[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]

                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
       [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the quarterly period ended:         June 30, 2000
                                            ----------------------

       [  ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                  EXCHANGE ACT

             For the transition period from               to
                                            -------------    --------------
                    Commission file number            0-18834
                                            -------------------------------

                             Klever Marketing, Inc.
                ------------------------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

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

            350 West 300 South, Suite 201, Salt Lake City, Utah 84101
                    (Address of principal executive offices)

                                 (801) 322-1221
                          ----------------------------
                            Issuer's telephone number


         (Former name,  former  address and former fiscal year, if changed since
last report.)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No



<PAGE>






                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS


     Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes X  No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares  outstanding of each of the issuer's  classes of
common  equity,  as of the  latest  practical  date:  June 30,  2000  12,062,348
                                                     ---------------------------

            Transitional Small Business Disclosure Format (check one).
Yes      ;  No   X
    ----       ---



<PAGE>



                                     PART I


Item 1.  Financial Statements



                         INDEPENDENT ACCOUNTANT'S REPORT


Klever Marketing, Inc.


     We have reviewed the accompanying balance sheets of Klever Marketing,  Inc.
as of June 30,  2000 and  December  31,  1999,  and the  related  statements  of
operations  for the  three  and six  months,  and cash  flows  for the six month
periods  ended  June 30,  2000 and  1999.  These  financial  statements  are the
responsibility of the Company's management.

     We conducted our review in accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.

     Based on our review,  we are not aware of any material  modifications  that
should  be made  to the  accompanying  financial  statements  for  them to be in
conformity with generally accepted accounting principles.

                             Respectfully submitted



                             /s/ ROBISON, HILL & CO.
                             Certified Public Accountants

Salt Lake City, Utah
August 10, 2000





                                        3

<PAGE>



                             KLEVER MARKETING, INC.
                                 BALANCE SHEETS



                                          June 30,       December 31,
                                          -----------    -----------
ASSETS ................................        2000        1999
                                          -----------    -----------
Current Assets

  Cash ................................   $      (173)   $   203,232
  Shareholder Receivables .............       155,235         34,892
  Prepaid Expenses ....................          --             --
                                          -----------    -----------


     Total Current Assets .............       155,062        238,124
                                          -----------    -----------


Fixed Assets

  Office Equipment ....................       155,082         77,279
  Phase 2 Equipment ...................     1,202,646        445,330
  Less Accumulated Depreciation .......       (66,168)       (56,798)
                                          -----------    -----------


     Net Fixed Assets .................     1,291,560        465,811
                                          -----------    -----------


Other Assets

  Patents .............................     2,221,748      2,212,850
  Less Accumulated Amortization .......    (1,370,525)    (1,266,201)
                                          -----------    -----------


     Net Other Assets .................       851,223        946,649
                                          -----------    -----------


     Total Assets .....................   $ 2,297,845    $ 1,650,584
                                          ===========    ===========



















                                        4

<PAGE>



                             KLEVER MARKETING, INC.
                                 BALANCE SHEETS
                                   (Continued)
<TABLE>
<CAPTION>



                                                       June 30,       December 31,
                                                       ------------   -----------
                                                            2000          1999
                                                       ------------   -----------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

<S>                                                    <C>            <C>
  Accounts Payable, Trade .............................$    256,759   $   401,708
  Accrued Liabilities .................................     145,704       458,563
  Related Party Payables ..............................     663,750       191,250
  Short-term Notes Payable ............................      10,881       259,115
                                                       ------------   -----------

     Total Current Liabilities ........................   1,077,094     1,310,636
                                                       ------------   -----------


     Total Liabilities ................................   1,077,094     1,310,636
                                                       ------------   -----------


Stockholders' Equity
  Preferred stock (Par Value $.01),
    2,000,000 shares authorized. 53,014 shares issued
    and outstanding June 30, 2000 and -0- issued and
    outstanding December 31, 1999 .....................$        530   $      --
  Paid in Capital in Excess of Par Value ..............   1,377,845          --
  Common Stock (Par Value $.01),
    20,000,000 shares authorized. 12,062,348 shares
    issued  and  outstanding  June 30,  2000 and
    11,275,121   shares  issued and outstanding
    December 31, 1999 .................................     120,623       112,751
  Common Stock to be issued ...........................       4,356         4,589
  Paid in Capital in Excess of Par Value ..............   9,357,817     8,375,350
  Retained Deficit ....................................  (9,640,370)   (8,152,742)
                                                       ------------   -----------

