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, 2007
 
 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
              36-3688583State
      or other jurisdiction of incorporation or organization
              (I.R.S.
      Employer Identification No.)
 
 
 955 N.400
W. Suite 8, North Salt Lake, UT 84054.
 
 (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)
   1
  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
December 31, 2007, there were 46,781,300 (1 vote per share) Common and 168,434
Convertible Preferred, for a preferred (converted to common) and common share
total of 48,465,640.  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 $782,861 computed at
the closing price as of December 31, 2007.  The number of preferred
and common shares held by non-affiliates of the Registrant total 39,143,037
votes.
 
 
 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
 
  2
  TABLE OF
CONTENTS
 
 Item Number and Caption
              PagePART IItem
      1.     Description of Business
              4Item
      2.     Description of Property
              6Item
      3.     Legal Proceedings
              6Item
      4.     Submission of Matters to a Vote of
      Security Holders
              7PART IIItem
      5.     Market for Common Equity and Related
      Stockholder Matters
              7Item
      6.     Management's Discussion and Analysis or
      Plan of Operations
              10Item
      7.      Financial Statements
              11Item
      8.      Changes in and Disagreements With
      Accountants on Accounting and Financial Disclosure
              12Item
      8A(T)    Controls and Procedures
              12PART IIIItem
      9.     Directors, Executive Officers, Promoters
      and Control Persons; Compliance with Section 16(a) of the Exchange
      Act
              13Item
      10.   Executive Compensation
              15Item
      11.   Security Ownership of Certain Beneficial Owners and
      Management
              17Item
      12.   Certain Relationships and Related
      Transactions
              19Item
      13.   Exhibits and Reports on Form 8-K
              21Item
      14.   Principal Accountant Fees &
    Services
              23
 
  3
  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
evaluating transitional partnerships and identifying appropriate acquisition
suitors, while also assessing available options for monetizing the existing
Patent Portfolio through enhanced licensing Agreements.
 
 
 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  was in a 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 August
2004, the Company signed a partnership contract with Fujitsu Transaction
Solutions (FTXS).  Under this contract, Fujitsu committed to
manufacture and develop the hardware for a cart-based, advertising and
promotional device offering (the U-Scan Shopping Cart), to develop relevant and
required software and applications to support said device, to act as sales lead
for the solution & hardware sell-in process and to provide for technical
installations, IT implementation, and support for all retail
locations.  The Company and Fujitsu agreed to jointly share
responsibility for marketing into Fujitsu’s current retail client base for the
initial nationwide sales effort.  The Company likewise agreed to act
as sales lead for the participant sell-in of advertising and promotion space to
both retailers and manufacturers.
 
  4
  In 2007,
the Company was informed by Fujitsu (FTXS) that they were restructuring their US
management team and had reprioritized their go-to-market model, which
unfortunately would no longer include pursuing the joint deployment of U-Scan
Shopping Carts in the US marketplace, as this was no longer part of their US
business strategy. As a result, Fujitsu amicably disengaged from collaborative
deployment discussions with the Company. However today and despite concluding US
go-to-market collaboration with Fujitsu in 2007, the Company continues to pursue
a remaining obligation by Fujitsu of $25,000 related to the sale of its
international Patents and Patent work done by the Company on Fujitsu’s behalf.
Importantly post-Fujitsu, the Company has endeavored to pursue alternative
deployment approaches; has continued efforts to protect the Patents against
potential infringement; and has continued to explore opportunities to monetize
the Patent Portfolio, which retains a meaningful duration in-market.
Proactively, and in pursuit of an exit strategy, the Company is currently
assessing potential acquisition suitors, who are best poised to take full and
timely advantage of the Company’s Patent portfolio and who would be
competitively advantaged by control over said Patents.
 
 Inactive
Public Company
 
 Since
January 1, 2007, the Company has functioned as an inactive public company
without productive assets, revenues, or earnings.  As previously
indicated and disclosed, the business plan going forward is to attempt to seek
various possible merger or acquisition possibilities for the Company as an
inactive public company, sometimes known as a “Shell”
corporation.  Operating as an inactive public company poses certain
impediments and risk factors to the Company and the shareholders, the most
significant of which are outlined below:
 
 ·
              The
      Company has patent assets of undetermined value and substantial
      debt.  It has continued operations with limited capital
      contributions, these assets must be considered during the period of
      business inactivity as “wasting assets” which will be expended to continue
      the operation of the Company on a minimal basis and as a public reporting
      company pending a subsequent acquisition, merger, or
      reorganization.  There can be no warranty or assurance how long
      the Company can continue in its present state as a inactive public company
      without further capitalization.
 
 ·
              The
      Company can make no warranty or assurance it will be successful in
      obtaining a suitable merger or acquisition candidate and is pursuing such
      objectives on a best efforts basis through its part-time management and
      board members.
 
 ·
              There
      are imposed by SEC regulation certain restrictions and limitations upon
      investors who can purchase shares in an inactive public corporation
      through brokerage firms, which regulations limit the suitability of any
      shares to be sold while inactive to a limited range of individuals who are
      able to bear high risk investments.
 
  5
  ·
              The
      fact that the Company shares are limited to a restricted group of buyers
      and the fact that the Company must report itself as a Shell company in its
      periodic reporting requirements may limit the value of the Company as a
      public entity and the tradability of its shares in the
    market.
 
 ·
              There
      are certain limitations and restraints upon the use of SEC Rule 144 for
      the resale of restricted securities in a Shell corporation which may have
      to be satisfied by various individuals holding restricted stock in the
      Company.
 
 ·
              In
      the future, the SEC or various state security regulatory agencies may
      impose further or additional regulations or limitations on the Company or
      the tradeability of its stock as a Shell
  company.
 
 
 ITEM
2   DESCRIPTION OF PROPERTY
 
 The
Company currently occupies approximately 700 square feet of office
space.   The space is provided “free of charge” to the
Corporation on a short-term basis by Jeremiah Cox, Managing Principal, All World
Consortium and currently CFO of the Company. The office space is used as the
corporate headquarters.  It is located at 955 N.400 W. Suite 8, North
Salt Lake, UT 84054.
 
 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 was in
relation to a consulting agreement between eiKart, LLC. and the Company. This
judgment was included in the financial statements as part of accrued liabilities
at December 31, 2006. In June 2007, this litigation was settled in full out-of
court by a cash payment of $10,000 and the remainder of the liability of $80,448
was included in the statement of operations as extraordinary income
 
 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.  During 2006, this judgment was paid in full.
 
 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.  During
2007,this litigation was settled out-of court, resulting in a favorable
depreciation of the claim sought, and full and complete resolution in this
matter, also resulting in the return of 992,100 shares of common stock to the
Company’s treasury.  These shares were subsequently
cancelled.
  6
  During
2006, Arthur Portugal, a former officer of the Company, filed a formal claim
asserted for approximately $125,000 for past due executive compensation
including stock options.  Mr. Portugal previously filed a formal
administrative wage claim in California which is inactive and no longer
pending.  As of December 31, 2007, the Company has accrued
compensation of $96,700 for Mr. Portugal as part of his employment agreement
through June 30, 2006.  The Company also has accrued notes payable of
$10,303 due to Mr. Portugal.
 
 ITEM
4   SUBMISSION OF MATTERS TO A
 VOTE
OF SECURITY HOLDERS
 
 There
were no matters submitted to a vote of shareholders during 2007.
 
 PART
II
 
 ITEM
5   MARKET FOR COMMON EQUITY AND
 RELATED
STOCKHOLDER MATTERS
 
 The stock
is traded on the “Pink Sheets” with the trading symbol KLMK.PK.  The
Company has 50 million authorized common shares.
 
 
 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:
 
 2007:
              
              High
              
              
              LowFirst
      Quarter
              
              $
              0.10
              
              
              $
              0.05Second
      Quarter
              
              $
              0.07
              
              
              $
              0.04Third
      Quarter
              
              $
              0.05
              
              
              $
              0.02Fourth
      Quarter
              
              $
              0.05
              
              
              $
              0.022006:
              
              High
              
              
              LowFirst
      Quarter
              
              $
              0.10
              
              
              $
              0.05Second
      Quarter
              
              $
              0.17
              
              
              $
              0.07Third
      Quarter
              
              $
              0.13
              
              
              $
              0.06Fourth
      Quarter
              
              $
              0.08
              
              
              $
              0.04
 
 The
number of shareholders of record of the Company's common stock as of
December  31, 2007 was approximately 861.
 
 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 any available funds for the development of the
Company's business.
 
  7
  Recent
Sales of Unregistered Securities.
 
 During
the year ended December 31, 2006, the Company issued 586,000 shares of common
stock for cash of $146,500.  The shares were sold for $.25 per
share.
 
 In
December 2006, the Company issued 2,788 shares of common stock for general and
administrative expenses of $697.  The shares were valued at $.25 per
share.
 
 In
October 2006, the Company issued 24,000 shares of common stock for accounts
payable of $6,000.  The shares were valued at $.25 per
share.
 
 In
December 2006, the Company issued 47,956 shares of common stock for accounts
payable of $11,989.  The shares were valued at $.25 per
share.
 
 During
the year ended December 31, 2007, the Company issued 1,090,000 shares of common
stock for cash of $272,500.  The shares were sold for $.25 per
share.
 
 In
December 2007, the Company issued 450,000 shares of common stock for general and
administrative expenses of $17,500.  The shares were valued at $.035
per share.
 
 In
October 2007, the Company issued 8,411,103 shares of common stock for accounts
payable and debt instruments totalling  $2,102,776.  The
shares were valued at $.25 per share.
 
 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.
 
  8
  Beneficial
Ownership Compliance Reporting
 
 The
company is aware of the following share and option transactions for the
reporting period ending December 31, 2007 for which Form 4 or Form 5 were not
filed.
 
