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, 1999

                                       OR

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

FOR THE TRANSITION PERIOD FROM                      To
                              ------------------------------------------------


COMMISSION FILE NUMBER     0-18834
                       ---------------

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

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


            350 WEST 300 SOUTH, SUITE 201, SALT LAKE CITY, UTAH 84101
               (Address of principal executive offices) (zip code)

ISSUER'S TELEPHONE NUMBER                               (801) 322-1221
                                                       ---------------


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

                          COMMON STOCK PAR VALUE $0.01
                          ----------------------------
                                (Title of class)





<PAGE>



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

                                                                 TOTAL PAGES: 15
                                                                            ----
                                                          EXHIBIT INDEX PAGE: 14
                                                                            ----

         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. [X]

     STATE ISSUER'S REVENUES FOR ITS MOST RECENT FISCAL YEAR.       $ -0-
                                                                    -----

         As of March 16, 2000, there were 11,985,566  shares of the Registrant's
common stock,  par value $0.01,  issued and  outstanding.  The aggregate  market
value of the Registrant's  voting stock held by non-affiliates of the Registrant
was  approximately  $29,711,528  computed at the  closing  price as of March 16,
2000.

                             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
                                                                -------     ----















                                        2


<PAGE>





                                                 TABLE OF CONTENTS


ITEM NUMBER AND CAPTION                                                    PAGE

PART I

Item 1.   Description of Business                                             4

Item 2.   Description of Property                                             4

Item 3.   Legal Proceedings                                                   5

Item 4.   Submission of Matters to a Vote of Security Holders                 5


PART II

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

Item 6.   Management's Discussion and Analysis or Plan of Operations          7

Item 7.   Financial Statements                                                9

Item 8.   Changes in and Disagreements With Accountants on Accounting and
          Financial Disclosure                                                9

PART III

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

Item 10.  Executive Compensation                                             10

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

Item 12.  Certain Relationships and Related Transactions                     13

Item 13.  Exhibits and Reports on Form 8-K                                   14





                                        3


<PAGE>



                                     PART I

                         ITEM 1 DESCRIPTION OF BUSINESS

GENERAL

         The  Company was formed for the purpose of creating a vehicle to obtain
capital,  to file  and  acquire  patents,  to seek  out,  investigate,  develop,
manufacture and market  electronic  in-store  advertising,  directory and coupon
services  which have  potential  for  profit.  The Company is  currently  IN THE
PROCESS OF THE COMMERCIALIZATION OF THE PATENTED PROCESS, KLEVER-KART(R), it has
acquired.

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.  The Company was in the
development stage during the period from July 5, 1996 to June 30, 1998.

                         ITEM 2 DESCRIPTION OF PROPERTY

         On June 1, 1994 the Company entered into a six year commercial lease of
office  space  with  Tree  of  Stars,  Inc./P.D.O.  (major  shareholders  of the
Company).  The office space is used as the Corporate headquarters and is located
at 350 West 300 South,  Suite 201, Salt Lake City,  Utah. The lease provides for
rental  payments  of  $22,428  for  two  years,  increasing  to  $25,726  for an
additional  two years with a  provision  for the  review of the  rental  payment
requirements every two years thereafter.

         In January  1998 the  parties  agreed to modify the June 1, 1994 lease.
The Company's lease commitments for office space with Tree of Stars, Inc./P.D.O.
consist of two leases with payments of $26,743 and $10,496 per year.  Both lease
commitments  expired  December  31, 1998 and have  continued on a month to month
basis since that time.

                                        4


<PAGE>






                            ITEM 3 LEGAL PROCEEDINGS

         NONE

                        ITEM 4 SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during 1999



                                     PART II

                       ITEM 5 MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS

         The stock is traded OTCBB with the trading symbol KLMK.

         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:

                 1998:                              High                 Low
First Quarter                             $         3.63      $         2.38
Second Quarter                            $         3.50      $         2.38
Third Quarter                             $         3.38      $         1.75
Fourth Quarter                            $         2.88      $         1.56

                 1999:

First Quarter                             $         2.88      $         1.50
Second Quarter                            $         2.38      $         1.50
Third Quarter                             $         4.44      $         2.00
Fourth Quarter                            $         4.13      $         1.50


                                       5
<PAGE>

         The number of shareholders  of record of the Company's  common stock as
of March 10, 2000 was 820.

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

RECENT SALES OF UNREGISTERED SECURITIES.

         The Company sold 880,302  shares of common stock during 1999. The stock
was not sold through an  underwriter  and was not sold  through a public  offer.
These sales are exempt  under  Regulation  D Rule 506 of the  Securities  Act of
1933.  (See Item &. Financial  Statements,  Statement of  Stockholders'  Equity,
pages F - 7 through F - 9)

         On February 7, 2000 the Board of Directors  authorized and  established
"Class A Voting Preferred Stock Series 1. " ("Class A Shares") as a class of its
$.01 par value,  2,000,000 shares  authorized,  preferred stock.  Class A Shares
consist of 1,000,000  shares,  125,000 shares thereof are designated as Series 1
shares.

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

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

                                        6


<PAGE>



         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.

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

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

Phase I:          System Development and Product Movement Test.

         The product  movement test was completed during third quarter 1997. The
test took  place in a Smith's  Food and Drug  store  located  in Salt Lake City,
Utah. Information Resources, Inc., an independent company audited the results of
the test and reported an average 46.84% incremental product movement.

Phase II:         Cost Reduction & Enhancement.