     Total Paid-In Capital & Retained Earnings ........   1,220,801       339,948

  Treasury Stock (Par Value $.01),
    5,000 shares June 30, 2000 and -0- shares
    December 31, 1999 at par value ....................         (50)         --
                                                       ------------   -----------

     Total Stockholders' Equity .......................   1,220,751       339,948
                                                       ------------   -----------

     Total Liabilities and Stockholders' Equity .......$  2,297,845   $ 1,650,584
                                                       ============   ===========
</TABLE>

                 See accompanying notes and accountants' report.

                                        5

<PAGE>



                             KLEVER MARKETING, INC.
                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>



                                     For the Three Months            For the Six Months
                                        Ended June 30,                  Ended June 30,
                                  ---------------------------   ---------------------------
                                       2000          1999           2000           1999
                                  ------------   ------------   ------------   ------------

<S>                               <C>            <C>            <C>            <C>
Revenue ........................  $       --     $       --     $       --     $       --

                                  ------------   ------------   ------------   ------------

Expenses
  General and Administrative ...       362,820        248,255      1,489,499        480,820
  Research and Development .....        41,026        111,894        170,896        218,484
                                  ------------   ------------   ------------   ------------

     Total Expenses ............       403,846        360,149      1,660,395        699,304
                                  ------------   ------------   ------------   ------------

Other Income (Expense)
  Interest Income ..............            89             58            191            539
  Interest Expense .............       (14,409)        (8,069)       (21,543)       (15,010)
  Gain/Loss ....................          --             --          193,677           --
  Sale of Investments ..........          --             --             --             --
                                  ------------   ------------   ------------   ------------

    Total Other Income (Expense)       (14,320)        (8,011)       172,325        (14,471)
                                  ------------   ------------   ------------   ------------

Loss Before Taxes ..............      (418,166)      (368,160)    (1,488,070)      (713,775)

Income Taxes ...................          --             --             --             --
                                  ------------   ------------   ------------   ------------

Net Loss After Taxes ...........  $   (418,166)  $   (368,160)  $ (1,488,070)  $   (713,775)
                                  ============   ============   ============   ============

Weighted Average Shares
Outstanding ....................    12,587,172     10,671,294     12,514,735     10,725,557
                                  ============   ============   ============   ============

Loss per Common Share ..........  $      (0.03)  $      (0.03)  $      (0.12)  $      (0.07)
                                  ============   ============   ============   ============
</TABLE>







                 See accompanying notes and accountants' report.


                                        6

<PAGE>



                             KLEVER MARKETING, INC.
                             STATEMENT OF CASH FLOWS



                                                           For the Six Months
                                                             Ended June 30,
                                                        ------------------------
                                                             2000        1999
                                                        ------------  ----------

CASH FLOWS FROM
OPERATING ACTIVITIES:

Net Loss .............................................  $(1,488,070)  $(713,775)

Adjustments  used to  reconcile
  net loss to net  cash  provided
  by  (used  in) operating activities:

Non cash general and
   administrative ....................................      604,283       6,218
(Increase) decrease in:
    shareholder receivable ...........................     (120,343)    108,271
    prepaid expense ..................................         --          --
Increase (decrease) in:
   accounts payable ..................................     (126,014)   (363,664)
   accrued liabilities ...............................     (293,392)     (4,778)
   deferred income ...................................         --          --
   lease obligation ..................................        1,766      15,404
   related party payables ............................      472,500     (75,250)
Loss on Extraordinary Item ...........................         --          --
Sale of Investments ..................................         --          --
Depreciation and Amortization ........................      114,115     110,984
                                                        ------------  ----------

Net cash used in operating
   activities ........................................  $  (835,155)  $(916,590)
                                                        ------------  ----------

CASH FLOWS FROM
INVESTING ACTIVITIES:
Acquisition of equipment .............................  $  (835,098)  $ (21,816)
Non cash equipment ...................................       13,809        --
Acquisition of patents ...............................       (8,898)     (3,288)
                                                        ------------  ----------

Net cash used by investing
   activities ........................................  $  (830,187)  $ (25,104)
                                                        ------------  ----------