 
 Options
              
              
              Options
              
              
              
              TermName
              Officer
      or board
              
              Number
      of shares
              
              
              Share
      Price
              
              
              Total
      cost
              
              
              at
      .50
              
              
              at
      1.00
              
              Date
              
              in
      yearsBill
      Bailey
              B
      &O
              
              
              40,000
              
              
              
              0.25
              
              
              
              10,000
              
              
              
              10,000
              
              
              
              10,000
              
              02/01/2007
              
              
              3Bill
      Bailey
              B
      &O
              
              
              20,000
              
              
              
              0.25
              
              
              
              5,000
              
              
              
              5,000
              
              
              
              5,000
              
              07/31/2007
              
              
              3Jeremiah
      Cox
              B
      &O
              
              
              200,000
              
              
              
              0.25
              
              
              
              50,000
              
              
              
              50,000
              
              
              
              50,000
              
              04/16/2007
              
              
              3Jeremiah
      Cox
              B
      &O
              
              
              40,000
              
              
              
              0.25
              
              
              
              10,000
              
              
              
              10,000
              
              
              
              10,000
              
              06/01/2007
              
              
              3Jeremiah
      Cox
              B
      &O
              
              
              60,000
              
              
              
              0.25
              
              
              
              15,000
              
              
              
              15,000
              
              
              
              15,000
              
              06/01/2007
              
              
              3Jeremiah
      Cox
              B
      &O
              
              
              120,000
              
              
              
              0.25
              
              
              
              30,000
              
              
              
              30,000
              
              
              
              30,000
              
              06/28/2007
              
              
              3Jeremiah
      Cox
              B
      &O
              
              
              20,000
              
              
              
              0.25
              
              
              
              5,000
              
              
              
              5,000
              
              
              
              5,000
              
              07/24/2007
              
              
              3Jeremiah
      Cox
              B
      &O
              
              
              20,000
              
              
              
              0.25
              
              
              
              5,000
              
              
              
              5,000
              
              
              
              5,000
              
              07/26/2007
              
              
              3Jeremiah
      Cox
              B
      &O
              
              
              120,000
              
              
              
              0.25
              
              
              
              30,000
              
              
              
              30,000
              
              
              
              30,000
              
              12/07/2007
              
              
              3Paul
      Begum
              B
      &O
              
              
              100,000
              
              
              
              0.25
              
              
              
              25,000
              
              
              
              25,000
              
              
              
              25,000
              
              02/01/2007
              
              
              3Paul
      Begum
              B
      &O
              
              
              100,000
              
              
              
              0.25
              
              
              
              25,000
              
              
              
              25,000
              
              
              
              25,000
              
              02/09/2007
              
              
              3Paul
      Begum
              B
      &O
              
              
              20,000
              
              
              
              0.25
              
              
              
              5,000
              
              
              
              5,000
              
              
              
              5,000
              
              07/25/2007
              
              
              3Paul
      Begum
              B
      &O
              
              
              180,000
              
              
              
              0.25
              
              
              
              45,000
              
              
              
              45,000
              
              
              
              45,000
              
              09/28/2007
              
              
              3
 
 
  9
  ITEM
6   MANAGEMENT’S DISCUSSION AND
 ANALYSIS
OR PLAN OF OPERATIONS
  
   The
Company will continue to operate on an inactive basis, while it attempts find an
appropriate and synergistic suitor to acquire it assets in a transaction
acceptable to its shareholders. Alternatively, the company may attempt to
renegotiate existing licensing agreements to ensure the ongoing monetization of
its Patent Portfolio. However, there is no Operational Plan to maintain any
day-to-day Operations, thus requiring only minimal financing to ensure the
payment of ongoing and nominal expenses.
  We advise
anyone relying upon this report that any statement of earnings by the company
for the calendar year ending 2007 have been obtained solely through the
reduction, adjustment or termination of various debt obligations and does notin any way
reflect revenues to the company. The company continues as an inactive company
without revenues and with continuing substantial expenses, yielding a net loss
from operations if considered apart from reduction of debt. The company
continues to search for merger or acquisition candidates or possible entities to
whom it may sell its patent interest, but makes no warranty or assurance that it
will be successful in any of these endeavors. Further, there is no assurance
that the company can continue to operate without cash flows or revenues and
during the past year has relied exclusively upon interim capital financing for
its continuation. Based upon these and other related factors, the auditors for
the company will necessarily have to continue to express a reservation of the
company's ability to continue as a going concern."
   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 attempt to monetize its Patent
Portfolio through expanded licensing agreements and/or to sell minority or
majority interest in the Company, its assets and/or its Patents to a qualified
suitor through a cash and/or equity transaction. This will allow the Company to
pay off its remaining liabilities, financial and contractual obligations,
cleaning up its balance sheet in its entirety, while obtaining equity interest
(with upside potential) in a going business concern for its shareholders. In the
interim, the Company plans to continue to find sufficient smaller financing to
permit the Company to continue to prevent the loss or wasting of its assets and
to continue to seek such an appropriate synergistic suitor, fully capable of
leveraging the Company’s assets, while returning value to its shareholders.
Currently, the Company has sufficient liquid assets to permit current restricted
operations to continue for one month or until such a desired suitor is found and
a transaction is secured. 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.
  
  10
  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 remains in the development stage.  For the
year ended December 31, 2007,  the Company had net income of
$1,563,900 due to an extraordinary gain of $2,271,394 as a result of
restructuring debt.  The Company had a loss before extraordinary items
of $707,494 for the year ended December 31, 2007. For the year ended December
31, 2006, the Company had a net loss of $850,440.
 
 Liquidity and Capital Resources -The Company requires working capital principally to fund its proposed
research and development and operating expenses for which the Company has relied
on short-term borrowings and the issuance of restricted common
stock.  There are no formal commitments from banks or other lending
sources for lines of credit or similar short-term borrowings, but the Company
has been able to borrow minimal additional working capital that has been
required to prevent the assets from wasting away.  From time to time
in the past, required short-term borrowings have been obtained from a principal
shareholder or other related entities.
 
 Cash
flows.  Operating activities used cash of approximately $298,000 and
$152,000 for 2007 and 2006 respectively.  The increase in the use of
cash is due primarily to a decrease in accounts payable and accrued
liabilities.
 
 Investing
activities have used cash of approximately $0 and $7,000 for 2007 and 2006,
respectively.  Investing activities primarily represent purchases of
patents relating to the electronic in-store advertising.
 
 Financing
activities provided cash of approximately $296,000 and $159,000 for 2007 and
2006, 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 preceding the signature page to this
report.  See Item 13 for a list of the financial statements and
financial statement schedules included.
  11
  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(T)   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.
 
 Our
internal controls framework is based on the criteria set forth in the Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).  Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
 
 (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 and
audit committee, 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.
 
 This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
 
 (b)
Changes in Internal Controls
 
 Based on
this evaluation as of December 31, 2007, 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.
  12
  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
      ExpiresWilliam
      C. Bailey
              71
              Chairman
              Next
      annual shareholder meetingPaul
      G. Begum
              65
              Secretary
      & Treasurer
              Next
      annual shareholder meetingJohn
      L. Hastings III
              44
              Interim
      Pres./CEO
              Status
      Change 02/08, remains Dir.Bernadette
      Suckel
              51
              Interim
      COO
              Status
      Change 02/08, remains Dir.Craig
      Poulton
              48
              Director
              Next
      annual shareholder meetingMichael
      L. Mills
              43
              Director
              Next
      annual shareholder meetingJeremiah
      Cox
              35
              CFO
              Next
      annual shareholder meeting
 
 William
C. Bailey, age 71, 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 isalsoPresident 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
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.
 
 Paul G.
Begum, Founder, age 65 returned to the Board of Directors in February,
2007.  Paul currently serves as Secretary & Treasurer, having
previously served in prior years as President & CEO. Paul has substantial
entrepreneurial experience managing and owning controlling interest in
HelpUSolve, LLC which operates a number of divisions with products ranging from
filtered breathing masks (EnviroAir), food service industry cup liners, script
writing, screen plays and theatrical production. Paul also brings substantial
and diverse fundraising abilities and negotiating skills to the
Board.
 
  13
  Michael
L. Mills, age 46, was elected as a director of the Company in December
1998.
 Mr. Mills
is President/CEO of Cackle Fresh Egg Farms, Inc. (an entity merged from Olson
Holdings, Inc.).  Cackle Fresh Egg Farms deals primarily in the
distribution of eggs, with headquarters in Washington State.  Mr.
Mills has been with the 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.
 
 John L.
Hastings III, age 44, joined the Company in November 2006 as Interim President
and CEO of Klever Marketing. John brought with him more than 20 years of
experience in the roles of Sales, Marketing & Brand Management, Consultative
Practice Leader and Executive General Management within Consumer Packaged Goods,
Global Information Services and Global Retail/CPG Research & Analytics
industries. As of February 2008, John was appointed Chief Sales & Marketing
Officer of RemoteMDX and has continued to serve voluntarily on a part-time,
interim capacity at the company.
 
 Bernadette
Suckel, age 51, joined the Company in November 2006 as Interim Chief Operating
Officer of Klever Marketing, working on a part time basis. She brought with her
more than 25 years experience in the roles of Sales, Marketing, Business
Development and Consultative Sales Management within Global Research, Global
Information Management, Large Systems and Retail Technologies
industries.  As of February 2008, Bernadette has been fulfilling this
role on a volunteer basis.
 
 Jeremiah
Cox, age 35, joined the Company in April 2007 and serves as the Chief Financial
Officer. Jeremiah has entrepreneurial experience in operating and managing a
substantial real estate portfolio and holdings; capital management and equity
fundraising skills; and mortgage banking and currency trading experience. He
continues to operate a number of real estate investment, land development,
property management companies and a cellular phone retailer.
 
 Craig
Poulton, age 48, joined the company in 2006 and is the Managing Partner of
Poulton and Associates, Insurance Company.
 
 Changes
to Executive Officers and Directors
 
 Director's
      Name
              Age
              Office
              Date
      of changeArthur
      Portugal
              65
              President
              Released
      as of 6-30-06Daniel
      Warner
              34
              EVP
      Business Development
              Resigned
      as of 3-31-06D.
      Paul Smith
              59
              CFO
              Resigned
      05-19-06C.
      Terry Warner
              69
              Director
              Released
      as of 3-24-06Dick
      King
              54
              Director
              Resigned
      as of 1-15-06
 
  14
  Audit
Committee
 
 As of
December 31, 2007, the Company had one active board committee, the Audit and
Compliance Committee.  D. Paul Smith and Michael L. Mills serve 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.
  15
  
 (a)
              (b)
              (c)
              (d)
              (e)
              (f)
              (g)
              
              (h)
              (i)Other
              
              SecuritiesYear
              
              
              Annual
              Restricted
              Underlying
              
              
              All
      OtherEnded
              
              
              Compen-
              Stock
              Options/
              
              LTIP
              Compen-Name
      and
              Dec.
              Salary
              Bonus
              Sation
              Award(s)
              SAR’s
              
              Payouts
              sationPrincipal
      Position
              31
              ($)(1)
              ($)
              ($)
              ($)
              (no.)
              
              ($)
              ($)D.
      Paul Smith
              2007
              -
              -
              -
              -
              -
              
              -
              -Chairman/CFO/
              2006
              -
              -
              -
              -
              -
              1
              -
              -Sec/Treasurer
              2005
              -
              -
              -
              -
              -
              
              -
              -Exec
      Vice-PresidentWilliam
      J. Dupre
              2007
              
              -
              -
              -
              -
              
              -
              -President/COO
              2006
              
              -
              -
              -
              -
              
              -
              -2005
              $62,000
              -
              -
              -
              
              2
              -
              -Art
      Portugal
                President
      through 6/30/06
              2007
                2006
                2005
              $96,700
                $23,822
              
              
              
              195,288
              3John
      Hastings
                Interim
      Pres/CEO
              2007
                2006
              128,750
                $60,000
              -
              -
              
              
              4
              -
              -Bernadette
      Suckel Interim COO
              2007
                2006
              45,000,
                $10,000
              
              
              
              
              5
              -
              -
 
 (1). 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. On May 19, 2006, Mr. Smith resigned as Chief Financial
Officer, Corporate Secretary and Treasurer.
 