         In January  1998,  the Company  commenced  development  of the Phase II
functional   specification   that  will  encompass  cost  reduction  and  system
enhancements.  Improvements that are IN THE PROCESS OF DESIGN AND DEVELOPMENT OF
THE KLEVER-KART(R) system include: a significantly smaller and more sleek design
in the  appearance  and size of the display  unit,  smaller  trigger  units with
improved sensitivity, more durable plastics, and improved sound fidelity.

Phase III:        Installation of 115 Stores.

         DURING  2000 THE  COMPANY  PLANS TO PLACE  KLEVER-KART(R)  units in 115
stores in targeted  retail  chains.  Target stores  include  major  national and
regional chains.

Phase IV:         Electronic Coupon Integration.

         Final definition of the Electronic  Coupon system is scheduled to begin
the fourth quarter of 2000. This process  consists of working with retailers and
Point-of-Sale   transaction   processing  system   manufactures  to  ensure  the
appropriate  degree of interface  and  integration  necessary  to IMPLEMENT  THE
ELECTRONIC COUPON SYSTEM.  BECAUSE THE  KLEVER-KART(R)  system was designed with
the

                                        7


<PAGE>



eventual  implementation  of  Electronic  Coupons in mind,  the Company does not
expect  significant  hardware  modifications  will be necessary.  The Electronic
Coupon system design and initial  manufacture is scheduled for completion during
the second  quarter of 2000,  with a minimum three month in-store test of system
operation to take place during 2001.

Phase V:          Future Development.

         THE   KLEVER-KARDTM   frequent   shopper   program  is  scheduled   for
introduction  in early 2001.  THIS DYNAMIC  MICRO-MARKETING  CAPABILITY  WILL BE
ADDED TO THE KLEVER-KART(R)  system,  allowing targeted promotions to individual
customers according to demographics and personal buying history.

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

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 was in the development  stage until June
30, 1998.

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

         Cash flows.  Operating  activities used cash of $1,176,891 and $574,000
for 1999 and 1998 respectively. The increase in the use of cash is due primarily
to an increase in general and administrative costs.

         Investing  activities  have used cash of $470,530  and $34,000 for 1999
and 1998,  respectively.  Investing  activities primarily represent purchases of
phase 2 equipment,  patents  relating to the  electronic  in-store  advertising,
directory and coupon devices, and purchases of office equipment.

         Financing  activities provided cash of $1,805,282 and $643,000 for 1999
and 1998,  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:

                                        8


<PAGE>



         The  foregoing   statements   are  based  upon   management's   current
assumptions.

                           ITEM 7 FINANCIAL STATEMENTS

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

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

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

                                    PART III

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

EXECUTIVE OFFICERS AND DIRECTORS

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

DIRECTOR'S NAME      AGE      OFFICE            TERM EXPIRES

Paul G. Begum         61      CEO               Next annual shareholder meeting
William Bailey        65      Director          Next annual shareholder meeting
Gerard C. Coelsch     56      President/COO     Until July, 1999
Michael L Mills       37      Director          Next annual shareholder meeting
Abel T. Porter        41      Director          Next annual shareholder meeting

                                        9


<PAGE>



         Paul G. Begum, age 61, has been the  President/CEO of Klever Marketing,
Inc. for the past five years through the merger date,  and is now the CEO of the
Company  after the merger.  Mr.  Begum was also the  President/CEO  of Hi, Tiger
International  from February 14, 1995 through October 1996, and the President of
Tree of Stars,  Inc.,  a private  company,  PSF,  Inc., a private  company,  and
Maktoob Inc., a private company, for all of the past five years to the present

         William Bailey,  age 65, has been a Director of Klever Marketing,  Inc.
for the past five years  through the merger  date,  and is now a Director of the
Company after the merger.  Mr. Bailey has also been the  President/CEO  of Mount
Olympus Water, a private company, during all of the past five years to present.

         Michael L. Mills, age 37, has been a Director of Klever Marketing, Inc.
since  November  1998. For the past five years prior to November 1998, Mr. Mills
was President/COO of Olson Farms, a private company. On November 1998, Mr. Mills
became Chairman/CEO of Olson Farms.

         Abel T. Porter,  age 41, has served on the board since  September 1999.
Mr. Porter has held many executive  positions including Senior Vice President of
Operations,  Vice  President of Sales and  Merchandising,  District  Manager and
Store Director in both the Intermountain and Southwest regions.

                         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.
<TABLE>
<CAPTION>

                                                                              LONG TERM COMPENSATION

                                      ANNUAL COMPENSATION                  AWARDS                   PAYOUTS

          (A)            (B)        (C)        (D)       (E)         (F)           (G)         (H)        (I)
         ----            ---        ---        ---       ---         ---           ---         ---        ---
                                                        OTHER                   SECURITIES

                        YEAR                           ANNUAL     RESTRICTED    UNDERLYING             ALL OTHER
                        ----                           ------     ----------    ----------             ---------
                        ENDED                          COMPEN-      STOCK        OPTIONS/     LTIP      COMPEN-
                        -----                          -------      -----        --------     ----      -------
       NAME AND         DEC.      SALARY      BONUS    SATION      AWARD(S)       SAR'S      PAYOUTS     SATION
       --------         ----      ------      -----    ------      --------       -----      -------     ------
  PRINCIPAL POSITION     31       ($)(1)       ($)       ($)         ($)          (NO.)        ($)        ($)
  ------------------     --       ------       ---       ---         ---          -----        ---        ---