                                       7
<PAGE>

                             KLEVER MARKETING, INC
                             STATEMENT OF CASH FLOWS
                                   (Continued)




                                               For the Six Months
                                                 Ended June 30,
                                         --------------------------
                                             2000           1999
                                         -----------      ---------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds From Capital Stock ........     $ 1,750,339      $ 913,490
Principle Payments on  Lease
   Obligations .....................            --           (1,688)
Non Cash Capital Stock .............        (288,402)          --
                                         -----------      ---------
Net Cash Provided by
   Financing  Activities ...........     $ 1,461,937      $ 911,802
                                         -----------      ---------

Net Increase (Decrease) in
   Cash  and Cash Equivalents ......        (203,405)       (29,892)
Cash and Cash Equivalents at
   Beginning of the Period .........         203,232         45,371
                                         -----------      ---------
Cash and Cash Equivalents at
   End of the Period ...............     $      (173)       $15,479
                                         ===========      =========

SUPPLEMENTAL
DISCLOSURE OF CASH
  FLOW INFORMATION:

Interest ...........................     $    21,543      $  15,010
Income Taxes .......................     $      --        $    --












                 See accompanying notes and accountants' report.


                                        8

<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                     --------------------------------------


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES

     This summary of accounting policies for Klever Marketing, Inc. is presented
to assist in understanding the Company's  financial  statements.  The accounting
policies  conform to  generally  accepted  accounting  principles  and have been
consistently applied in the preparation of the financial statements.

     The  unaudited  financial  statements  as of June 30,  2000 and for the six
months then ended reflect, in the opinion of management,  all adjustments (which
include  only  normal  recurring  adjustments)  necessary  to  fairly  state the
financial  position  and  results of  operations  for the three and six  months.
Operating  results for interim  periods are not  necessarily  indicative  of the
results which can be expected for full years.

Organization and Basis of Presentation

     The  Company  was  organized  under  the laws of the State of  Delaware  in
December 1989. The Company was in the  Development  stage from 1989 to 1991. The
Company  was an  operating  company  from 1992 to December 8, 1993 when it filed
petitions for relief under Chapter 11 bankruptcy. The Company was inactive until
July 5, 1996 when the Company merged with Klever Kart,  Inc. in a reverse merger
and  changed  its  name  to  Klever  Marketing,  Inc.  The  company  was  in the
development stage until June 30, 1998.

Nature of Business

     The  Company  was  formed for the  purpose of  creating a vehicle to obtain
capital,  to file  and  acquire  patents,  to seek  out,  investigate,  develop,
manufacture and market  electronic  in-store  advertising,  directory and coupon
services  which have  potential  for  profit.  The Company is  currently  in the
process of the commercialization of the patented process it has acquired.

Cash Equivalents

     For the purpose of reporting cash flows,  the Company  considers all highly
liquid debt  instruments  purchased  with maturity of three months or less to be
cash  equivalents  to the  extent  the funds are not being  held for  investment
purposes.

Pervasiveness of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect the reported amounts

                                        9

<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES(continued):
--------------------------------------------------------------------

of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Reclassifications

     Certain  reclassifications  have been made in the 1998 financial statements
to conform with the 1999 presentation.

Loss per Share

     The  reconciliations  of the  numerators  and  denominators  of  the  basic
earnings per share computations are as follows:


                                                                       Per-Share
                                             Loss          Shares       Amount

                                        For the three months ended June 30, 2000

Basic Earnings per Share
Income available to common shareholders $   (418,166)    12,587,172   $   (0.03)
                                        ============    ===========   ==========

                                         For the six months ended June 30, 2000

Basic Earnings per Share
Income available to common shareholders $ (1,488,070)    12,514,735   $   (0.12)
                                        ============    ===========   ==========

                                        For the three months ended June 30, 1999

Basic Earnings per Share
Income available to common shareholders $   (368,160)    10,671,294   $   (0.03)
                                        ============    ===========   ==========

                                         For the six months ended June 30, 1999

Basic Earnings per Share
Income available to common shareholders $   (713,775)    10,725,557   $   (0.03)
                                        ============    ===========   ==========

                                       10

<PAGE>

                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES(continued):
--------------------------------------------------------------------

     Basic earnings per common share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted  earnings  per common  share for the six months  ended June 30, 2000 and
1999 are not presented as it would be anti-dilutive.