 (2)
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
 
 (3)
Arthur Portugal joined the company as President in November
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. Mr. Portugal was released as of June 30,
2006.
 
 (4) John
Hastings joined the Company on November 16, 2006, under terms of a contract, as
Interim President and Chief Executive Officer and as a member of the
board.
 
 (5)
Bernadette Suckel joined the Company on November 16, 2006, under terms of a
contract,  as Interim Chief Operating Officer and as a member of the
board.
  16
  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, 2007, to the chief
executive officer, chief financial officer, and directors of the
Company.
 
 Name
              Shares
      Acquired on exercise
              Value
      Realized ($)
              Number
      of Securities Underlying Unexercised Options
              Value
      of Unexercised in-the-money options ($) (a)Exercisable
              Unexercisable
              Exercisable
              UnexercisableWilliam
      Bailey
              0
              $0
              30,000
              
              $0
              $0Jeremiah
      Cox
              0
              $0
              290,000
              -
              $0
              $0Paul
      G. Begum
              0
              $0
              100000
              -
              $0
              $0
 
 (a)
              Based
      on the closing price of the Company’s Common Stock on December 31, 2007 at
      $.02    per
share
 
 Executive
Compensation and Benefits
 
 The
Company provides no health insurance to any full or part-time
employees.
 
 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
48,465,640 votes as of December 31, 2007, 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.
  17
  
 Name
      and Addressof
      Beneficial OwnersDirectors
      and
              Nature
      of
              
              Shares
              
              
              #
      ofPrincipal
      Shareholders
              Ownership
              
              Owned
              
              
              PercentJohn
      Hastings
              Direct
              
              
              4,400,000955
      N 400 W, Ste 8
              Preferred
              
              
              0North
      Salt Lake, UT  84011
              Options/Warrants
              
              
              0Total
              
              
              4,400,000
              
              
              
              9.08
              %Presidio
              Direct
              
              
              18,898,1683200
      North Central Ave
              Preferred
              
              
              347,332Phoenix,
      AZ  85012
              Options/Warrants
              
              
              0Total
              
              
              19,245,500
              
              
              
              39.71
              %Seabury
      Investors III
              Direct
              
              
              1,000,000540
      Madison Avenue
              Preferred
              
              
              4,036,552New
      York, NY  10022
              Options/Warrants
              
              
              0Total
              
              
              5,036,552
              
              
              
              10.39
              %Directors
      and Executive OfficersPaul
      G. Begum
              Direct
              
              
              1,622,843P.O.
      Box 58045
              Preferred
              
              
              126,302Salt
      Lake City, UT 84158
              Options/Warrants
              
              
              408,800Total
              
              
              2,157,945
              
              
              
              4.45
              %Jeremiah
      Cox
              Direct
              
              
              1,630,0001042
      East Fort Union, Ste 500
              Preferred
              
              
              0Midvale,
      UT  84047
              Options/Warrants
              
              
              390,000Total
              
              
              2,020,000
              
              
              
              4.17
              %William
      Bailey
              Direct
              
              
              574,0923889
      E. Brockbank Dr.
              Preferred
              
              
              0Salt
      Lake City, UT  84124
              Options/Warrants
              
              
              96,000Total
              
              
              670,092
              
              
              
              1.38
              %John
      Hastings
              Direct
              
              
              4,400,000955
      N 400 W, Ste 8
              Preferred
              
              
              0North
      Salt Lake, UT  84011
              Options/Warrants
              
              
              0Total
              
              
              4,400,000
              
              
              
              9.08
              %Bernadette
      Suckel
              Direct
              
              
              1,220,00012
      Charmony
              Preferred
              
              
              0Laguna
      Niguel, CA  92677
              Options/Warrants
              
              
              0Total
              
              
              1,220,000
              
              
              
              2.52
              %
  18
  ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 Olson
Holdings, Inc. loans to the Company
 
 Olson
Holdings, Inc. made a $150,000 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
$1,836.  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.
 
 On
September 30, 2007, the principal balance due on the loans of $151,836 was
converted to 607,343 shares of common restricted stock at $.25 per share and the
accrued interest totaling $139,551 was forgiven and included in extraordinary
gain from troubled debt restructuring.  At December 31, 2007 and 2006,
the total amount due on these notes was $0 and $297,139.
 
 Olson
Foundation loans to the Company
 
 Olson
Foundation loaned the Company $60,000 on July 16, 2001, of which is secured by a
blanket lien on the assets of the Company.  An interest rate of 10%
compounded monthly applies until January 15, 2002.  Principal and all
due and unpaid interest are to be paid on January 16, 2002, or the interest rate
increases to 15% compounded daily.  Warrants were issued in
conjunction with this loan for 18,182 common shares at a strike price of $0.01
and an expiration date of July 16, 2006. This note is convertible to Class C
convertible preferred shares or to Class D convertible preferred shares at the
option of the note holder.
 
 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,
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.
  19
  
 On
September 30, 2007, the principal balance due on the loans of $168,418 was
converted to 673,673 shares of common restricted stock at $.25 per share and the
accrued interest totaling $220,375 was forgiven and included in extraordinary
gain from troubled debt restructuring.  At December 31, 2007 and 2006,
the total amount due on these notes was $0 and $270,155.
 
 Presidio
Investments, LLC loan to the Company
 
 Presidio
Investments, LLC has loaned the Company $1,000,000, which loan is secured by a
blanket lien on the assets of the Company.  The sole trustee of
Presidio Investments, LLC is William J. Howard, trustee of the Olson Legacy
Trust, whose residual beneficiary is the Olson Foundation.  The Olson
Foundation was the guarantor for funds borrowed from Northern Trust Bank which
funds were used to make the loan to the Company. This note was amended on March
22, 2001 with an additional $500,000 loaned to the Company between January 1,
2001 and March 22, 2001.  An Interest rate of 8% applies until March
31, 2001 and increases to 10% on April 1, 2001.  Principal and all due
and unpaid interest are to be paid on October 1, 2001.  This note is
convertible to Class C convertible preferred shares at the option of the note
holder.
 
 On
September 30, 2007, the principal balance due on the loans of $1,500,000 was
converted to 6,000,000 shares of common restricted stock at $.25 per share and
the accrued interest totaling $1,483,019 was forgiven and included in
extraordinary gain from troubled debt restructuring.  At December 31,
2007 and 2006, the total amount due on these notes was $0 and
$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.
 
  20
  On
September 30, 2007, the principal balance due on the loans of $150,000 was
converted to 1,000,000 shares of common restricted stock at $.25 per share and
the accrued interest totaling $348,000 was forgiven and included in
extraordinary gain from troubled debt restructuring.  At December 31,
2007 and 2006, the total amount due on these notes was $0 and
$464,601.
 
 Arbinger
Loans to the Company
 
 The
Arbinger Institute has made $41,893 in loans to the Company.  As part
of a restructure process, the accrued interest of $14,749 was converted to
58,996 shares of common restricted shares at the rate of .25 cents per
share.   The 68,467 associated options have expired.
 
 At
December 31, 2007 and 2006, the total amount due on these loans is $41,893 and
$49,905, respectively.
 
 Director
and Officer Loans to the Company
 
 During
the year ended December 31, 2006, two former officers and directors loaned the
Company $16,500.  The loans are due on demand and carry an interest
rate of 8% per annum.  On September 30, 2007, $776 of interest was
converted to 3,105 common restricted stock at $.25 per share.  At
December 31, 2007 and 2006, the total due on these loans was $17,797 and
$17,545, respectively.
 
 ITEM
13. EXHIBITS, AND REPORTS ON FORM 8-K
 
 (a)           The
following documents are filed as part of this report.
 
 1.     Financial
      Statements
              PageReport
      of Independent Registered Public Accountants
              F-1Balance
      SheetsDecember
      31, 2007 and 2006
              F-3Statements
      of OperationsFor
      the Years Ended December 31, 2007 and 2006And
      for the Cumulative Period from July 5, 1996 (inception of development
      stage)To
      December 31, 2007
              F-4Statement
      of Stockholders’ EquityFrom
      July 5, 1996 (inception of development stage) to December 31,
      2007
              F-5Statements
      of Cash FlowsFor
      the Years Ended December 31, 2007 and 2006And
      for the Cumulative Period from July 5, 1996 (inception of development
      stage)To
      December 31, 2007
              F-15Notes
      to the Financial Statements
              F-17
  21
 
  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)
 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
 
  22
  (b)           Reports Filed on Form
8-K
 
 On May 3,
2007, the Company filed a Form 8-K under Item 9, Regulation FD
Disclosure.
 
 On July
19, 2007, the Company filed a Form 8-K under Item 7, Regulation FD
Disclosure.
 
 On
November 13, 2007, the Company filed a Form 8-K under Item 8,
Other.
 
 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, 2007 and
2006:
 
 Service
              
              2007
              
              
              2006Audit
      Fees
              
              $
              17,989
              
              
              $
              25,109Audit-Related
      Fees
              
              
              -
              
              
              
              -Tax
      Fees
              
              
              250
              
              
              
              224All
      Other Fees
              
              
              -
              
              
              
              -Total
              
              $
              18,239
              
              
              $
              25,333
 
 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
 
 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 2007 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.
 
  23


KLEVER
MARKETING, INC.
 (A
Development Stage Company)
 
 -:-
 
 INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS REPORT
 
 DECEMBER
31, 2007 AND 2006
    
 
  24
  
 
 
 
 
 
 TABLE OF
CONTENTS
 
 
 PageReport
      of Independent Registered Public Accountants
              F-1Balance
      SheetsDecember
      31, 2007 and 2006
              F-2Statements
      of OperationsFor
      the Years Ended December 31, 2007 and 2006And
      for the Cumulative Period from July 5, 1996 (inception of development
      stage)To
      December 31, 2007
              F-3Statement
      of Stockholders’ EquityFrom
      July 5, 1996 (inception of development stage) to December 31,
      2007
              F-4Statements
      of Cash FlowsFor
      the Years Ended December 31, 2007 and 2006And
      for the Cumulative Period from July 5, 1996 (inception of development
      stage)To
      December 31, 2007
              F-14Notes
      to the Financial Statements
              F-16
 
  25
  
 
 
 
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
 
 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, 2007 and 2006, and the related statements of operations and cash
flows for the two years ended December 31, 2007, and the cumulative period from
July 5, 1996 (inception of development stage) to December 31, 2007, and the
statement of stockholders' equity from July 5, 1996 (inception of development
stage) to December 31, 2007. 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.  The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, 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, 2007 and 2006, 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.
 