-------------------------------------------------------------------------------------------------------------------
<S>                     <C>    <C>             <C>        <C>          <C>         <C>         <C>         <C>
PAUL G. BEGUM           1999   $      77,700        -          -             -             -        -             -
CEO                     1998   $      77,700        -          -             -             -        -             -
                        1997   $      72,000        -          -             -             -        -             -
                                                    -          -             -             -        -             -


</TABLE>

                                       10


<PAGE>
<TABLE>
<CAPTION>

<S>                     <C>    <C>             <C>        <C>          <C>         <C>         <C>         <C>
GERARD C. COELSCH       1999   $     126,661        -          -             -             -        -             -

Former President/COO    1998   $     109,000        -          -             -             -        -             -
</TABLE>

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

         THE FOLLOWING  TABLE SETS FORTH  INFORMATION  RESPECTING ALL INDIVIDUAL
GRANTS OF OPTIONS  AND SARS MADE  DURING THE LAST  COMPLETED  FISCAL YEAR BY THE
CHIEF EXECUTIVE OFFICER AND CHIEF OPERATIONS OFFICER OF THE COMPANY.

<TABLE>
<CAPTION>

    (a)                   (b)                   (c)                   (d)                     (e)
                        NUMBER OF            % OF TOTAL
                       SECURITIES            OPTIONS/SARS
                       UNDERLYING             GRANTED TO
                      OPTIONS/SAR'S        EMPLOYEES DURING      EXERCISE OF BASE
    NAME              GRANTED (NO.)          FISCAL YEAR         PRICE ($/SHARE)         EXPIRATION DATE
---------------------------------------------------------------------------------------------------------


<S>                        <C>                   <C>                   <C>              <C>
Paul G. Begum              237,000               18%                   $2.75            August 2, 2004
CEO
</TABLE>

Aggregate  Option/SAR  Exercises in the Last Fiscal Year and year End Option/SAR
Values

         The following table sets forth  information  respecting the exercise of
options and SARs during the last  completed  fiscal year by the chief  executive
officer and the chief operations  officer of the Company and the fiscal year end
valued of unexercised options and SARs.
<TABLE>
<CAPTION>

      (a)                      (b)                  (c)                  (d)                 (e)
                                                                      Number of
                                                                     Securities     Value of Unexercised
                                                                     Underlying         In-the-Money
                                                                     Unexercised     Options/SARs at FY
                                                                    Options/SARs at        End ($)
                                                                      FY End (no.)
                        Shares Acquired                               Exercisable/       Exercisable/
     Name               On Exercise (no.)     Value Realized ($)      Unexercised        Unexercised


<S>                       <C>                  <C>                   <C>              <C>
Paul G. Begum                    --                  --                850,564          $ 2,976,974(1)
CEO

Gerard C. Coelsch                --                  --                200,000          $   700,000(1)
Former President/COO

</TABLE>

                                       11


<PAGE>



(1)      Based on the closing price of the Company's  stock on March 16, 2000 at
         $3.50 per share.

Executive Compensation and Benefits

         The  Company  provides  to all of its full  time  employees,  including
executive  officers and  directors,  health  insurance and  miscellaneous  other
benefits.

         On July 7, 1992, the board of directors  approved a resolution that the
Company  will  obtain an  automobile  for Paul G.  Begum  once the  Company  has
received $2,000,000 in financing from investors introduced to the company by Mr.
Begum, the Company will incur monthly  lease/payment costs of approximately $500
for an  automobile  for Mr.  Begum.  On May  20,  1998  the  Company  leased  an
automobile  for Mr.  Begum at $621 per month.  In  addition  PSF,  Inc.  (As Mr.
Begum's assign) will receive cash of $50,000 in consideration for the assignment
of the electronic  coupon patent.  In 1999 the Company paid $35,500  towards the
electronic  coupon  patent.  In  1998  the  Company  paid  $10,000  towards  the
electronic coupon patent.

                 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  more than 5% of the
11,985,566 shares of issued and outstanding  Common Stock,  including options to
acquire  stock of the  Company as of March 10,  2000 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.

                                                      # OF
NAME AND ADDRESS                    NATURE OF         SHARES
OF BENEFICIAL OWNERS                OWNERSHIP         OWNED             PERCENT
DIRECTORS

PRINCIPAL SHAREHOLDERS

Tree of Stars, Inc.                 Direct            2,542,967          21.21%

PSF                                 Direct              639,585           5.34%

Peter D. Olson, Trust               Direct(1)         2,006,627          16.74%

                                       12


<PAGE>



C. Terry Warner                     Direct            1,062,111           8.86%

DIRECTORS AND EXECUTIVE OFFICERS

Paul G. Begum                       Direct(2)         3,314,386          27.65%
                                    OPTIONS(2)          270,979           2.26%
                                                     ----------         ------
                                        TOTAL         3,585,365          29.91%
                                                     ==========         ======

William Bailey                      Direct               43,193            .36%
                                    OPTIONS              36,786            .31%
                                                     ----------         ------
                                        TOTAL            79,979           2.46%
                                                     ==========         ======

Michael L. Mills                    Direct              113,979            .95%
                                    OPTIONS              12,000            .10%
                                                     ----------         ------
                                        TOTAL           125,979           1.05%
                                                     ----------         ======

Abel T. Porter                      Direct               25,000            .21%


ALL EXECUTIVE OFFICERS AND
DIRECTORS AS A GROUP (3

PERSONS)                            Direct            3,496,558          29.17%
                                    OPTIONS             319,765           2.67%
                                                     ----------         ------
                                        TOTAL         3,816,323          31.84%
                                                     ==========         ======

(1)      The Olson Trust ownership  includes 759,765 shares held by Olson Farms,
         28,979  shares held by the Mills Family Trust,  452,132  shares held in
         care of Linda  Olson,  20,000  shares held by the Olson  Family  Trust,
         150,000 shares held by the Olson Foundation, 311,834 shares held by the
         Peter D. Olson  Trust,  168,000  shares  held by the Estate of Peter D.
         Olson, 115,917 shares held by Peter D. Olson IRA.