Fixed Assets

     Fixed assets are stated at cost. Depreciation and amortization are computed
using the straight- line method over the estimated  economic useful lives of the
related assets as follows:

            Computer equipment                              3 years
            Office furniture and fixtures                   5-10 years

     Upon sale or other  disposition  of property  and  equipment,  the cost and
related  accumulated  depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.

     Expenditures  for  maintenance  and  repairs  are  charged  to  expense  as
incurred.  Major overhauls and betterments are capitalized and depreciated  over
their estimated economic useful lives.

Intangibles

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

NOTE 2 - INCOME TAXES

     The Company has accumulated tax losses estimated at $8,000,000  expiring in
years 2007 through 2014.  Current tax laws limit the amount of loss available to
be offset against  future taxable income when a substantial  change in ownership
occurs. The amount of net operating loss carryforward available to offset future
taxable income may be limited if there is a substantial change in ownership.

NOTE 3 - LEASE COMMITMENT

     The  Company's  lease  commitments  for  office  space  with Tree of Stars,
Inc./P.D.O. consist of two leases with payments of $26,743 and $10,496 per year.
Both lease commitments expired

                                        11

<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Continued)


NOTE 3 - LEASE COMMITMENT (continued):

December 31, 1998 and have continued on a month to month basis since that time.

NOTE 4 - RESEARCH AND DEVELOPMENT

     Research  and  development  of the  Klever-Kart  System began with the sole
purpose of reducing thefts of shopping carts. A voice-activated alarm system was
envisioned.  As time and technology  progressed,  the present  embodiment of the
Klever-Kart   System  evolved  into  a  "product   specific"   point-of-purchase
advertising  system  consisting of an easily  readable  electronic  display that
attaches  to any  shopping  cart,  a shelf  mounted  message  sending  unit that
automatically  sends  featured  products'  ad-message  to the display and a host
computer using proprietary software.

     During the six months  ended June 30, 2000 and 1999,  the Company  expended
$170,896  and  $218,484,  respectively  for  research  and  development  of  the
technology involved with its patents.

     On February  1, 1997 the Company  entered  into an  agreement  with ETC and
Digital  Radio  Communications  Corp.  ("DRCC")where  by the  Company  exchanged
electronic components for a promissory note of $97,093 together with interest at
eight  percent  calculated on the basis of the actual number of days elapsed but
computed  on a 360 day year.  The  principal  balance,  together  with  interest
thereon will be amortized  over 18 monthly  installments,  commencing on the day
the "cost reduction and manufacturing" ("Commercial Service Agreement") contract
is  executed  and the first  payment  is made by the  Company  to  ETC/DRCC  and
continuing on the last day of each month thereafter until paid in full.

     On February  13,  1998 the  Company  entered  into the  Commercial  Service
Agreement  (see  above) with World  Wireless  Communications  ("WWC")  where WWC
agrees to provide consulting and engineering services related to the development
of a wireless  shopping  data  display  system.  WWC may also offer  alternative
approaches to design, construct and performance of the product.

     The  Company is required to pay a $10,000  deposit in  connection  with the
agreement, retained by WWC, which will be credited during final billing received
from WWC. The Company has agreed to provide WWC a bonus of $2,000 if the project
is  completed  by March 31,  1998.  If the project  duration is beyond April 15,
1998, WWC will be required to pay the Company a penalty of $2,000.

     On February 13, 1998 the Company  entered into a settlement  agreement with
WWC (formerly  Electronic  Technology  Corp.) pursuant to which the company paid
$30,000 and issued 46,364 shares of common stock to WWC in  satisfaction  of any
and all claims in connection with the September 26,

                                       12

<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Continued)


NOTE 4 - RESEARCH AND DEVELOPMENT (continued):

1994  contract.  The agreement also provides for 10,000 shares of WWC restricted
common stock in exchange for a promissory note in the amount of $97,093.

     On March 29, 2000 the Company entered into a settlement  agreement with WWC
pursuant to which WWC is to transfer 7,000 common shares of the Company's  stock
back to the Company by April 14, 2000 in  satisfaction  of any and all claims in
connection with the Klever Kart project.