 
 
 /s/
Robisonhill.com
 Certified Public
Accountants
 Salt Lake
City, Utah
 April 14,
2008




F -
1




KLEVER
      MARKETING, INC.(a
      Development Stage Company)BALANCE
      SHEETSDecember
      31,
              
              
              December
      31,ASSETS
              
              2007
              
              
              2006Current
      AssetsCash
              
              $
              375
              
              
              $
              3,172Prepaid
      Expense
              
              
              0
              
              
              
              3,850Other
      Receivable
              
              
              25,000
              
              
              
              25,865Total
      Current Assets
              
              
              25,375
              
              
              
              32,887Fixed
      AssetsOffice
      Equipment
              
              
              92,964
              
              
              
              92,964Less
      Accumulated Depreciation
              
              
              (92,964
              )
              
              
              (92,964
              )Net
      Fixed Assets
              
              
              -
              
              
              
              -Other
      AssetsPatents
              
              
              775,045
              
              
              
              775,045Less
      Accumulated Amortization
              
              
              (775,045
              )
              
              
              (775,045
              )Net
      Other Assets
              
              
              -
              
              
              
              -Total
      Assets
              
              $
              25,375
              
              
              $
              32,887LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      Payable, Trade
              
              $
              302,037
              
              
              $
              379,491Accrued
      Liabilities
              
              
              748,615
              
              
              
              2,608,007Line
      of Credit
              
              
              23,023
              
              
              
              -Related
      Party Payables
              
              
              58,393
              
              
              
              2,128,648Notes
      Payable
              
              
              45,000
              
              
              
              45,000Total
      Current Liabilities
              
              
              1,177,068
              
              
              
              5,161,146Stockholders'
      EquityPreferred
      stock (par value $.01), 2,000,000 shares authorized168,434
      issued and outstanding December 31, 2007 and 2006
              
              
              1,684
              
              
              
              1,684Common
      Stock (Par Value $.01), 50,000,000 sharesauthorized
      46,718,303 shares issued and outstandingat
      December 31 2007 and 39,183,864 and December 31, 2006
              
              
              467,183
              
              
              
              391,839Common
      Stock to be issued, 469,752 shares atDecember
      31, 2007 and December 31, 2006
              
              
              4,698
              
              
              
              4,698Treasury
      Stock, 52,700,000 shares at December 31, 2007and
      100,000 shares at December 31, 2006
              
              
              (52,700
              )
              
              
              (1,000
              )Paid
      in Capital in Excess of Par Value
              
              
              16,032,208
              
              
              
              13,643,186Retained
      Deficit
              
              
              (3,333,785
              )
              
              
              (3,333,785
              )Deficit
      Accumulated During Development Stage
              
              
              (14,270,981
              )
              
              
              (15,834,881
              )Total
      Stockholders' Equity
              
              
              (1,151,693
              )
              
              
              (5,128,259
              )Total
      Liabilities and Stockholders' Equity
              
              $
              25,375
              
              
              $
              32,887The
      accompanying notes are an integral part of these financial
      statements


F -
2




KLEVER
      MARKETING, INC.(A
      Development Stage Company)STATEMENTS
      OF OPERATIONSCumulativeFrom5-Jul-96For
      the Years Ended
              
              
              Inception
      ofDecember
      31,
              
              
              Development2007
              
              
              2006
              
              
              StageRevenue
              
              $
              -
              
              
              $
              -
              
              
              $
              256,000ExpensesSales
      and Marketing
              
              
              -
              
              
              
              8,098
              
              
              
              163,306General
      and Administrative
              
              
              549,759
              
              
              
              400,080
              
              
              
              10,351,286Research
      and Development
              
              
              -
              
              
              
              -
              
              
              
              4,529,656Total
      Expenses
              
              
              549,759
              
              
              
              408,178
              
              
              
              15,044,248Other
      Income (Expense)Other
      Income
              
              
              25,126
              
              
              
              -
              
              
              
              453,843Interest
      Income
              
              
              -
              
              
              
              -
              
              
              
              18,902Interest
      Expense
              
              
              (309,898
              )
              
              
              (442,162
              )
              
              
              (2,571,248
              )Forgiveness
      of debt
              
              
              127,137
              
              
              
              -
              
              
              
              127,137Gain
      (Loss) on sale of assets
              
              
              -
              
              
              
              -
              
              
              
              26,947Capital
      gain on sale of investments
              
              
              -
              
              
              
              -
              
              
              
              191,492Total
      Other Income (Expense)
              
              
              (157,635
              )
              
              
              (442,162
              )
              
              
              (1,752,927
              )Loss
      Before Taxes
              
              
              (707,394
              )
              
              
              (850,340
              )
              
              
              (16,541,175
              )Income
      Taxes
              
              
              100
              
              
              
              100
              
              
              
              1,200Net
      Loss before extraordinary items
              
              
              (707,494
              )
              
              
              (850,440
              )
              
              
              (16,542,375
              )Extraordinary
      item - troubled debt restructuring
              
              
              2,271,394
              
              
              
              -
              
              
              
              2,271,394Net
      Income (loss)
              
              $
              1,563,900
              
              
              $
              (850,440
              )
              
              $
              (14,270,981
              )Loss
      per Common ShareIncome
      (loss) before extraordinary item
              
              $
              (0.02
              )
              
              $
              (0.02
              )Extraordinary
      item
              
              
              0.06Loss
      per share
              
              $
              0.04
              
              
              $
              (0.02
              )Weighted
      Average Shares Outstanding
              
              
              41,193,978
              
              
              
              38,718,472The
      accompanying notes are an integral part of these financial
      statements


F -
3




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








DeficitAccumulatedFromCommon
            
            
            Paid
      in
            
            
            
            
            
            5-Jul-96Stock
            
            
            Capital
      in
            
            
            
            
            
            Inception
      ofPreferred
      Stock
            
            
            Common
      Stock
            
            
            Treasury
            
            
            to
      be
            
            
            Excess
      of
            
            
            Retained
            
            
            DevelopmentShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Stock
            
            
            Issued
            
            
            Par
      Value
            
            
            Deficit
            
            
            StageBalance
      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
            
            
            
            100,017,463Shares
      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
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -831,814Balance
      December 31, 1996
            
            
            -
            
            
            
            -
            
            
            
            8,884,613
            
            
            
            88,846
            
            
            
            -
            
            
            
            7,716
            
            
            
            4,658,555
            
            
            
            -3,333,785
            
            
            
            -831,814





F -
4




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







DeficitAccumulatedFromCommon
            
            
            Paid
      in
            
            
            
            
            
            5-Jul-96Stock
            
            
            Capital
      in
            
            
            
            
            
            Inception
      ofPreferred
      Stock
            
            
            
            
            
            Common
      Stock
            
            
            
            
            
            Treasury
            
            
            to
      be
            
            
            Excess
      of
            
            
            Retained
            
            
            DevelopmentShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Stock
            
            
            Issued
            
            
            Par
      Value
            
            
            Deficit
            
            
            StageShares
      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 - 1.82per
      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 forpatents
            
            
            -
            
            
            
            -
            
            
            
            260,813
            
            
            
            2,608
            
            
            
            -
            
            
            
            -2,250
            
            
            
            1,892
            
            
            
            -
            
            
            
            -Shares
      issued for cash and receivables at $1.75 - 2.00per
      share
            
            
            -
            
            
            
            -
            
            
            
            58,286
            
            
            
            583
            
            
            
            -
            
            
            
            -100
            
            
            
            85,267
            
            
            
            -
            
            
            
            -Shares
      issued to VideOcartcreditors
            
            
            -
            
            
            
            -
            
            
            
            97,610
            
            
            
            976
            
            
            
            -
            
            
            
            -976
            
            
            
            -
            
            
            
            -
            
            
            
            -Shares
      issued for research &development at par
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            464
            
            
            
            -
            
            
            
            -
            
            
            
            -Shares
      issued for employee compensation at $2.50per
    share
            
            
            -
            
            
            
            -
            
            
            
            6,000
            
            
            
            60
            
            
            
            -
            
            
            
            -
            
            
            
            14,940
            
            
            
            -
            
            
            
            -Net
      Loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -755,594Balance
      December 31, 1997
            
            
            -
            
            
            
            -
            
            
            
            9,795,314
            
            
            
            97,953
            
            
            
            -
            
            
            
            4,903
            
            
            
            5,292,308
            
            
            
            -3,333,785
            
            
            
            -1,587,408






F -
5




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






DeficitAccumulatedFromCommon
              
              
              Paid
      in
              
              
              
              
              
              5-Jul-96Stock
              
              
              Capital
      in
              
              
              
              
              
              Inception
      ofPreferred
      Stock
              
              
              
              
              
              Common
      Stock
              
              
              
              
              
              Treasury
              
              
              to
      be
              
              
              Excess
      of
              
              
              Retained
              
              
              DevelopmentShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Stock
              
              
              Issued
              
              
              Par
      Value
              
              
              Deficit
              
              
              StageShares
      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 employeecompensation
      at $2.19 -3.06 per share
              
              
              -
              
              
              
              -
              
              
              
              4,363
              
              
              
              44
              
              
              
              -
              
              
              
              -
              
              
              
              9,954
              
              
              
              -
              
              
              
              -Shares
      issued for accountsreceivable
      at $1.50 - 2.12per 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 forpatent at $2.94 per share
              
              
              -
              
              
              
              -
              
              
              
              150,000
              
              
              
              1,500
              
              
              
              -
              
              
              
              250
              
              
              
              512,313
              
              
              
              -
              
              
              
              -Shares
      returned at $1.58per share
              
              
              -
              
              
              
              -
              
              
              
              -42,493
              
              
              
              -425
              
              
              
              -
              
              
              
              -
              
              
              
              -66,667
              
              
              
              -
              
              
              
              -Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -1,496,926Balance
      December 31, 1998
              
              
              -
              
              
              
              -
              
              
              
              10,394,819
              
              
              
              103,948
              
              
              
              -
              
              
              
              4,589
              
              
              
              6,625,919
              
              
              
              -3,333,785
              
              
              
              -3,084,334






F -
6




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






DeficitAccumulatedFromCommon
              
              
              Paid
      in
              
              
              
              
              
              5-Jul-96Stock
              
              
              Capital
      in
              
              
              
              
              
              Inception
      ofPreferred
      Stock
              
              
              
              
              
              Common
      Stock
              
              
              
              
              
              Treasury
              
              
              to
      be
              
              
              Excess
      of
              
              
              Retained
              
              
              DevelopmentShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Stock
              
              
              Issued
              
              
              Par
      Value
              
              
              Deficit
              
              
              StageShares
      issued for cash at$1.96 - 3.00 per share
              
              
              -
              
              
              $
              -
              
              
              
              701,525
              
              
              $
              7,015
              
              
              $
              -
              
              
              $
              -
              
              
              $
              1,649,949
              
              
              $
              -
              
              
              
