        168,434   1,684 12,370,578   123,706    (1,000) 7,689  12,100,583   (3,333,785)    (12,253,482)

Shares issued for cash at
   $0.05 - 0.75 per share              -       -  2,580,000    25,800         - (3,333)    151,033            -               -
Shares issued for S&C
   Medical at $0.05 per share          -       -  3,000,000    30,000         -      -     120,000            -               -
Shares issued for notes
   payable at $.04-.05/share           -       - 11,259,786   112,598         -      -     446,642            -               -
Shares issued for accounts
   payable at $.01-.10/share           -       -  4,200,000    42,000         -      -      96,000            -               -
Shares authorized for expense
   at $.03 per share - not
   issued                              -       -          -         -         -  9,545      19,090            -               -
Shares authorized for
   payment of accounts
   payable at $.21 per share -
   not issued                          -       -          -         -         -     56       1,115            -               -
</TABLE>


                                     F - 11

<PAGE>

                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                    Deficit
                                                                                                                  Accumulated
                                                                                                                      From
                                                                              Common   Paid in                    July 5, 1996
                                                                               Stock   Capital in                  Inception of
                              Preferred Stock        Common Stock   Treasury   to be   Excess of    Retained      Development
                             ---------------- --------------------
                                Shares Amount  Shares     Amount      Stock   Issued   Par Value     Deficit          Stage
                             --------- ------ ---------- ---------  -------- ------- ------------  ------------ ----------------
<S>                          <C>       <C>    <C>        <C>        <C>      <C>     <C>           <C>           <C>
Net Loss                             - $    -          - $       -         - $     - $          -  $          - $     (1,361,753)
                             --------- ------ ---------- ---------  -------- ------- ------------  ------------ ----------------

Balance December 31, 2003      168,434  1,684 33,410,364   334,104    (1,000) 13,957   12,934,463    (3,333,785)     (13,615,235)

Shares issued for cash at                                                                                                      -
   $.036 - .15 per share             -      -    770,000     7,700         -       -       57,420             -                -
Shares issued for accounts
   payable at $.05-.23/share         -      -    391,939     3,919         -       -       27,306             -                -
Shares issued for expenses
   at $.04 - .23 per share           -      -  1,910,604    19,106         -  (9,203)     108,325             -                -
Authorized shares issued             -      -      5,571        56         -     (56)           -             -                -
Shares issued for
   settlement of liabilities         -      -    152,142     1,521         -       -       36,514             -                -
Net Loss                             -      -          -         -         -       -            -             -         (632,293)
                             --------- ------ ---------- ---------  -------- ------- ------------  ------------ ----------------

Balance December 31, 2004      168,434  1,684 36,640,620   366,406    (1,000)  4,698   13,164,028    (3,333,785)     (14,247,528)

Shares issued for cash at
   $.028 - .25 per share             -      -  1,790,000    17,900         -       -      254,726             -                -
Shares issued for expenses
   at $.25 per share                 -      -     92,500       925         -       -       22,200             -                -
Net Loss                             -      -          -         -         -       -            -             -         (736,913)
                             --------- ------ ---------- ---------  -------- ------- ------------  ------------ ----------------

Balance December 31, 2005      168,434 $1,684 38,523,120 $ 385,231  $ (1,000)$ 4,698 $ 13,440,954  $ (3,333,785)$    (14,984,441)
                             ========= ====== ========== =========  ======== ======= ============  ============ ================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F - 12

<PAGE>



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


<TABLE>
<CAPTION>
                                                                                                     Cumulative
                                                                                                        From
                                                                                                    July 5, 1996
                                                                   For the Year ended               Inception of
                                                                      December 31,                  Development
                                                                2005                2004               Stage
                                                          -----------------  ------------------  ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S>                                                       <C>                <C>                 <C>
Net Loss                                                  $        (736,913) $         (632,293) $      (14,984,441)
Adjustments used to reconcile net loss to net
   cash provided by (used in) operating activities:
     Stock issued for general and administrative                     23,125              63,545             986,785
     Stock issued for research and development                            -              47,850              62,850
     Stock returned for services not rendered                             -                   -            (200,790)
     (Gain) loss on sale/disposal of assets                               -            (261,138)            486,536
     Compensation expense from stock options                              -                   -              26,247
     Stock issued for interest expense                                    -                   -             119,701
     Stock issued for accounts payable                                    -              36,350             208,473
     Deferred income                                                      -                   -            (214,000)
     Depreciation and amortization                                   43,537             144,062           1,905,668
     (Increase) decrease in accounts receivable                           -                   -                (413)
     (Increase) decrease in shareholder receivable                        -                   -              37,694
     (Increase) decrease in other assets & prepaids                       -             (24,103)             87,623
     Increase (decrease) in accounts payable                        (36,174)           (103,090)            221,887
     Increase (decrease) in accrued liabilities                     426,152             379,823           2,011,850
                                                          -----------------  ------------------  ------------------
Net Cash Used in Operating Activities                              (280,273)           (348,994)         (9,244,330)
                                                          -----------------  ------------------  ------------------

CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition/Sale of equipment, net                                        -               2,328            (587,801)
Acquisition/Sale of patents                                         (12,741)            311,430              32,304
Acquisition/Sale of stock, net                                            -                   -              12,375
                                                          -----------------  ------------------  ------------------
Net Cash Used by Investing Activities                               (12,741)            313,758            (543,122)
                                                          -----------------  ------------------  ------------------
</TABLE>







                                      F - 13

<PAGE>



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

<TABLE>
<CAPTION>
                                                                                                     Cumulative
                                                                                                        From
                                                                                                    July 5, 1996
                                                                   For the Year ended               Inception of
                                                                      December 31,                  Development
                                                                2005                2004               Stage
                                                          -----------------  ------------------  ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
<S>                                                                 <C>                  <C>              <C>
Proceeds capital stock issued                                       272,626              65,120           6,619,173
Proceeds from loans                                                   1,564               2,374           3,456,752
Loan receivables                                                          -                   -             (15,000)
Principal payments on lease obligations                                   -                   -             (18,769)
Cash payments on notes payable                                         (458)            (11,000)           (275,486)
                                                          -----------------  ------------------  ------------------
Net Cash Provided by Financing Activities                           273,732              56,494           9,766,670
                                                          -----------------  ------------------  ------------------

Net Increase (Decrease) in Cash and Cash
          Equivalents                                               (19,282)             21,258             (20,782)
Cash and Cash Equivalents at Beginning of the
          Year                                                       23,174               1,916              24,674
                                                          -----------------  ------------------  ------------------
Cash and Cash Equivalents at End of the Year              $           3,892  $           23,174  $            3,892
                                                          =================  ==================  ==================

SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest                                                  $               -  $                -  $                -
Income Taxes                                              $             100  $              100  $            1,000
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

o        During September 2003,  3,000,000 shares of common stock were issued to
         acquire 80% of S&C Medical. The Company is in the process of cancelling
         these shares.

o        During  September 2003,  11,259,786  shares of common stock were issued
         for notes payable.


   The accompanying notes are an integral part of these financial statements.

                                     F - 14

<PAGE>



                             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 $736,913
for the year ended  December  31,  2005,  losses of $632,293  for the year ended
December 31, 2004, and losses of $18,318,226 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.





                                     F - 15

<PAGE>



                             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.

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  2004  financial
statements to conform with the 2005 presentation.

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 years ended  December 31, 2005 and
2004 are not  presented as it would be  anti-dilutive.  At December 31, 2005 and
2004,  the total number of potentially  dilutive  common stock  equivalents  was
8,109,807 and 9,242,589, respectively.

                                     F - 16

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

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 $3,644 and $1,785 for the year ended December
31, 2005 and 2004, respectively.

Intangibles

         Intangibles associated with certain technology agreements are amortized
over 10 - 14 years.

         Amortization  expense  was  $39,892  and  $142,275  for the year  ended
December 31, 2005 and 2004, respectively.

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.




                                     F - 17

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

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              $            -
                                                          ==============

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 year ended December 31, 2005 and 2004, the Company  expended
$0 and $69,765  respectively  for research  and  development  of the  technology
involved with its patents.



                                     F - 18

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

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 December 31, 2005, the total amount due on these notes was $288,183.

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.

         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 December 31, 2005 the total amount due on these loans was $265,010.

                                     F - 19

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 6- RELATED PARTY TRANSACTIONS (continued)

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  December  31, 2005 the
total amount due on these loans was $2,542,713.

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

         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 December 31, 2005 the total amount due on these loans was $464,601.

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.



                                     F - 20

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 6- RELATED PARTY TRANSACTIONS (continued)

<TABLE>
<CAPTION>
                                                                 Common
                                                                  Stock
                                Annual                           Option #     Option Strike
    DATE       Principal    Interest Rate     Maturity Date       Shares          Price
------------ ---------------------------------------------------------------------------------
<S>          <C>             <C>              <C>               <C>           <C>
  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
             =============                                    ==============
</TABLE>

         During 2004,  the Arbinger  Institute  loaned the Company an additional
$2,260 to pay general and  administrative  expenses.  At December 31, 2005,  the
total amount due on these loans is $49,095.

DIRECTOR AND OFFICER LOANS TO THE COMPANY

         On October 8, 2003, D. Paul Smith,  a member of the Board of Directors,
loaned to the Company $2,500 In conjunction with this loan, Mr. Smith received a
common stock option at a ratio of 1.667 common  shares for each dollar loaned to
the  Company.  The  option has a strike  price of $1.00 and a 3-year  expiration
date. At December 31, 2005, the total amount due on this advance was $2,969.