(2)      Mr. Begum's ownership  includes 2,542,967 shares held by Tree of Stars,
         Inc.,  a  corporation  of which Mr. Begum is a director,  officer,  and
         principal  shareholder,  639,0585  shares held by PSF,  Inc., a private
         company, of which Mr. Begum is President and principal shareholder, and
         100,000  shares  held by the  Reed H.  Bradford  Center  for  Christian
         Living, a 509(a)(1) publicly supported organization.



             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         During 1998 various officers and directors loaned the Company $347,100.
The notes are

                                       13


<PAGE>



payable within one year plus interest at 10% and 12% per annum.  During 1999 and
1998  principle  payments of $155,850  and $12,500 were paid toward these loans.
The balance due as of December 31, 1999 is $191,250.

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

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

1.     FINANCIAL STATEMENTS                                                PAGE
                                                                           ----

Report of Robison, Hill & Co., Independent Certified Public Accountants.....F-1
Balance Sheets
  December 31, 1999, and 1998...............................................F-2
Statements of Loss
  For the Years Ended December 31, 1999, and 1998...........................F-3
Statement of Stockholders' Equity
  For the Years Ended December 31, 1999, and 1998...........................F-4
Statements of Cash Flows
  For the Years Ended December 31, 1999, and 1998..........................F-10
Notes to Financial Statements
  December 31, 1999 and 1998...............................................F-12

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

3.02     BYLAWS(1)

10.01    EMPLOYMENT AGREEMENT FOR GERARD C. COELSCH(1)

23.01    CONSENT OF ACCOUNTANTS(1)

         (1) Incorporated by Reference

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

                                       14


<PAGE>





                                   SIGNATURES

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

                                                KLEVER MARKETING, INC.

DATED: MARCH 21, 2000                           BY  /S/     PAUL G. BEGUM
                                                -------------------------
                                                Paul G. Begum
                                                C.E.O., Director

         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 21st day of March 2000.

Signatures                                      Title

/S/     PAUL G. BEGUM
Paul G. Begum                                   C.E.O., Director
                                                (Principal Executive, Financial
                                                and Accounting Officer)

/S/     WILLIAM C. BAILEY
William C. Bailey                               Director


/S/     MICHAEL L. MILLS
Michael L. Mills                                Director


/S/     ABEL T. PORTER
Abel T. Porter                                  Director


                                       15


<PAGE>





                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
Klever Marketing, Inc.
Salt Lake City, Utah

         We have audited the  accompanying  balance sheets of Klever  Marketing,
Inc. as of December 31, 1999 and 1998, and the related statements of operations,
changes in  stockholders'  equity  and cash flows for the two years then  ended.
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 generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material  respects,  the financial  position of Klever Marketing,
Inc., as of December 31, 1999 and 1998,  and the results of its  operations  and
its cash  flows  for the two  years  then  ended in  conformity  with  generally
accepted accounting principles.

                                                   Respectfully submitted,


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

Salt Lake City, Utah
February 26, 2000

                                      F - 1


<PAGE>
                             KLEVER MARKETING, INC.
                                  BALANCE SHEET
<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                                -------------------------
ASSETS .......................................................     1999          1998
------                                                          -----------   -----------
Current Assets

<S>                                                             <C>           <C>
     Cash ....................................................  $   203,232   $    45,371
     Shareholder Receivables .................................       34,892       136,821
                                                                -----------   -----------
          Total Current Assets ...............................      238,124       182,192
                                                                -----------   -----------
Fixed Assets

     Office Equipment ........................................       77,279        64,269
     Phase 2 Equipment .......................................      445,330         2,550
     Less Accumulated Depreciation ...........................      (56,798)      (47,301)
                                                                -----------   -----------
          Net Fixed Assets ...................................      465,811        19,518
                                                                -----------   -----------
Other Assets

     Patents .................................................    2,212,850     2,198,110
     Less Accumulated Amortization ...........................   (1,266,201)   (1,058,244)
                                                                -----------   -----------
          Net Other Assets ...................................      946,649     1,139,866
                                                                -----------   -----------

          Total Assets .......................................  $ 1,650,584   $ 1,341,576
                                                                ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities

     Accounts Payable, Trade .................................  $   401,708   $   613,080
     Accrued Liabilities .....................................      458,563        65,058
     Related Party Payables ..................................      191,250       347,100
     Short-term Notes Payable ................................      259,115          --
                                                                -----------   -----------
          Total Current Liabilities ..........................    1,310,636     1,025,238
                                                                -----------   -----------

Stockholders' Equity

     Preferred stock (par value $.01), 2,000,000 shares
          authorized, -0- issued and outstanding .............         --            --
     Common Stock (Par Value $.01), 20,000,000 shares
          authorized. 11,275,121 shares issued and outstanding
          December 31, 1999 and 10,394,819 shares issued and
          outstanding December 31, 1998 ......................      112,751       103,948
     Common Stock to be issued ...............................        4,589         4,589
     Paid in Capital in Excess of Par Value ..................    8,375,350     6,625,919
     Retained Deficit ........................................   (8,152,742)   (6,418,119)
                                                                -----------   -----------
          Total Stockholders' Equity .........................      339,948       316,337
                                                                -----------   -----------