              -Shares
      issued for employeecompensationat
      $1.95 -2.34 per share
              
              
              -
              
              
              
              -
              
              
              
              2,995
              
              
              
              30
              
              
              
              -
              
              
              
              -
              
              
              
              6,187
              
              
              
              -
              
              
              
              -Shares
      issued for exercise of options at $0.52 - .86per
      share
              
              
              -
              
              
              
              -
              
              
              
              238,271
              
              
              
              2,383
              
              
              
              -
              
              
              
              -
              
              
              
              200,342
              
              
              
              -
              
              
              
              -Shares
      returned at $0.67-1.58per share
              
              
              -
              
              
              
              -
              
              
              
              -62,489
              
              
              
              -625
              
              
              
              -
              
              
              
              -
              
              
              
              -107,047
              
              
              
              -
              
              
              
              -Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -1,734,623Balance
      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 forcash at $17 - 26 per share
              
              
              84,576
              
              
              
              846
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,827,529
              
              
              
              -
              
              
              
              -Shares
      issued for employee compensation at $3.99per
    share
              
              
              -
              
              
              
              -
              
              
              
              74,608
              
              
              
              746
              
              
              
              -
              
              
              
              -
              
              
              
              296,939
              
              
              
              -
              
              
              
              -






F -
7




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






DeficitAccumulatedFromCommon
              
              
              Paid
      in
              
              
              
              
              
              5-Jul-96Stock
              
              
              Capital
      in
              
              
              
              
              
              Inception
      ofPreferred
      Stock
              
              
              
              
              
              Common
      Stock
              
              
              
              
              
              Treasury
              
              
              to
      be
              
              
              Excess
      of
              
              
              Retained
              
              
              DevelopmentShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Stock
              
              
              Issued
              
              
              Par
      Value
              
              
              Deficit
              
              
              StageShares
      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 - 3.00per
      share
              
              
              -
              
              
              
              -
              
              
              
              9,488
              
              
              
              95
              
              
              
              -
              
              
              
              -
              
              
              
              26,649
              
              
              
              -
              
              
              
              -Paid-in
      capital from treasurystock 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 paidfor 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
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -4,066,283Balance
      December 31, 2000
              
              
              94,191
              
              
              
              942
              
              
              
              12,152,768
              
              
              
              121,528
              
              
              
              -
              
              
              
              4,356
              
              
              
              11,546,459
              
              
              
              -3,333,785
              
              
              
              -8,885,240






F -
8




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






DeficitAccumulatedFromCommon
              
              
              Paid
      in
              
              
              
              
              
              5-Jul-96Stock
              
              
              Capital
      in
              
              
              
              
              
              Inception
      ofPreferred
      Stock
              
              
              
              
              
              Common
      Stock
              
              
              
              
              
              Treasury
              
              
              to
      be
              
              
              Excess
      of
              
              
              Retained
              
              
              DevelopmentShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Stock
              
              
              Issued
              
              
              Par
      Value
              
              
              Deficit
              
              
              StageShares
      issued for cash at$0.82 per share
              
              
              -
              
              
              $
              -
              
              
              
              4,685
              
              
              $
              47
              
              
              $
              -
              
              
              $
              -
              
              
              $
              3,795
              
              
              $
              -
              
              
              $
              -Preferred
      shares issued forcash at $6.60 per share
              
              
              6,061
              
              
              
              60
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              39,940
              
              
              
              -
              
              
              
              -Preferred
      shares issued for payment of note payableat $6.60 per
      share
              
              
              68,182
              
              
              
              682
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              449,318
              
              
              
              -
              
              
              
              -Shares
      canceled fornonpayment
              
              
              -
              
              
              
              -
              
              
              
              -4,694
              
              
              
              -47
              
              
              
              -
              
              
              
              -
              
              
              
              -9,903
              
              
              
              -
              
              
              
              -Shares
      issued for research & development xpenses 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
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -2,342,405Balance
      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






F -
9




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






DeficitAccumulatedFromCommon
              
              
              Paid
      in
              
              
              
              
              
              5-Jul-96Stock
              
              
              Capital
      in
              
              
              
              
              
              Inception
      ofPreferred
      Stock
              
              
              
              
              
              Common
      Stock
              
              
              
              
              
              Treasury
              
              
              to
      be
              
              
              Excess
      of
              
              
              Retained
              
              
              DevelopmentShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Stock
              
              
              Issued
              
              
              Par
      Value
              
              
              Deficit
              
              
              StageShares
      canceled for servicesnot rendered
              
              
              -
              
              
              $
              -
              
              
              
              -304,229
              
              
              $
              (3,042
              )
              
              $
              -
              
              
              $
              -
              
              
              $
              (197,749
              )
              
              $
              -
              
              
              $
              -Cash
      received for shares thathave not yet been
    issued
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,333
              
              
              
              21,667
              
              
              
              -
              
              
              
              -Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -1,025,837Balance
      December 31, 2002
              
              
              168,434
              
              
              
              1,684
              
              
              
              12,370,578
              
              
              
              123,706
              
              
              
              -1,000
              
              
              
              7,689
              
              
              
              12,100,583
              
              
              
              -3,333,785
              
              
              
              -12,253,482Shares
      issued for cash at$0.05 - 0.75 per share
              
              
              -
              
              
              
              -
              
              
              
              2,580,000
              
              
              
              25,800
              
              
              
              -
              
              
              
              -3,333
              
              
              
              151,033
              
              
              
              -
              
              
              
              -Shares
      issued for S&CMedical at $0.05 per share
              
              
              -
              
              
              
              -
              
              
              
              3,000,000
              
              
              
              30,000
              
              
              
              -
              
              
              
              -
              
              
              
              120,000
              
              
              
              -
              
              
              
              -Shares
      issued for notespayable at $.04-.05/share
              
              
              -
              
              
              
              -
              
              
              
              11,259,786
              
              
              
              112,598
              
              
              
              -
              
              
              
              -
              
              
              
              446,642
              
              
              
              -
              
              
              
              -Shares
      issued for accountspayable at $.01-.10/share
              
              
              -
              
              
              
              -
              
              
              
              4,200,000
              
              
              
              42,000
              
              
              
              -
              
              
              
              -
              
              
              
              96,000
              
              
              
              -
              
              
              
              -Shares
      authorized for expense at $.03 per share -
      notissued
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              9,545
              
              
              
              19,090
              
              
              
              -
              
              
              
              -Shares
      authorized forpayment of accounts payable at $.21 per share
      -not issued
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              56
              
              
              
              1,115
              
              
              
              -
              
              
              
              -






F -
10




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






DeficitAccumulatedFromCommon
              
              
              Paid
      in
              
              
              
              
              
              5-Jul-96Stock
              
              
              Capital
      in
              
              
              
              
              
              Inception
      ofPreferred
      Stock
              
              
              
              
              
              Common
      Stock
              
              
              
              
              
              Treasury
              
              
              to
      be
              
              
              Excess
      of
              
              
              Retained
              
              
              DevelopmentShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Stock
              
              
              Issued
              
              
              Par
      Value
              
              
              Deficit
              
              
              StageNet
      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
              
              
              
              -13,615,235Shares
      issued for cash at$.036 - .15 per share
              
              
              -
              
              
              
              -
              
              
              
              770,000
              
              
              
              7,700
              
              
              
              -
              
              
              
              -
              
              
              
              57,420
              
              
              
              -
              
              
              
              -Shares
      issued for accountspayable at $.05-.23/share
              
              
              -
              
              
              
              -
              
              
              
              391,939
              
              
              
              3,919
              
              
              
              -
              
              
              
              -
              
              
              
              27,306
              
              
              
              -
              
              
              
              -Shares
      issued for expensesat $.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
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -632,293Balance
      December 31, 2004
              
              
              168,434
              
              
              
              1,684
              
              
              
              36,640,620
              
              
              
              366,406
              
              
              
              -1,000
              
              
              
              4,698
              
              
              
              13,164,028
              
              
              
              -3,333,785
              
              
              
              -14,247,528Shares
      issued for cash at$.028 - .25 per share
              
              
              -
              
              
              
              -
              
              
              
              1,790,000
              
              
              
              17,900
              
              
              
              -
              
              
              
              -
              
              
              
              254,726
              
              
              
              -
              
              
              
              -Shares
      issued for expensesat $.25 per share
              
              
              -
              
              
              
              -
              
              
              
              92,500
              
              
              
              925
              
              
              
              -
              
              
              
              -
              
              
              
              22,200
              
              
              
              -
              
              
              
              -Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -736,913Balance
      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






F -
11




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




DeficitAccumulatedFromCommon
              
              
              Paid
      in
              
              
              
              
              
              5-Jul-96Stock
              
              
              Capital
      in
              
              
              
              
              
              Inception
      ofPreferred
      Stock
              
              
              
              
              
              Common
      Stock
              
              
              
              
              
              Treasury
              
              
              to
      be
              
              
              Excess
      of
              
              
              Retained
              
              
              DevelopmentShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Stock
              
              
              Issued
              
              
              Par
      Value
              
              
              Deficit
              
              
              StageShares
      issued for general andadministrative
      expensesat $.25 per share
              
              
              -
              
              
              
              -
              
              
              
              2,788
              
              
              
              29
              
              
              
              -
              
              
              
              -
              
              
              
              669
              
              
              
              -
              
              
              
              -Shares
      issued for cashat $.25 per share
              
              
              -
              
              
              
              -
              
              
              
              586,000
              
              
              
              5,860
              
              
              
              -
              
              
              
              -
              
              
              
              140,640
              
              
              
              -
              
              
              
              -Shares
      issued for accountspayable at $.25 per share
              
              
              -
              
              
              
              -
              
              
              
              71,956
              
              
              
              719
              
              
              
              -
              
              
              
              -
              
              
              
              17,270
              
              
              
              -
              
              
              
              -Compensation
      expense fromissuance of stock options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              43,653
              
              
              
              -
              
              
              
              -Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -850,440Balance
      December 31, 2006
              
              
              168,434
              
              
              $
              1,684
              
              
              
              39,183,864
              
              
              $
              391,839
              
              
              $
              (1,000
              )
              
              $
              4,698
              
              
              $
              13,643,186
              
              
              $
              (3,333,785
              )
              
              $
              (15,834,881
              )






F -
12
 
  KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 STATEMENT
OF STOCKHOLDERS’ EQUITY
 (continued)


DeficitAccumulatedFromCommon
                  
                  
                  Paid
      in
                  
                  
                  
                  
                  
                  5-Jul-96Stock
                  
                  
                  Capital
      in
                  
                  
                  
                  
                  
                  Inception
      ofPreferred
      Stock
                  
                  
                  
                  
                  
                  Common
      Stock
                  
                  
                  Treasury
                  
                  
                  to
      be
                  
                  
                  Excess
      of
                  
                  
                  Retained
                  
                  
                  DevelopmentShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Stock
                  
                  
                  Issued
                  
                  
                  Par
      Value
                  
                  
                  Deficit
                  
                  
                  StageShares
      issued for general and administrative expenses' at $.03 - $.05 per
      share
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  450,000
                  