PAUL G. BEGUM

         On February 1, 2000, an accrued  liability owed to Paul G. Begum 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. As of July 31, 2001, the total balance on
the note  receivable  was  $98,375.  On July 31, 2001,  the Company  forgave the
remaining amount owed on the receivable in exchange for 100,000 shares of common
stock that were returned to the Company.






                                     F - 21

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 6- RELATED PARTY TRANSACTIONS (continued)

         During the year ended December 31, 2001, the Company accrued additional
liabilities  from a separation  agreement  with Paul G. Begum.  During 2003, the
Company  paid  $27,899  towards  these  liabilities.  The total  amount of these
liabilities remaining at December 31, 2003 was $38,035.

         In February  2004, the remaining  liabilities  $38,035 due to Mr. Begum
were settled in exchange for 152,142 shares of the Company's free-trading common
stock valued at $.25 per share.

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
December 31, 2005, the total amount due on these loans is $60,175

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  December  31,  2005,   7,326,053   options  were   outstanding.
Compensation expense charged to operations in 2005 and 2004 is $0 and $0.

         The following table sets forth the options and warrants  outstanding as
of December 31, 2004.

<TABLE>
<CAPTION>
                                                                                            Weighted
                                                                     Option /                Average             Weighted
                                                                     Warrants               Exercise             Average
                                                                      Shares                  Price             Fair Value
                                                                ------------------      -----------------    ----------------
<S>                                                             <C>                     <C>                  <C>
Options & warrants outstanding,
       December 31, 2003                                                 7,082,629      $            0.73
Granted, Exercise price more than fair value                               900,132                   2.15                0.07
Granted, Exercise price less than fair value                                     -                      -                   -
Expired                                                                 (1,121,177)                  0.24
Exercised                                                                        -                   -
                                                                ------------------
Options & warrants outstanding,
       December 31, 2004                                                 6,861,584      $            0.77
                                                                ==================      =================
</TABLE>


                                     F - 22

<PAGE>

                             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, 2004.

<TABLE>
<CAPTION>
                                                                                            Weighted
                                                                     Option /                Average             Weighted
                                                                     Warrants               Exercise             Average
                                                                      Shares                  Price             Fair Value
                                                                ------------------      -----------------    ----------------
<S>                                                             <C>                     <C>                  <C>
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
                                                                ==================      =================
</TABLE>

         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:

<TABLE>
<CAPTION>
                                                                                             Weighted-              Weighted-
                                                Weighted-            Shares/                  Average                Average
                            Shares /             Average             Warrants             Exercise Price           Contractual
     Exercise               Warrants            Exercise            Currently                Currently              Remaining
      Price               Outstanding             Price            Exercisable              Exercisable               Life
------------------     ------------------    ---------------    ------------------     ---------------------    -----------------
<S>                    <C>                   <C>                <C>                    <C>                      <C>
$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
</TABLE>





                                     F - 23

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

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 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.

                                     F - 24

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9 - PREFERRED STOCK (continued)

         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 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.

                                     F - 25

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9 - PREFERRED STOCK (continued)

         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).

         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.

                                     F - 27

<PAGE>



                             KLEVER MARKETING, INC.
                          (a Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9 - PREFERRED STOCK (continued)

         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.

         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.



                                     F - 28

<PAGE>



                             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 December 31, 2005 and 2004.

         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 December 31, 2005 and 2004.

         A Confession  of Judgment  Statement of Klever  Marketing,  Inc.  dated
November 28, 2003 was filed in the amount of  $16,135.81  in favor of Boult Wade
Tennant.  This amount has been  included in accounts  payable as of December 31,
2003. On May 7, 2004, the Company paid $16,135.81 to settle this judgment.

         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.





                                     F - 29

<PAGE>



                             KLEVER MARKETING, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11 - STOCK TRANSACTIONS

         During January 2003, the Company received $65,000 for 866,667 shares of
common  stock.  These shares were issued  during the three months ended June 30,
2003.

         On September 8, 2003,  the Company  issued  3,200,000  shares of common
stock valued at $.04 per share for $128,000 of accounts payable.

         On September 11, 2003, the Company converted $544,239 of notes payable,
accrued  interest,  and accounts  payable to  10,884,786  shares of common stock
valued at $.05 per share.

         On September 8, 2003, the Company converted $15,000 of notes payable to
375,000 shares of common stock valued at $.04 per share.

         On  September  11,  2003,  the Company  authorized  issuance of 954,502
shares of common  stock for payment of expenses of $28,635.  As of December  31,
2003 these shares have not been issued.

         On September 25, 2003,  the Company issued  1,000,000  shares of common
stock valued at $.10 per share for $100,000 of accounts payable.