NOTE 5- RELATED PARTY TRANSACTIONS

     During 1998 various shareholders loaned the Company $347,100. The notes are
payable within one year plus interest at 10% and 12% per annum.  During 1999 and
the six months  ended June 30, 2000  principle  payments of $155,850 and $62,500
were paid toward these loans. During the six months ended June 30, 2000, various
shareholders loaned the Company $535,000.  The notes are payable within one year
plus  interest  at 12% per annum.  The total  balance due as of June 30, 2000 is
$663,750.

     On February 1, 2000 an accrued  liability in the amount of $306,666.64  was
converted  to common  shares by exercise of options for the  purchase of 579,585
shares at $.86 per share and a note receivable in the amount of $191,776.46. The
note is payable in thirty-six  equal  installments  with interest at the rate of
eight  percent.  The note is  collateralized  by 100,000 shares of the Company's
common shares.

NOTE 6- STOCK OPTIONS

     The  shareholders  approved,  by a majority  vote, the adoption of the 1998
Stock Incentive Plan (the "Plan").  Under the Plan,  3,500,000  shares of common
stock are  reserved  for  issuance  upon the  exercise  of options  which may be
granted from  time-to-time  to officers,  directors  and certain  employees  and
consultants  of the Company or its  subsidiaries.  The Plan permits the award of
both qualified and  non-qualified  incentive  stock options.  Under the Plan, an
additional  500,000 shares of common stock are reserved for issuance in the form
of restricted stock grants. As of December 31, 1998, no options had been granted
under the Plan.  Compensation  expense charged to operations in 1999 and 1998 is
$24,010 and $11,247.  Compensation  expense  charged to  operations  for the six
months  ending  June  30,2000  is  $297,686.  The  following  is  a  summary  of
transactions:




                                       13

<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Continued)


NOTE 6- STOCK OPTIONS (continued):
<TABLE>
<CAPTION>


                                                           Shares Under Option
                                                         -----------------------
                                                         June 30,   December 31,
                                                         -----------------------
                                                             2000         1999
                                                         ----------   ----------
<S>                                                       <C>          <C>
Outstanding, beginning of year ........................   2,898,059    1,675,355
Granted during the year ...............................     485,172    1,284,641
Canceled during the year ..............................    (125,392)        --
Exercised during the year .............................     (92,801)     (61,937)
                                                         ----------   ----------

Outstanding, end of year (at prices
ranging from $.86 to $3.61 per share) .................   3,165,038    2,898,059
                                                         ==========   ==========

Eligible, end of year for exercise currently (at prices
ranging from $.86 to $3.61 per share) .................   3,165,038    2,898,059
                                                         ==========   ==========
</TABLE>


NOTE 7 - CONTINGENCIES

     On May 24, 1996, in  consideration  of the  assignment in September 1993 to
the  company,  certain  technologies  and  patents  relating  to the  electronic
couponing  ("Electronic Coupon Patent") by Mr. Paul G. Begum,  President/CEO and
Mr. Mark Geiger, V.P. Operations, the Board of Directors agreed to pay Mr. Begum
and Mr. Geiger  200,000 and 25,000 shares,  respectively  at a price of $.01 per
share for the  electronic  coupon  patent.  $132,750 was  capitalized in 1996 as
patents.  The  shares  are  valued  at $.60 per  share as this was the value the
Company's  stock was selling for when the assignment was made in September 1993.
As additional  consideration  for the  Electronic  Coupon  Patent,  the Board of
Directors  has agreed to pay PSF,  Inc.(as Mr.  Begum's  assign) and Mr.  Geiger
$50,000 and $10,000,  respectively  upon receipt by the Company of $2,000,000 in
equity  funding and when the Company has the necessary  financing to conduct its
operations.

     On February 25, 1997 Mr. Begum and Mr. Geiger  received  200,000 and 25,000
shares respectively.  On December 22, 1997 pursuant to the merger, Mr. Begum and
Mr. Geiger received an additional  31,834 and 3,979 shares  respectively.  As of
June 30, 2000 the Company has  fulfilled  its  obligation  to Mr.  Begum and Mr.
Geiger, respectively.

NOTE 8 - PREFERRED STOCK

     On  February  7, 2000 the Board of  Directors  authorized  and  established
"Class A Voting

                                       14

<PAGE>

                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Continued)


NOTE 8 - PREFERRED STOCK (continued):

Preferred Stock Series 1. " ("Class A Shares") as a class of its $.01 par value,
2,000,000  shares  authorized,  preferred  stock.  Class  A  Shares  consist  of
1,000,000 shares, 125,000 shares thereof are designated as Series 1 shares.