                  
                  
                  4,500
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  13000
                  
                  
                  
                  -
                  
                  
                  
                  -Shares
      issued for cash at $.25 per share
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,090,000
                  
                  
                  
                  10,900
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  261,600
                  
                  
                  
                  -
                  
                  
                  
                  -Shares
      issued for accounts payable at $.25 per share
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  67,988
                  
                  
                  
                  680
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16,315
                  
                  
                  
                  -
                  
                  
                  
                  -Shares
      issued for notes payable at $.25 per share
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,281,016
                  
                  
                  
                  82,810
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,987,444
                  
                  
                  
                  -
                  
                  
                  
                  -Shares
      issued for accrued interest' at $.25 per share
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  62,101
                  
                  
                  
                  621
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  14,905Shares
      returned to the treasury
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (51,700
                  )
                  
                  
                  -
                  
                  
                  
                  51,700
                  
                  
                  
                  -
                  
                  
                  
                  -Shares
      returned to treasury and cancelled
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (2,416,666
                  )
                  
                  
                  (24,167
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  24,167
                  
                  
                  
                  -
                  
                  
                  
                  -Compensation
      expense from issuance of stock options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  19,891
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,563,900Balance
      December 31, 2007
                  
                  
                  168,434
                  
                  
                  $
                  1,684
                  
                  
                  
                  7,534,439
                  
                  
                  $
                  75,344
                  
                  
                  $
                  (51,700
                  )
                  
                  $
                  4,698
                  
                  
                  $
                  2,389,022
                  
                  
                  $
                  (3,333,785
                  )
                  
                  $
                  1,563,900




F -
13




KLEVER
      MARKETING, INC.(A
      Development Stage Company)STATEMENT
      OF CASH FLOWSCumulativeFrom5-Jul-96For
      the Years Ended
              
              
              Inception
      ofDecember
      31,
              
              
              Development2007
              
              
              2006
              
              
              StageCASH
      FLOWS FROM OPERATINGACTIVITIES:Net
      Loss
              
              $
              1,563,900
              
              
              $
              (850,440
              )
              
              $
              (14,270,981
              )Adjustments
      used to reconcile net loss to netcash
      provided by (used in) operating activities:Stock
      issued for general and administrative
              
              
              17,500
              
              
              
              697
              
              
              
              1,004,982Stock
      issued for research and development
              
              
              -
              
              
              
              -
              
              
              
              62,850Stock
      returned for services not rendered
              
              
              -
              
              
              
              -
              
              
              
              (200,790
              )(Gain)
      loss on sale/disposal of assets
              
              
              -
              
              
              
              -
              
              
              
              486,536Compensation
      expense from stock options
              
              
              19,891
              
              
              
              43,653
              
              
              
              89,791Stock
      issued for interest
              
              
              15,525
              
              
              
              -
              
              
              
              135,226Stock
      issued for accounts payable
              
              
              16,995
              
              
              
              17,989
              
              
              
              243,457Deferred
      income
              
              
              -
              
              
              
              -
              
              
              
              (214,000
              )Depreciation
      and amortization
              
              
              -
              
              
              
              7,215
              
              
              
              1,912,883Write-off
      bad debts
              
              
              -
              
              
              
              15,000
              
              
              
              15,000(Increase)
      decrease in accounts receivable
              
              
              -
              
              
              
              -
              
              
              
              (413
              )(Increase)
      decrease in shareholder receivable
              
              
              -
              
              
              
              -
              
              
              
              37,694(Increase)
      decrease in other assets & prepaids
              
              
              4,715
              
              
              
              (3,100
              )
              
              
              89,238Increase
      (decrease) in accounts payable
              
              
              (77,454
              )
              
              
              71,899
              
              
              
              216,332Increase
      (decrease) in accrued liabilities
              
              
              (1,859,392
              )
              
              
              544,826
              
              
              
              697,284Net
      Cash Used in Operating Activities
              
              
              (298,320
              )
              
              
              (152,261
              )
              
              
              (9,694,911
              )CASH
      FLOWS FROM INVESTINGACTIVITIES:Acquisition/Sale
      of equipment, net
              
              
              -
              
              
              
              -
              
              
              
              (587,801
              )Acquisition/Sale
      of patents
              
              
              -
              
              
              
              (7,215
              )
              
              
              25,089Acquisition/Sale
      of stock, net
              
              
              -
              
              
              
              -
              
              
              
              12,375Net
      Cash Used by Investing Activities
              
              
              -
              
              
              
              (7,215
              )
              
              
              (550,337
              )CASH
      FLOWS FROM FINANCINGACTIVITIES:Proceeds
      capital stock issued
              
              
              272,500
              
              
              
              146,500
              
              
              
              7,038,173Proceeds
      from loans
              
              
              -
              
              
              
              16,500
              
              
              
              3,473,252Proceeds
      from line of credit
              
              
              23,023
              
              
              
              
              
              
              
              23,023Loan
      receivables
              
              
              -
              
              
              
              
              
              
              
              (15,000
              )Principal
      payments on lease obligations
              
              
              -
              
              
              
              
              
              
              
              (18,769
              )Cash
      payments on notes payable
              
              
              -
              
              
              
              (4,244
              )
              
              
              (279,730
              )Net
      Cash Provided by Financing Activities
              
              
              295,523
              
              
              
              158,756
              
              
              
              10,220,949Net
      Increase (Decrease) in Cash and CashEquivalents
              
              
              (2,797
              )
              
              
              (720
              )
              
              
              (24,299
              )Cash
      and Cash Equivalents at Beginning of theYear
              
              
              3,172
              
              
              
              3,892
              
              
              
              24,674Cash
      and Cash Equivalents at End of the Year
              
              $
              375
              
              
              $
              3,172
              
              
              $
              375






F -
14




KLEVER
      MARKETING, INC.(A
      Development Stage Company)STATEMENT
      OF CASH FLOWS(continued)CumulativeFrom5-Jul-96For
      the Years Ended
              
              
              Inception
      ofDecember
      31,
              
              
              Development2007
              
              
              2006
              
              
              StageSUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Interest
              
              $
              -
              
              
              $
              -
              
              
              $
              -Income
      Taxes
              
              $
              100
              
              
              $
              100
              
              
              $
              1,200SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:On
      September 30, 2007, the Company issued 8,281,016 shares of common stock in
      exchange fornotes
      payable totaling $2,070,254. As part of the agreements, accrued
      interest related to these notestotaling
      $2,190,946 was forgiven, and recorded as extraordinary gain at September
      30, 2007.The
      accompanying notes are an integral part of these financial
      statements




F -
15
 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 net income of $1,563,900 for the year ended
December 31, 2007, due to an extraordinary gain of $2,271,394 as a result of
restructuring debt.  The Company had a loss before extraordinary items
of $707,494 for the year ended December 31, 2007.  For the year ended
December 31, 2006, the Company had losses of $850,440. The Company has losses of
$17,604,766 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 -
16
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 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, market and distribute electronic
shopping cart based and in-store advertising, promotion and media content and
retail shopper services, which have potential for profit.  The Company
is currently in the process of commercializing and capitalizing on the patented
technologies, Klever Kart system and retail shopper-centric processes it has
acquired and/or developed.
 
 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 2006 financial statements to conform with the 2007
presentation.
  F -
17
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 2 - SUMMARY OF
ACCOUNTING POLICIES (continued)
 
 Fair Value of Financial
Instruments
 
 The carrying value of the Company's
financial instruments, including accounts payable and accrued liabilities at
December 31, 2007 and 2006 approximates their fair values due to the short-term
nature of these financial instruments.
 
 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 twelve months ended December 21, 2007 and 2006 are not presented as it would
be anti-dilutive.  At December 21, 2007 and 2006, the total number of
potentially dilutive common stock equivalents was 8,109,807 and 6,425,467,
respectively.
 
 Concentration of Credit
Risk
 
 The Company has no significant
off-balance-sheet concentrations of credit risk such as foreign exchange
contracts, options contracts or other foreign hedging arrangements.
 
 Fixed
Assets
 
 Fixed assets are stated at cost.
Depreciation and amortization are computed using the straight-line method over
the estimated economic useful lives of the related assets as
follows:
 
 Computer
      equipment
              3
      yearsOffice
      furniture and fixtures
              5-10
      years
 
 Upon sale or other disposition of
property and equipment, the cost and related accumulated depreciation or
amortization are removed from the accounts and any gain or loss is included in
the determination of income or loss.
 
 Expenditures for maintenance and
repairs are charged to expense as incurred.  Major overhauls and
betterments are capitalized and depreciated over their estimated economic useful
lives.
 
 Depreciation expense was $0 and $0 for
the years ended December 31, 2007 and 2006, respectively.
 
 
  F -
18
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 2 - SUMMARY OF
ACCOUNTING POLICIES (continued)
 
 Intangibles
 
 Intangibles associated with certain
technology agreements are amortized over 10 - 14 years.
 
 Amortization expense was $0 and $0 for
the years ended December 31, 2007 and 2006, respectively.
 
 Stock
Options
 
 Effective January 1, 2006, the company
adopted the provisions of SFAS No. 123(R). SFAS No. 123(R) requires
employee equity awards to be accounted for under the fair value method.
Accordingly, share-based compensation is measured at grant date, based on the
fair value of the award. Prior to January 1, 2006, the company accounted for
awards granted to employees under its equity incentive plans under the intrinsic
value method prescribed by Accounting Principles Board (APB) Opinion
No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related
interpretations, and provided the required pro forma disclosures prescribed by
SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS
No. 123), as amended.
 
 Under the modified prospective method
of adoption for SFAS No. 123(R), the compensation cost recognized by the
company beginning on January 1, 2006 includes (a) compensation cost for all
equity incentive awards granted prior to, but not yet vested as of
January 1, 2006, based on the grant-date fair value estimated in accordance
with the original provisions of SFAS No. 123, and (b) compensation
cost for all equity incentive awards granted subsequent to January 1, 2006,
based on the grant-date fair value estimated in accordance with the provisions
of SFAS No. 123(R). The company uses the straight-line attribution method
to recognize share-based compensation costs over the service period of the
award. Upon exercise, cancellation, forfeiture, or expiration of stock options,
or upon vesting or forfeiture of restricted stock units, deferred tax assets for
options and restricted stock units with multiple vesting dates are eliminated
for each vesting period on a first-in, first-out basis as if each vesting period
was a separate award. To calculate the excess tax benefits available for use in
offsetting future tax shortfalls as of the date of implementation, the company
followed the alternative transition method discussed in FASB Staff Position
No. 123(R)-3.
 