         On October 10, 2003, the Company  received $56,000 for 1,120,000 shares
of common stock.

         On October 22, 2003, the Company received $50,000 for 250,000 shares of
common stock.

         On November 12, 2003, the Company  received $2,500 for 10,000 shares of
common stock.

         On December 29, 2003, the Company  authorized  issuance of 5,571 shares
of common  stock for payment of $1,170 in accounts  payable.  As of December 31,
2003, these shares have not been issued.

         On January 7, 2004,  the Company  issued  19,000 shares of common stock
for payment of accounts payable of $3,800.

         On January 23, 2004,  the Company  issued 50,000 shares of common stock
for $7,000 in cash.

         On January 27,  2004,  the Company  issued 7,046 shares of common stock
for payment of accounts payable of $1,550.



                                     F - 30

<PAGE>



                             KLEVER MARKETING, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11 - STOCK TRANSACTIONS (continued)

         On February 2, 2004,  the Company  issued  6,739 shares of common stock
for payment of accounts payable of $1,550.

         On February 6, 2004,  the Company issued 200,000 shares of common stock
for $28,000 in cash.

         On February 9, 2004,  the Company issued 152,142 shares of common stock
for settlement of shareholder payables of $38,036.

         On February 10, 2004, the Company issued 100,000 shares of common stock
for $15,000 in cash.

         On February 19, 2004,  the Company issued 24,435 shares of common stock
for payment of accounts payable of $5,125.

         On February 20, 2004, the Company issued 200,000 shares of common stock
for general and administrative expenses of $46,000.

         On February 27, 2004,  the Company issued 20,588 shares of common stock
for payment of accounts payable of $3,500.

         On March 17, 2004,  the Company issued 7,619 shares of common stock for
payment of accounts payable of $1,600.

         On March 25, 2004,  the Company issued 8,214 shares of common stock for
payment of accounts payable of $1,150.

         On May 5, 2004,  the Company  issued  14,375 shares of common stock for
payment of accounts payable of $1,150.

         On May 17, 2004,  the Company  issued 55,358 shares of common stock for
payment of accounts payable of $3,875.

         On June 14, 2004,  the Company issued 20,000 shares of common stock for
payment of accounts payable of $1,400.




                                     F - 31

<PAGE>



                             KLEVER MARKETING, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11 - STOCK TRANSACTIONS (continued)

         On July 15, 2004, the Company issued 200,000 shares of common stock for
cash of $7,200.

         On July 27, 2004,  the Company issued 20,000 shares of common stock for
cash of $720.

         On August 27, 2004,  the Company  issued 100,000 shares of common stock
for cash of $3,600.

         On September 1, 2004,  the Company  issued  1,154,502  shares of common
stock at $.04 per share for general and administrative expenses of $23,090.

         On September 8, 2004, the Company issued 100,000 shares of common stock
for cash of $3,600.

         On September  23, 2004,  the Company  issued  531,667  shares of common
stock at $.09 per share for consulting expense of $47,850.

         On November 18, 2004, the Company issued 151,000 shares of common stock
at $.05 per share for accounts payable of $7,550.

         On December 10, 2004,  the Company issued 82,000 shares of common stock
at $.05 per share for accounts payable of $4,100.

         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.

         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.



                                     F - 32

<PAGE>



                             KLEVER MARKETING, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11 - STOCK TRANSACTIONS (continued)

         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.

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.





                                     F - 33

<PAGE>


                             KLEVER MARKETING, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 13 - LICENSE AGREEMENT (continued)

         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 - SALE OF PATENTS

         On August 27, 2004, the Company sold all of its  international  patents
for $350,000. The international patents comprised approximately 69% of the total
patents the Company owned.

NOTE 15 - 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.  The  agreement  has a term of one
year.

                                     F - 34

<PAGE>





                                   SIGNATURES


         Pursuant to the  requirements  of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                    KLEVER MARKETING, INC.

Dated: April 28, 2006               By /S/ Arthur Portugal
                                    --------------------------------------------
                                    Arthur Portugal
                                    President
                                    (Principal Executive Officer)

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 28th day of April 2006.

Signatures                          Title


/S/     Arthur Portugal
-----------------------------------------------------------
Arthur Portugal                     President, COO
                                    (Principal Executive Officer)
/S/     D. Paul Smith
-----------------------------------------------------------
D. Paul Smith                       C.F.O., Secretary, Treasurer
                                    (Principal Financial Officer)

/S/     William C. Bailey
-----------------------------------------------------------
William C. Bailey                   Chairman


/S/     Michael L. Mills
-----------------------------------------------------------
Michael L. Mills                    Director


/S/     Richard King
-----------------------------------------------------------
Richard King                        Director


/S/     John T. Zaccheo
-----------------------------------------------------------
John T. Zaccheo                     Director




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