     Class A Shares are convertible  into Common Stock at an initial  conversion
price of $2.60 (subject to adjustment).

     Holders of Class A Shares shall be entitled to receive when and as declared
by the Board of  Directors  of the Company out of any funds at the time  legally
available therefor  dividends at the rate of $2.20 per share per annum,  payable
semi-annually  on the first day of January and July of each year. Such dividends
shall accrue on each such share from the date of its original issuance and shall
accrue from day to day,  whether or not earned or declared.  Such dividend shall
be  cumulative  and may be paid in cash or in kind through the  distribution  of
 .0425  Class A Shares,  Series 1, for each  outstanding  Class A Share,  on each
dividend  payment  date.  In  addition,  each holder of Class A Shares  shall be
entitled to receive,  when and as declared,  a dividend  equal to each  dividend
declared and paid on the shares of Common Stock,  on a share for share basis. If
there  is a split or  dividend  on the  Common  Stock,  then the  Class A Shares
dividends  shall be adjusted as if a similar split or dividend had occurred with
respect to the Class A Shares.

     Class A Shareholders shall be entitled to one vote for each share of Common
Stock into which such  Class A Shares  could then be  converted,  and shall have
voting rights and powers equal to that of a holder of Common Stock.  The Holders
of Class A Shares  shall  vote with the  holders  of  Common  Stock and not as a
separate class.

     Class A Shares  carry a  liquidation  preference  of $26 per share plus any
accrued  but  unpaid  dividends  on  such  shares,  if  any,  and  adjusted  for
combinations, splits, dividends or distributions of shares of stock with respect
to such shares.

     The Class A Shares shall be redeemable by the Company, in whole or in part,
at the option of the Board of  Directors  of the  Company,  at any time and from
time to time on or after July 1, 2002.  The  redemption  price  shall be $26 per
share together with accrued but unpaid dividends on such shares, if any.

NOTE 9 - SUBSEQUENT EVENTS

     On July 27, 2000 the Company  sold 10,786  shares of common stock for $1.07
per share.

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<PAGE>



                              KLEVER MARKETING, INC
                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                   (Continued)


NOTE 9 - SUBSEQUENT EVENTS (continued):

     On July 24, 2000, the Company entered into a one year employment  agreement
with Corey  Hamilton which sets forth the terms and conditions of his employment
as President of the Company. Mr. Hamilton will receive a base salary of $150,000
per year, and will also be granted  100,000  shares of common stock,  which will
vest quarterly over twelve months.

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<PAGE>



Item 2.  Management's Discussion and Analysis or Plan of Operation.

General  - This  discussion  should  be read in  conjunction  with  Management's
Discussion and Analysis of Financial  Condition and Results of Operations in the
Company's annual report on Form 10-KSB for the year ended December 31, 2000.

Plan of  Operations  - The  Company  was  formed for the  purpose of  creating a
vehicle to obtain capital, to file and acquire patents, to seek out, investigate
develop,  manufacture and market electronic in-store advertising,  directory and
electronic  coupon  services  which have  potential  for profit.  The Company is
currently  in the  process  of the  commercialization  of the  patented  system,
Klever-Kart(R).  The  commercialization  process is divided  into five phases as
follows:

Phase I:    System Development and Product Movement Test.

The product movement test was completed during third quarter 1997. The test took
place  in a  Smith's  Food and Drug  store  located  in Salt  Lake  City,  Utah.
Information Resources,  Inc., an independent company, audited the results of the
test which concluded an average 46.8% incremental product movement.

Phase II:   Cost Reduction & Enhancement.

In January 1998,  the Company  commenced  development of the Phase II functional
specification   that  encompassed  cost  reductions  and  system   enhancements.
Improvements on the Klever-Kart(R)  system included: a significantly smaller and
more  sleek  design in the  appearance  and size of the  display  unit;  smaller
trigger units with improved  sensitivity,  more durable  plastics,  and improved
sound fidelity.  Upon completion of the Phase II functional  specification,  the
Company began phase II engineering  design and  development.  In September 1999,
the Company began parts procurement and other manufacturing processes.

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<PAGE>





Phase III:  Installation of Stores.