          Total Liabilities and Stockholders' Equity .........  $ 1,650,584   $ 1,341,576
                                                                ===========   ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      F - 2
<PAGE>



                             KLEVER MARKETING, INC.
                                STATEMENT OF LOSS

                                                       For the Year Ended
                                                           December 31,
                                                  -----------------------------
                                                      1999             1998
                                                  ------------     ------------

Revenue ......................................    $       --       $    229,000
                                                  ------------     ------------

Expenses

  General and administrative .................       1,015,700          866,106
  Research and development ...................         689,558          854,786
                                                  ------------     ------------

     Total Expenses ..........................       1,705,258        1,720,892
                                                  ------------     ------------

Other income (expense)
  Interest income ............................           1,276            1,182
  Interest expense ...........................         (30,541)          (7,350)
  Capital gain on sale of investment .........            --              1,234
                                                  ------------     ------------

     Total Other Income (Expense) ............         (29,265)          (4,934)
                                                  ------------     ------------

Income (Loss) Before Taxes ...................      (1,734,523)      (1,496,826)

Income Taxes .................................             100              100
                                                  ------------     ------------

Net Income (Loss) After Taxes ................    $ (1,734,623)    $ (1,496,926)
                                                  ============     ============

Weighted Average Shares

  Outstanding ................................      11,361,021       10,156,672
                                                  ============     ============

Loss Per Share ...............................    $      (0.15)    $      (0.15)
                                                  ============     ============









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

                                      F - 3


<PAGE>



                             KLEVER MARKETING, INC.
                        STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>


                                                                                                            Paid in
                                                                                    Common Stock           Capital in
                                    Preferred Stock       Common Stock              to be issued            Excess of    Retained
                                     --------------  ------------------------  -------------------------
                                     Shares  Amount     Shares       Amount      Shares         Amount      Par Value     Deficit
                                     ------  ------  -----------  -----------  -----------   -----------   -----------  -----------

<S>                                  <C>     <C>     <C>          <C>          <C>           <C>           <C>          <C>
Balance at January 1, 1998 ........    --    $ --      9,795,314  $    97,953      490,282   $     4,903   $ 5,292,308  $(4,921,193)
January 1998 shares issued to
   individuals for cash at
   $1.50 per share ................    --      --         86,666          867      (10,000)         (100)      114,232         --
January 1998 shares issued for
   1,500 shares of Avtel stock at
   $3.00 per share ................    --      --          4,125           41         --            --          12,334         --
January 1998 shares issued to
   companies for services at
   $2.82 - $7.80 per share ........    --      --          2,930           29         --            --          13,848         --
February 1998 shares issued to
   company for research and
   development contract ...........    --      --         46,366          464      (46,364)         (464)         --           --
February 1998 shares issued to
   individual for cash at
   $2.50 per share ................    --      --        100,000        1,000         --            --         249,000         --
April 1998 shares issued to
   employee for compensation at
   $2.63 per share ................    --      --          1,426           14         --            --           3,736         --
April 1998 shares issued to
   company for legal services at
   $3.00 per share ................    --      --          1,620           16         --            --           4,844         --

</TABLE>

                                     F - 4
<PAGE>

                             KLEVER MARKETING, INC,
                        STATEMENT OF STOCKHOLDER'S EQUITY
                                   (Continued)

<TABLE>
<CAPTION>


                                                                                                            Paid in
                                                                                    Common Stock           Capital in
                                    Preferred Stock       Common Stock              to be issued            Excess of    Retained
                                     --------------  ------------------------  -------------------------
                                     Shares  Amount     Shares       Amount      Shares         Amount      Par Value     Deficit
                                     ------  ------  -----------  -----------  -----------   -----------   -----------  -----------

<S>                                  <C>     <C>     <C>          <C>          <C>           <C>           <C>          <C>
June 1998 to individual for
   consulting services at
   $2.79 per share ................    --    $ --          3,763  $        38         --     $      --     $    10,462  $      --
June 1998 reduction of stock price
   on employee's stock ............    --      --           --           --           --            --          (1,250)        --
July 1998 shares issued to officer
   for patent purchase at
   $2.94 per share ................    --      --        150,000        1,500       25,000           250       512,313         --
July 1998 shares issued for
   receivables at $1.50 per share .    --      --         25,000          250         --            --          37,250         --
July 1998 shares issued to
   employee for compensation at
   $3.06 per share ................    --      --          1,225           12         --            --           3,736         --
July 1998 shares issued for
   cash at $2.50-$3.00 per share ..    --      --         33,000          330         --            --          89,670         --
September 1998 shares issued to
   company for accounts receivable     --      --         86,937          870         --            --         136,396         --
September 1998 for shares issued
   for cash at  $2.00 - $2.25 per
   share ..........................    --      --         30,900          309         --            --          62,341         --

</TABLE>



                                      F - 5

<PAGE>

                             KLEVER MARKETING, INC,
                        STATEMENT OF STOCKHOLDER'S EQUITY
                                   (Continued)

<TABLE>
<CAPTION>


                                                                                                            Paid in
                                                                                    Common Stock           Capital in
                                    Preferred Stock       Common Stock              to be issued            Excess of    Retained
                                     --------------  ------------------------  -------------------------
                                     Shares  Amount     Shares       Amount      Shares         Amount      Par Value     Deficit
                                     ------  ------  -----------  -----------  -----------   -----------   -----------  -----------