 
 
 
 
 
  F -
19
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 2 - SUMMARY OF
ACCOUNTING POLICIES (continued)
 
 During
the year ended December 31, 2007 the Company granted 520,000 stock options to
officers and directors, and granted 25,000 stock options to non-employees.
Accordingly, stock-based compensation expense of $19,891 was recognized in the
Statement of Operations at December 31, 2007.  The Black-Scholes
option pricing model was used to calculate to estimate fair value of the options
granted.  The following assumptions were made: risk-free rate was
between 3.15% and 4.98%; expected life of the options was 3 years; expected
volatility of stock for the three year options was between 213.7% and 237%,
respectively.
 
 During
the year ended December 31, 2006 the Company granted 312,800 stock options to
officers and directors, and granted 290,000 stock options to non-employees.
Accordingly, stock-based compensation expense of $43,653 was recognized in the
Statement of Operations at December 31, 2006.  The Black-Scholes
option pricing model was used to calculate to estimate fair value of the options
granted.  The following assumptions were made: risk-free rate was
4.50%; expected life  of option was 2 or 3 years; expected volatility
of stock for the two and three year options was 215.6% and 238.3%,
respectively.
 
 During
the year ended December 31, 2005, the Company valued stock options using the
intrinsic value method prescribed by APB 25.  Since the exercise price
of stock options previously issued was greater than or equal to the market price
on grant date, no compensation expense was recognized.
 
 NOTE 3 - INCOME
TAXES
 
 As of December 31, 2007, the Company
had a net operating loss carry forward for income tax reporting purposes of
approximately $17,484,445 that may be offset against future taxable income
through 2026.  Current tax laws limit the amount of loss available to
be offset against future taxable income when a substantial change in ownership
occurs.  Therefore, the amount available to offset future taxable
income may be limited.  No tax benefit has been reported in the
financial statements, because the Company believes there is a 50% or greater
chance the carry-forwards will expire unused.  Accordingly, the
potential tax benefits of the loss carry-forwards are offset by a valuation
allowance of the same amount.
 
 2007
              
              
              2006Net
      Operating Losses
              
              $
              2,622,667
              
              
              $
              2,860,236Valuation
      Allowance
              
              
              (2,622,667
              )
              
              
              (2,860,236
              )$
              -
              
              
              $
              -
 
 
  F -
20
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 3 - INCOME TAXES
(continued)
 
 The provision for income taxes differs
from the amount computed using the federal US statutory income tax rate as
follows:
 
 2007
              
              
              2006Provision
      (Benefit) at US Statutory Rate
              
              $
              (237,569
              )
              
              $
              119,907Increase
      (Decrease) in Valuation Allowance
              
              
              237,569
              
              
              
              (119,907
              )$
              -
              
              
              $
              -
 
 The Company evaluates its valuation
allowance requirements based on projected future operations.  When
circumstances change and causes a change in management's judgment about the
recoverability of deferred tax assets, the impact of the change on the valuation
is reflected in current income.
 
 NOTE 4 - LEASE
COMMITMENT
 
 During the month of June, 2007, the
Company terminated a month to month lease of approximately 700 square feet of
office space from Poulton & Associates.  The rent payments, under
the terms of the terminated lease were approximately $800 per
month.
 
 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, 2007
and 2006, the Company expended $0 and $0 respectively for research and
development of the technology involved with its patents.
 
 
 
 
 
 
 
 
  F -
21
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 6- RELATED PARTY
TRANSACTIONS
 
 Olson
Holdings, Inc. loans to the Company
 
 Olson Holdings, Inc. made a $150,000
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 $1,836.  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.
 
 On September 30, 2007, the principal
balance due on the loans of $151,836 was converted to 607,343 shares of common
restricted stock at $.25 per share and the accrued interest totaling $139,551
was forgiven and included in extraordinary gain from troubled debt
restructuring.  At December 31, 2007 and 2006, the total amount due on
these notes was $0 and $297,139.
 
 Olson
Foundation loans to the Company
 
 Olson Foundation loaned the Company
$60,000 on July 16, 2001, of which is secured by a blanket lien on the assets of
the Company.  An interest rate of 10% compounded monthly applies until
January 15, 2002.  Principal and all due and unpaid interest are to be
paid on January 16, 2002, or the interest rate increases to 15% compounded
daily.  Warrants were issued in conjunction with this loan for 18,182
common shares at a strike price of $0.01 and an expiration date of July 16,
2006. This note is convertible to Class C convertible preferred shares or to
Class D convertible preferred shares at the option of the note
holder.
 
 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.
 
 
 
 
  F -
22
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 6- RELATED PARTY
TRANSACTIONS (continued)
 
 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, 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.
 
 On September 30, 2007, the principal
balance due on the loans of $168,418 was converted to 673,673 shares of common
restricted stock at $.25 per share and the accrued interest totaling $220,375
was forgiven and included in extraordinary gain from troubled debt
restructuring.  At December 31, 2007 and 2006, the total amount due on
these notes was $0 and $270,155.
 
 Presidio
Investments, LLC loan to the Company
 
 Presidio Investments, LLC has loaned
the Company $1,000,000, which loan is secured by a blanket lien on the assets of
the Company.  The sole trustee of Presidio Investments, LLC is William
J. Howard, trustee of the Olson Legacy Trust, whose residual beneficiary is the
Olson Foundation.  The Olson Foundation was the guarantor for funds
borrowed from Northern Trust Bank which funds were used to make the loan to the
Company. This note was amended on March 22, 2001 with an additional $500,000
loaned to the Company between January 1, 2001 and March 22, 2001.  An
Interest rate of 8% applies until March 31, 2001 and increases to 10% on April
1, 2001.  Principal and all due and unpaid interest are to be paid on
October 1, 2001.  This note is convertible to Class C convertible
preferred shares at the option of the note holder.
 
 On September 30, 2007, the principal
balance due on the loans of $1,500,000 was converted to 6,000,000 shares of
common restricted stock at $.25 per share and the accrued interest totaling
$1,483,019 was forgiven and included in extraordinary gain from troubled debt
restructuring.  At December 31, 2007 and 2006, the total amount due on
these notes was $0 and $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
 
  F -
23
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 6- RELATED PARTY
TRANSACTIONS (continued)
 
 The Seabury Group loaned the Company
$190,000 on August 22, 2001, of which is secured by a blanket lien on the assets
of the Company.  An interest rate of 10% compounded monthly applies
until February 22, 2002.  Principal and all due and unpaid interest
are to be paid on February 22, 2002, or the interest rate increases to 15%
compounded daily.  Warrants were issued in conjunction with this loan
for 57,576 common shares at a strike price of $0.01 and an expiration date of
August 22, 2006.  This note is convertible to Class C convertible
preferred shares or to Class D convertible preferred shares at the option of the
note holder.
 
 On September 30, 2007, the principal
balance due on the loans of $150,000 was converted to 1,000,000 shares of common
restricted stock at $.25 per share and the accrued interest totaling $348,000
was forgiven and included in extraordinary gain from troubled debt
restructuring.  At December 31, 2007 and 2006, the total amount due on
these notes was $0 and $464,601.
 
 Arbinger
Loans to the Company
 
 The Arbinger Institute has made $41,893
in loans to the Company.  As part of a restructure process, the
accrued interest of $14,749 was converted to 58,996 shares of common restricted
shares at the rate of .25 cents per share.   The 68,467
associated options have expired.
 
 At December 31, 2007 and 2006, the
total amount due on these loans is $41,893 and $49,905,
respectively.
 
 Director
and Officer Loans to the Company
 
 During the year ended December 31,
2006, two former officers and directors loaned the Company
$16,500.  The loans are due on demand and carry an interest rate of 8%
per annum.  On September 30, 2007, $776 of interest was converted to
3,105 common restricted stock at $.25 per share.  At December 31, 2007
and 2006, the total due on these loans was $17,797 and $17,545,
respectively.
 
 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, 2007 and 2006, the
total amount due on these loans is $69,124 and $65,148,
respectively.
 
 
 
 
  F -
24
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 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, 2007, 794,800
options were outstanding. The Company granted 545,000 options during 2007, of
which 545,000 expire in three years.  Compensation expense charged to
operations for the twelve months ended December 21, 2007 is
$19,891.
 
 The following table sets forth the
options and warrants outstanding as of December 21, 2007.
 WeightedOption
      /
              
              
              Average
              
              
              WeightedWarrants
              
              
              Exercise
              
              
              AverageShares
              
              
              Price
              
              
              Fair
      ValueOptions
      & warrants outstanding,December
      31, 2006
              
              
              5,070,388
              
              
              $
              0.18Granted,
      Exercise price more than fair value
              
              
              545,000
              
              
              $
              0.75
              
              
              
              -Granted,
      Exercise price less than fair value
              
              
              -
              
              
              
              -
              
              
              
              -Expired
              
              
              4,820,588
              
              
              $
              0.13Exercised
              
              
              -
              
              
              
              -Options
      & warrants outstanding,December
      21, 2007
              
              
              794,800
              
              
              $
              0.75
 
 Weighted-
              
              Weighted-Weighted-
              
              Shares/
              
              Average
              
              AverageShares
      /
              
              Average
              
              Warrants
              
              Exercise
      Price
              
              ContractualExercise
              
              Warrants
              
              Exercise
              
              Currently
              
              Currently
              
              RemainingPrice
              
              Outstanding
              
              Price
              
              Exercisable
              
              Exercisable
              
              Life0.50
              
              397,400
              
              0.50
              
              397,400
              
              0.50
              
              24
      months1.00
              
              397,400
              
              1.00
              
              397,400
              
              1.00
              
              24
      months
 
  F -
25
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  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.
 
  F -
26
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 9 - PREFERRED STOCK
(continued)
 
 On September 24, 2000 the Board of
Directors authorized and established “Class B Voting Preferred
Stock”  (“Class B Shares”) as a class of its $.01 par value, 2,000,000
shares authorized, preferred stock.  Class B Shares consisted of
250,000, 125,000 shares thereof were designated as Series 1
shares.  On May 20, 2002, the Board of Directors amended the number of
authorized shares of Class B voting preferred stock to 42,000
shares.
 
 Class B
Shares are convertible into Common Stock at an initial conversion price of $1.70
(subject to adjustment).
 
 Holders of Class B Shares shall be
entitled to receive when and as declared by the Board of Directors of the
Corporation out of any funds at the time legally available therefore dividends
at the rate of the Original Issue Price divided by 11.8181818 per share per
annum, payable semi-annually on the first day of January and July of each
year.  Such dividends shall accrue on each such share from the date of
its original issuance and shall accrue from day to day, whether or not earned or
declared.  Such dividends shall be cumulative and may be paid in cash
or in kind through the distribution of .0425 Class B Shares, of the same Series
for which the dividend is accrued, for each outstanding Class B Share, on each
dividend payment date; provided, that if such dividends in respect of any period
shall not have been paid or declared and set apart for payment for all
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.
 