In  December   1999,  the  Company  plans  to  commence   installation   of  the
Klever-Kart(R) units in Ralph's Grocery Company stores in Southern California.

Phase IV:   Electronic Coupon Integration.

Definition  of the  Electronic  Coupon  system is scheduled  to commence  during
fourth  quarter  1999.  This  process  consists of working  with  retailers  and
point-of-sale   transaction   processing  system  manufacturers  to  ensure  the
appropriate  degree of interface  and  integration  necessary  to implement  the
Electronic Coupon system.  Because the  Klever-Kart(R)  system was designed with
the eventual  implementation of Electronic Coupons in mind, the Company does not
expect  significant  hardware  modifications  will be necessary.  The Electronic
Coupon system design and initial  manufacture is scheduled for completion during
the year  2000,  followed  by a  minimum  three  month  in-store  test of system
operation.

Phase V:    Future Development.

The  Klever-KardTM   frequent  shopper  program  enhancement  is  scheduled  for
introduction in 2000. This dynamic  micro-marketing  capability will be added to
the Klever-Kart(R) system,  allowing targeted promotions to individual customers
according to demographics and personal buying history.

In order to  satisfy  its cash  requirements,  the  company  will  have to raise
additional funds through the sale of restricted  stock,  joint ventures or short
term borrowings..

Liquidity  and  Capital   Resources  -  The  Company  requires  working  capital
principally to fund its current research and development and operating  expenses
for which the Company has relied on short- term  borrowings  and the issuance of
restricted  common stock.  There are no formal  commitments  from banks or other
lending sources for lines of credit or similar  short-term  borrowings,  but the
Company has been able to borrow any  additional  working  capital  that has been
required.  From time to time in the past,  required  short-term  borrowings have
been obtained from a principal shareholder or other related entities.

Cash flows.  Operating  activities  used cash of $ 835,000 and $ 917,000 for the
six months ended June 30, 2000 and 1999, respectively.

Investing activities have used cash of $ 830,000 and $ 25,000 for the six months
ended  June 30,  2000 and 1999,  respectively.  Investing  activities  primarily
represent purchases of patents relating to the electronic in-store  advertising,
directory and coupon devices, and purchases of office equipment.

Financing  activities  provided  cash of $ 1,462,000  and  $912,000  for the six
months  ended  June  30,  2000  and  1999,  respectively.  Financing  activities
primarily represent sales of the Company's common

                                       18

<PAGE>

and preferred stock.

The Company may be required to supplement  its  available  cash and other liquid
assets with proceeds from borrowing, the sale of additional securities, or other
sources.  There can be no assurance  that any such required  additional  funding
will be available or, if available,  that it can be obtained on terms  favorable
to the Company.


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

        None.

Item 2.  Changes in Securities

The Company  sold  143,270  shares of common stock during the three months ended
June 30, 2000 to individuals for $ .86 to $3.99 per share. The Company also sold
5,769 shares of  preferred  stock during the three months ended June 30, 2000 to
other companies for $26 per share. The stock was not sold through an underwriter
and was not sold through a public offer. These sales are exempt under Regulation
D Rule 506 of the Securities Act of 1933.

Item 3.  Defaults Upon Senior Securities

        None.

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

        None.

Item 5.  Other Information

        None.

Item 6.  Exhibits and Reports on Form 8-K

         The following exhibits are included as part of this report:

Exhibit
Number   Title of Document

3.01     ARTICLES  OF  INCORPORATION  OF  KLEVER  MARKETING,   INC.  A  DELAWARE
         CORPORATION(1)

3.02     BYLAWS(1)

10.01    EMPLOYMENT AGREEMENT FOR GERARD C. COELSCH(1)

10.02    EMPLOYMENT AGREEMENT FOR COREY HAMILTON

23.01    CONSENT OF ACCOUNTANTS(1)

27.1     FINANCIAL DATA SCHEDULE

         (1) Incorporated by Reference

         (b)      No reports on Form 8-K were filed.



                                       19

<PAGE>










                                   SIGNATURES



            In  accordance  with  the  requirements  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.



                             Klever Marketing, Inc.
                             -----------------------
                                  (Registrant)





DATE:       August 21, 2000
     ----------------------



By:  /s/ Paul G. Begum
Paul G. Begum
Chief Executive Officer & Director
(Principal financial and Accounting Officer)



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