<S>                                  <C>     <C>     <C>          <C>          <C>           <C>           <C>          <C>
September 1998 shares issued to
   individual for consulting services
   at $3.00 per share .............    --    $ --          3,818  $        38         --     $      --     $    11,416  $      --
September 1998 shares issued to
   individuals for accounts receivable
   at $2.00 per share .............    --      --          7,500           75         --            --          14,925         --
October 1998 shares issued to
   individuals for cash at
   $2.00 per share ................    --      --          1,000           10         --            --           1,990         --
October 1998 shares issued to
   employees for accounts
   receivable at $2.12 per share ..    --      --         10,000          100         --            --          21,100         --
October 1998 shares issued to
   company for legal services at
   $2.00 per share ................    --      --          1,517           15         --            --           3,020         --
December 1998 shares returned at
   $1.58 per share ................    --      --        (42,493)        (425)        --            --         (66,667)        --
December 1998 shares issued to
   individuals for cash at
   $2.25 per share ................    --      --         42,493          425         --            --          95,183         --

</TABLE>

                                      F - 6

<PAGE>

                             KLEVER MARKETING, INC,
                        STATEMENT OF STOCKHOLDER'S EQUITY
                                   (Continued)

<TABLE>
<CAPTION>


                                                                                                            Paid in
                                                                                    Common Stock           Capital in
                                    Preferred Stock       Common Stock              to be issued            Excess of    Retained
                                     --------------  ------------------------  -------------------------
                                     Shares  Amount     Shares       Amount      Shares         Amount      Par Value     Deficit
                                     ------  ------  -----------  -----------  -----------   -----------   -----------  -----------

<S>                                  <C>     <C>     <C>          <C>          <C>           <C>           <C>          <C>
December 1998 shares issued to
   employee for compensation at
   $2.19 per share ...............    --    $ --          1,712   $        17          --    $      --    $     3,732   $      --

Net Loss .........................    --      --           --            --            --           --           --      (1,496,926)
                                    ------  ------  -----------   -----------   -----------  -----------  -----------   -----------

Balance at December 31, 1998 .....    --      --     10,394,819       103,948       458,918        4,589    6,625,919    (6,418,119)

January 1999 shares returned at
   $.67 to $1.58 per share .......    --      --        (62,489)         (624)         --           --       (107,047)         --
January & February 1999 issued
   shares to individuals for cash at
   $2.00 per share ...............    --      --        112,500         1,125          --           --        223,875          --
January & February 1999 issued
   shares to individuals for cash at
   $2.25 per share ...............    --      --        224,444         2,244          --           --        502,755          --
January 1999 shares issued to
   employee for compensation at
   $2.34 per share ...............    --      --          1,328            13          --           --          3,094          --

</TABLE>



                                      F - 7

<PAGE>

                             KLEVER MARKETING, INC,
                        STATEMENT OF STOCKHOLDER'S EQUITY
                                   (Continued)

<TABLE>
<CAPTION>


                                                                                                            Paid in
                                                                                    Common Stock           Capital in
                                    Preferred Stock       Common Stock              to be issued            Excess of    Retained
                                     --------------  ------------------------  -------------------------
                                     Shares  Amount     Shares       Amount      Shares         Amount      Par Value     Deficit
                                     ------  ------  -----------  -----------  -----------   -----------   -----------  -----------

<S>                                  <C>     <C>     <C>          <C>          <C>           <C>           <C>          <C>
April & June 1999  issued shares
   to individuals for cash at
    $2.25 to $2.50 per share ......    --      --         40,689          407         --            --          91,344         --
April 1999 shares issued to
   employee for compensation at
   $1.95 per share ................    --      --          1,667           17         --            --           3,093         --
June 1999 shares issued for
   exercise of option at $.86
   per share ......................    --      --        231,834        2,318         --            --         197,059         --
July 1999 shares issued to
   for cash at $2.25 per share ....    --      --         72,500          725         --            --         162,400         --
July & August 1999 shares issued
   to individuals for cash at $2 50
   per share ......................    --      --         78,500          785         --            --         195,465         --
July 1999 issued shares to
   employee for cash at $1.96
    per share .....................    --      --          1,285           13         --            --           2,506         --
August 1999 issued shares to
   individuals for cash at $3.00 per
   share ..........................    --      --          5,607           56         --            --          16,764         --

</TABLE>


                                      F - 8

<PAGE>


                             KLEVER MARKETING, INC,
                        STATEMENT OF STOCKHOLDER'S EQUITY
                                   (Continued)

<TABLE>
<CAPTION>


                                                                                                            Paid in
                                                                                    Common Stock           Capital in
                                    Preferred Stock       Common Stock              to be issued            Excess of    Retained
                                     --------------  ------------------------  -------------------------
                                     Shares  Amount     Shares       Amount      Shares         Amount      Par Value     Deficit
                                     ------  ------  -----------  -----------  -----------   -----------   -----------  -----------

<S>                                  <C>     <C>     <C>          <C>          <C>           <C>           <C>          <C>
September 1999 shares issued to
   an individual exercise of option
   at $.52 per share ..............    --      --          6,437  $        64         --     $      --     $     3,283  $      --
September 1999 shares issued to
   an individual for cash at $2.75
   per share ......................    --      --          6,000           60         --            --          16,440         --
October & November 1999 shares
   issued to individuals for cash at
   $2.75 per share ................    --      --        160,000        1,600         --            --         438,400         --