  F -
27
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 9 - PREFERRED STOCK
(continued)
 
 Class B Shares shall carry a
liquidation preference of $17 per share plus any accrued but unpaid dividends on
such shares, if any, and adjusted for combinations, splits, dividends or
distributions of shares of stock with respect to such shares.
 
 The Class B Shares shall be redeemable
by the Company, in whole or in part, at the option of the Board of Directors of
the Company, at any time and from time to time on or after March 24, 2004 for
Series 1, and such date as determined by the Board of Directors for each
additional Series.  The redemption price shall be $17.00 per share
together with accrued but unpaid dividends on such shares, if any.
 
 On January 2, 2001 the Board of
Directors authorized and established “Class C Voting Preferred Stock” (“Class C
Shares”) as a class of its $.01 par value, 2,000,000 shares authorized,
preferred stock.  Class C Shares consisted of 500,000, 125,000 shares
thereof were designated as Series 1 shares and 125,000 shares thereof were
designated as Series 2 shares.  On May 20, 2002, the Board of
Directors amended the number of authorized shares of Class C voting preferred
stock to 150,000 shares.
 
 Class C Shares are convertible into
Common Stock at an initial conversion price of $.66 (subject to
adjustment).
 
 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.
  F -
28
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 9 - PREFERRED STOCK
(continued)
 
 Class C Shareholders shall be entitled
to one vote for each share of Common Stock into which such Class C Shares could
then be converted and shall have voting rights and powers equal to the voting
rights and powers of a holder of shares of Common Stock. The holders of Class C
Shares shall vote with the holders of shares of Common Stock and not as a
separate class.
 
 Class C Shares shall carry a
liquidation preference of $6.60 per share plus any accrued but unpaid dividends
on such shares, if any, and adjusted for combinations, splits, dividends or
distributions of shares of stock with respect to such shares.
 
 The Class C Shares shall be redeemable
by the Company, in whole or in part, at the option of the Board of Directors of
the Company, at any time and from time to time on or after July 2, 2004 for
Series 1, and such date as determined by the Board of Directors for each
additional Series.  The redemption price shall be $6.60 per share
together with accrued but unpaid dividends on such shares, if any.
 
 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
  F -
29
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 9 - PREFERRED STOCK
(continued)
 
 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.
 
 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.  The judgment was in
relation to a consulting agreement between eiKart, LLC. and the Company. This
judgment was included in the financial statements as part of accrued liabilities
at December 31, 2006. In June 2007, this litigation was settled in full out-of
court by a cash payment of $10,000 and the remainder of the liability of $80,448
was included in the statement of operations as extraordinary income
 
 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.  During 2006,
this judgment was paid in full.
 
 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
 
  F -
30
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 NOTE 10 – LITIGATION
(continued)
 
 complaint
and filed a counter claim against S&C Medical.  During 2007,this
litigation was settled out-of court, resulting in a favorable depreciation of
the claim sought, and full and complete resolution in this matter, also
resulting in the return of 992,100 shares of common stock to the Company’s
treasury.  These shares were subsequently cancelled.
 
 During
2006, Arthur Portugal, a former officer of the Company, filed a formal claim
asserted for approximately $125,000 for past due executive compensation
including stock options.  Mr. Portugal previously filed a formal
administrative wage claim in California which is inactive and no longer
pending.  As of December 31, 2007, the Company has accrued
compensation of $96,700 for Mr. Portugal as part of his employment agreement
through June 30, 2006.  The Company also has accrued notes payable of
$10,303 due to Mr. Portugal.
  In
addition to the claim for Arthur Portugal, there are other claims for unpaid
salary and benefits due to former officers and employees that exist on the
balance sheet as current liabilities, Management has either completed or is in
the process of negotiating with a number of these claimants in order to conclude
agreements that would allow these liabilities to be settled in the form of
payment by cash, stock and stock options.  As of December 31, 2007,
the total amount of claims for accrued but unpaid salary and benefits is
$460,195
 
 NOTE 11 - STOCK
TRANSACTIONS
 
 During the year ended December 31,
2006, the Company issued 586,000 shares of common stock for cash of
$146,500.  The shares were sold for $.25 per share.
 
 In December 2006, the Company issued
2,788 shares of common stock for general and administrative expenses of
$697.  The shares were valued at $.25 per share.
 
 In October 2006, the Company issued
24,000 shares of common stock for accounts payable of $6,000.  The
shares were valued at $.25 per share.
 
 In December 2006, the Company issued
47,956 shares of common stock for accounts payable of $11,989.  The
shares were valued at $.25 per share.
 
 On
February 20, 2007, the company issued 200,000 shares of commons stock for cash
of $50,000.  The shares were valued at $.25 per
share.
  F -
31
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 
 NOTE 11 - STOCK TRANSACTIONS
(continued)
 
 On March 6, 2007 the company issued
40,000 shares of commons stock for cash of $10,000. The shares were valued at
$.25 per share.
 
 On April
9, 2007, the company received 992,100 shares of common stock as the result of
litigation settlement.  The shares were returned to treasury and
cancelled.
 
 On April 16, 2007, the Company issued
200,000 shares of common stock for cash of $50,000.  The shares were
valued at $.25 per share.
 
 On June 1, 2007, the Company issued
60,000 shares of common stock for cash of $15,000.  The shares were
valued at $.25 per share.
 
 On June 1, 2007, the Company issued
40,000 shares of common stock for cash of $10,000.  The shares were
valued at $.25 per share.
 
 On June
28, 2007, the Company issued 120,000 shares of common stock for cash of
$30,000.  The shares were valued at $.25 per share.
 
 On June 30, 2007, the Company issued
34,764 shares of common stock for payment of service in the amount of
$8,691.  The shares were valued at $.25 per share.
 
 On July
24, 2007, the Company issued 20,000 shares of common stock for cash of $5,000.
The shares were valued at $.25 per share.
 
 On July 25, 2007, the Company issued
20,000 shares of common stock for cash of $5,000.  The shares were
valued at $.25 per share.
 
 On July 26, 2007, the Company issued
20,000 shares of common stock for cash of $5,000. The shares were valued at $.25
per share.
 
 On July 31, 2007, the Company issued
20,000 shares of common stock for cash of $5,000.  The shares were
valued at $.25 per share.
 
 On August 3, 2007, the Company issued
50,000 shares of common stock for cash of $12,500. The shares were valued at
$.25 per share.
 
 On August 31, 2007, the Company
authorized issuance of 150,000 shares of common stock for services rendered in
the amount of $5,000.  The shares were valued at $.03 per
share.  At December 31, 2007, these had not been
issued.
  F -
32
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
  
 
 NOTE 11 - STOCK TRANSACTIONS
(continued)
 
 On September 28, 2007, the Company
issued 180,000 shares of common stock for cash of $45,000. The shares were
valued at $.25 per share.
 
 On
September 30, 2007, the company issued 150,000 shares of commons stock for
services rendered in the amount of $7,500.  The shares were valued at
$.05 per share.  At December 31, 2007, these shares had not been
issued.
 
 On September 30, 2007, the Company
issued the following shares of common stock: 8,281,016 shares for notes payable
of $2,070,254; 62,101 shares for accrued interest of $15,525; 33,224 shares for
accounts payable of $8,306.  The shares were valued at $.25 per
share.
 
 On
October 31, 2007, the Company authorized issuance of 150,000 shares of common
stock for services rendered in the amount of $5,000.  The shares were
valued at $.03 per share.  At December 31, 2007, these had not been
issued.
 
 On December 7, 2007, 6,594,566 shares
of common stock were returned to the Company and held as treasury stock, On the
same date, 1,424,566 of these shares were cancelled.
 
 On December 7, 2007, the Company issued
120,000 shares of common stock for cash of $30,000.  The shares were
valued at $.25 per share.
 
 NOTE 12 - LICENSE
AGREEMENT
 
 On May 11, 2004, Media Cart, Inc.
acquired from the Company a limited exclusive license to use the Company’s
United States patent portfolio for electronic display devices specific to Media
Cart’s product design.  Under the license agreement, Media Cart paid
the Company $200,000 and will pay ongoing royalties for all Media Cart products
that utilize the Company’s licensed technology.
 
 On February 15, 2005 ModStream Digital
Messaging Products, LLC acquired from the Company limited non-exclusive
licensees to use the Company's United States patent portfolio for electronic
display devices specific to ModStreams product design. This product design is
limited to a 80 character dot-matrix LCD-type screen with limited alerts, and
does not include full motion video or product scanning.  Under the
license agreement, ModStream paid the Company $150,000 and will pay ongoing
royalties for all ModStream products that utilize the specific components of the
Company's licensed technology.
 
 F -
33
 KLEVER
MARKETING, INC.
 (a
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 
 
 NOTE 13 - 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.  At December 31, 2007 and 2006, the Company was still owed
$25,000 relating to this sale.  The Company has been in communication
with the buyer of the patents regarding the receivable of $25,000, and believes
it will be collected in 2008.
 
 NOTE 14 - UNCERTAIN TAX
POSITIONS
 
 Effective January 1, 2007, the company
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109”
(“FIN 48”). FIN 48 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to
be recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The adoption of the provisions of FIN 48 did
not have a material impact on the company’s condensed consolidated financial
position and results of operations. At January 1, 2007, the company had no
liability for unrecognized tax benefits and no accrual for the payment of
related interest.
 
 Interest costs related to unrecognized
tax benefits are classified as “Interest expense, net” in the accompanying
consolidated statements of operations. Penalties, if any, would be recognized as
a component of “Selling, general and administrative expenses”. The Company
recognized $0 of interest expense related to unrecognized tax benefits for the
year ended December 31, 2007.  In many cases the company’s uncertain
tax positions are related to tax years that remain subject to examination by
relevant tax authorities. With few exceptions, the company is generally no
longer subject to U.S. federal, state, local or non-U.S. income tax examinations
by tax authorities for years before 2003. The following describes the open tax
years, by major tax jurisdiction, as of December 31, 2007:
 
 United
      States (a)
              
              2004
      – Present(a)
      Includes federal as well as state or similar local jurisdictions, as
      applicable.
 
 
 
 
  F -
34
  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 14, 2008
              By  /S/     William
      C. BaileyWilliam
      C. BaileyChairman(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 14th day of
April  2008.
 
 Signatures
              Title/S/     William C.
      BaileyWilliam
      C. Bailey
              Chairman
      (Principal Executive Officer)/S/  John L. Hastings
      IIIJohn
      L. Hastings III
              Director
      & Interim President & CEO, as of 11/10/06/S/  Craig
PoultonCraig
      Poulton
              Director/S/  Michael L.
    MillsMichael
      L. Mills
              Director/S/  Bernadette
      SuckelBernadette
      Suckel
              Director
      & Interim COO, as of 11/10/06/S/     Jeremiah
      CoxJeremiah
      Cox
              Director
      & CFO/S/     Paul G.
      BegumPaul G. Begum
              Director
      & Secretary Treasurer