Net Loss ..........................    --      --           --           --           --            --            --     (1,734,623)
                                     ------  ------  -----------  -----------  -----------   -----------   -----------  -----------

Balance December 31, 1999 .........    --    $ --     11,275,121  $   112,751      458,918   $     4,589   $ 8,375,350  $(8,152,742)
                                     ======  ======  ===========  ===========  ===========   ===========   ===========  ===========

</TABLE>






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

                                      F - 9

<PAGE>



                             KLEVER MARKETING, INC.
                             STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                For the Year ended
                                                                    December 31,
                                                             -------------------------
                                                                 1999          1998
                                                             -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                          <C>           <C>
Net Loss ..................................................  $(1,734,623)  $(1,496,926)
Adjustments used to reconcile net loss to net cash provided
   by (used in) operating activities:
     Non cash general and administrative ..................       49,999        48,529
     Compensation expense from stock options ..............        6,218        11,247
     Stock issued for interest expense ....................         --            --
     (Increase) decrease in shareholder receivable ........      101,928          --
     Increase (decrease) in accounts payable ..............     (211,372)      515,613
     Increase (decrease) in accrued liabilities ...........      393,505        30,237
     Increase (decrease) in related party payables ........         --         332,069
     Deferred income ......................................         --        (229,000)
     Gain on sale of stock investment .....................         --          (1,234)
     Depreciation and amortization ........................      217,454       215,317
                                                             -----------   -----------
Net Cash Used in Operating Activities .....................   (1,176,891)     (574,148)
                                                             -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition/Sale of equipment, net ........................  $  (455,790)  $    (9,270)
Acquisition of patents ....................................      (14,740)      (37,952)
Acquisition/Sale of stock investment, net .................         --          13,609
                                                             -----------   -----------
Net Cash Used by Investing Activities .....................     (470,530)      (33,613)
                                                             -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds From capital stock issued ........................    1,702,017       655,958
Proceeds from loans .......................................      265,328          --
Principle payments on lease obligations ...................       (6,213)         (862)
Cash payments on notes payable ............................     (155,850)      (12,500)
                                                             -----------   -----------
Net Cash Provided by Financing Activities .................    1,805,282       642,596
                                                             -----------   -----------

Net Increase (Decrease) in Cash and Cash Equivalents ......      157,861        34,835
Cash and Cash Equivalents at Beginning of the Year ........       45,371        10,536
                                                             -----------   -----------
Cash and Cash Equivalents at End of the Year ..............  $   203,232   $    45,371
                                                             ===========   ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW

INFORMATION:

Interest ..................................................  $     7,119   $     5,351
Income Taxes ..............................................  $       100   $     7,350

</TABLE>

                                     F - 10
<PAGE>

                             KLEVER MARKETING, INC.
                             STATEMENT OF CASH FLOWS
                                   (Continued)

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:

o        On  January  28,  1998 the  Company  issued  4,125  shares  of stock in
         exchange for 1,500 shares of Avtel stock.
o        On  January  28,  1998 the  Company  issued  2,930  shares  of stock in
         exchange for legal and consulting services of $13,878.
o        On February 23, 1998 the Company issued 46,366 shares of stock as final
         payment on a contract.
o        On April 1, 1998 the Company  issued 1,426 shares of stock for employee
         compensation of $3,750.
o        On April 30, 1998 the Company  issued  1,620  shares of stock for legal
         services of $4,860.
o        On June 3, 1998 the Company issued 3,763 shares of stock for consulting
         services of $10,500.
o        On July 1, 1998 the Company  issued  150,000 shares of stock and 25,000
         shares of stock to be issued for patent of $514,063.
o        On July 1,  1998 the  Company  issued  25,000  shares  of stock  for an
         accounts receivable of $37,500.
o        On July 7, 1998 the Company  issued  1,225 shares of stock for employee
         compensation of $3,748.
o        On September  17, 1998 the Company  issued  86,937  shares of stock for
         accounts receivable of $137,265.
o        On  September  18, 1998 the Company  issued  3,818  shares of stock for
         consulting services of $11,454.
o        On  September  28, 1998 the Company  issued  7,500  shares of stock for
         accounts receivable of $15,000.
o        On October  28,  1998 the  Company  issued  10,000  shares of stock for
         accounts receivable from employees of $21,200.
o        On October 22, 1998 the Company  issued 1,517 shares of stock for legal
         services of $3,035.
o        On  December  3, 1998  20,271  shares  of stock  were  returned  to the
         Company.
o        On  December  8, 1998  22,222  shares  of stock  were  returned  to the
         Company.
o        On  December  16, 1998 1,712  shares of stock were issued for  employee
         compensation of $3,749.
o        During  January 1999,  the Company issued 22,222 shares in exchange for
         accounts payable of $49,999.
o        During and February  1999, the Company issued 2,995 shares for employee
         compensation of $6,218.

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

                                      F - 11


<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998

NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES

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

ORGANIZATION AND BASIS OF PRESENTATION

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

NATURE OF BUSINESS

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

CASH EQUIVALENTS

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

PERVASIVENESS OF ESTIMATES

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

                                     F - 12


<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998
                                   (Continued)

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

RECLASSIFICATIONS

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

LOSS PER SHARE

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

                                                                      Per-Share
                                            LOSS          SHARES        AMOUNT

                                           FOR THE YEAR ENDED DECEMBER 31, 1998

Basic Earnings per Share

Income available to common shareholders  $(1,496,926)   10,156,672  $     (0.15)
                                         ===========   ===========  ===========


                                           FOR THE YEAR ENDED DECEMBER 31, 1999

Basic Earnings per Share

Income available to common shareholders  $(1,734,623)   11,361,021  $     (0.15)
                                         ===========   ===========  ===========


         Basic earnings per common share were computed by dividing net income by
the weighted  average  number of shares of common stock  outstanding  during the
year.  Diluted  earnings per common share for the years ended  December 31, 1999
and 1998 are not presented as it would be anti-dilutive.

                                     F - 13


<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998
                                   (Continued)

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

FIXED ASSETS

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

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

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

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

INTANGIBLES

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

NOTE 2 - INCOME TAXES

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

NOTE 3 - LEASE COMMITMENT

         The Company's  lease  commitments  for office space with Tree of Stars,
Inc./P.D.O. consist of two leases with payments of $26,743 and $10,496 per year.
Both lease  commitments  expired December 31, 1998 and have continued on a month
to month basis since that time.

                                     F - 14


<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998
                                   (Continued)

NOTE 4 - RESEARCH AND DEVELOPMENT

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

         During the years ended December 31, 1999 and 1998, the Company expended
$689,558  and  $854,786,  respectively  for  research  and  development  of  the
technology involved with its patents.

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

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

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

         On February 13, 1998 the Company  entered  into a settlement  agreement
with WWC (formerly  Electronic  Technology  Corp.) pursuant to which the company
paid $30,000 and issued 46,364 shares of common stock to WWC in  satisfaction of
any and all claims in  connection  with the  September  26, 1994  contract.  The
agreement  also  provides for 10,000  shares of WWC  restricted  common stock in
exchange for a promissory note in the amount of $97,093.

                                     F - 15


<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998
                                   (Continued)

NOTE 5- RELATED PARTY TRANSACTIONS

         During 1998 various shareholders loaned the Company $347,100. The notes
are payable within one year plus interest at 10% and 12% per annum.  During 1999
and 1998  principle  payments of $155,850  and  $12,500  were paid toward  these
loans. The balance due as of December 31, 1999 is $191,250.

NOTE 6- STOCK OPTIONS

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

                                                          Shares Under Option
                                                        -----------------------
                                                              December 31,
                                                        -----------------------
                                                           1999         1998
                                                        ----------   ----------
Outstanding, beginning of year .......................   1,675,355    1,172,355
Granted during the year ..............................   1,284,641      542,500
Canceled during the year .............................        --        (29,500)
Exercised during the year ............................     (61,937)     (10,000)
                                                        ----------   ----------

Outstanding, end of year (at prices
ranging from $.86 to $3.61 per share) ................   2,898,059    1,675,355
                                                        ==========   ==========

Eligible, end of year for exercise currently (at prices
ranging from $.86 to $3.61 per share) ................   2,898,059    1,400,355
                                                        ==========   ==========








                                     F - 16


<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998
                                   (Continued)

NOTE 7 - CONTINGENCIES

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

         On February  25, 1997 Mr.  Begum and Mr.  Geiger  received  200,000 and
25,000 shares  respectively.  On December 22, 1997  pursuant to the merger,  Mr.
Begum  and  Mr.  Geiger   received  an   additional   31,834  and  3,979  shares
respectively.  As of December 31, 1999 the Company owes Mr. Begum and Mr. Geiger
$12,500 and $0, respectively.

NOTE 8 - PREFERRED STOCK

         On February 7, 2000 the Board of Directors  authorized and  established
"Class A Voting Preferred Stock Series 1. " ("Class A Shares") as a class of its
$.01 par value,  2,000,000 shares  authorized,  preferred stock.  Class A Shares
consist of 1,000,000  shares,  125,000 shares thereof are designated as Series 1
shares.

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

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

                                     F - 17


<PAGE>



                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998
                                   (Continued)

NOTE 8 - PREFERRED STOCK (CONTINUED)

dividend had occurred with respect to the Class A Shares.

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

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

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

NOTE 9 - SUBSEQUENT EVENTS

         On January 17, 2000 the former President of the Company used a cashless
exercise to receive  74,608  common  shares in  exchange  for options of 125,392
shares.

         On February 17, 2000 the Company sold 2,885 shares of Class A Preferred
Stock Series 1 for cash at $26 per share.

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

         On February 15, 2000 the Company sold 1,346 shares of Class A Preferred
Stock Series 1 for cash at $26 per share.

         On February 14, 2000 the Company sold 1,538 shares of Class A Preferred
Stock Series 1 for cash at $26 per share.

                                     F - 18


<PAGE>


                             KLEVER MARKETING, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1999 AND1998
                                   (Continued)

NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)

         On  February  15,  2000 a  short-term  note  payable  in the  amount of
$250,000 was  converted  to 9,615 shares of Class A Preferred  Stock Series 1 at
$26 per share and 100,000  shares of common stock was converted to 10,576 shares
of Class A Preferred Stock Series 1 at $26 per share.

         On  February  15,  2000  the  Company  sold  21,285  shares  of Class A
Preferred Stock Series 1 for cash at $26 per share less commission of $48,038.

         On February 14, 2000 the Company  issued  20,000  shares in  connection
with the exercise of options at $1.5 per share by an investor.

         On  February  17, 2000 the Company  sold  28,979  shares of  restricted
common stock for cash at $1.07 per share.

         On  February  25, 2000 the Company  sold  10,909  shares of  restricted
common stock for cash at $2.75 per share.

                                     F - 19