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

U.S. Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended: June 30, 2002

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

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

Klever Marketing, Inc.

(Exact name of small business issuer as
                                   specified in its charter)

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

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

(801) 322-1221
Issuer's telephone number

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

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


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

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: June 30, 2002 12,674,807

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


PART I

ITEM 1. FINANCIAL STATEMENTS

INDEPENDENT ACCOUNTANT'S REPORT

Klever Marketing, Inc.

We have reviewed the accompanying balance sheets of Klever Marketing, Inc. as of June 30, 2002 and December 31, 2001, and the related statements of operations for the three and six months ended June 30, 2002 and 2001, and cash flows for the six months ended June 30, 2002 and 2001. These financial statements are the responsibility of the Company's management.

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

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

Respectfully submitted

                                                   /s/ Robison, Hill & Co.
                                                   Certified Public Accountants

Salt Lake City, Utah
August 19, 2002

3

KLEVER MARKETING, INC.
BALANCE SHEETS

                                                                   June 30,      December 31,
                                                                ---------------  -------------
ASSETS                                                               2002            2001
------
                                                                ---------------  -------------
Current Assets
  Cash                                                          $         2,815  $           -
  Prepaid Expenses                                                      215,919        226,272
  Related Party Receivables                                               7,964          7,964
                                                                ---------------  -------------

     Total Current Assets                                               226,698        234,236
                                                                ---------------  -------------

Fixed Assets
  Office Equipment                                                      148,067        155,876
  Phase 2 Equipment                                                      57,750         66,690
  Less Accumulated Depreciation                                        (111,546)      (105,145)
                                                                ---------------  -------------

     Net Fixed Assets                                                    94,271        117,421
                                                                ---------------  -------------

Other Assets
  Patents                                                             2,317,468      2,303,380
  Less Accumulated Amortization                                 (1,803,513)         (1,694,599)
                                                                ---------------  -------------

     Net Other Assets                                                   513,955        608,781
                                                                ---------------  -------------

     Total Assets                                               $       834,924  $     960,438
                                                                ===============  =============

4

KLEVER MARKETING, INC.
BALANCE SHEETS
(Continued)

                                                                  June 30,       December 31,
                                                               ---------------  --------------
                                                                    2002             2001
                                                               ---------------  --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Accounts Payable, Trade                                      $       434,446  $      420,945
  Liability for Overdrawn Cash                                               -           3,903
  Accrued Liabilities                                                  516,880         346,011
  Related Party Payables                                             2,442,986       2,331,482
  Short-term Notes Payable                                               3,689           4,828
                                                               ---------------  --------------

     Total Current Liabilities                                       3,398,001       3,107,169

Non-Current Liabilities

  Lease Obligation Payable                                               4,372           6,246
                                                               ---------------  --------------

     Total Liabilities                                               3,402,373       3,113,415
                                                               ---------------  --------------

Stockholders' Equity
  Preferred stock (Par Value $.01),
    2,000,000 shares authorized. 168,434 shares issued
    and outstanding June 30, 2002 and December 31, 2001                  1,684           1,684
  Common Stock (Par Value $.01),
    20,000,000 shares authorized. 12,674,807 shares
    issued and outstanding at June 30, 2002 and
    December 31, 2001                                                  126,748         126,748
  Common Stock to be issued, 435,584 shares at
     June 30, 2002 and December 31, 2001                                 4,356           4,356
  Treasury Stock, 1,000 shares at June 30, 2002 and
     December 31, 2001                                                  (1,000)         (1,000)
  Paid in Capital in Excess of Par Value                            12,276,665      12,276,665
  Retained Deficit                                                 (14,975,902)    (14,561,430)
                                                               ---------------  --------------

     Total Stockholders' Equity                                     (2,567,449)     (2,152,977)
                                                               ---------------  --------------

     Total Liabilities and Stockholders' Equity                $       834,924  $      960,438
                                                               ===============  ==============

See accompanying notes and accountants' report.

5

KLEVER MARKETING, INC.
STATEMENTS OF OPERATIONS

                                     For the Three Months            For the Six Months
                                         Ended June 30,                 Ended June 30,
                                 ----------------------------- -------------------------------
                                      2002         2001             2002                  2001
                                 --------------  ------------- ---------------  --------------

Revenue                          $            -  $           - $             -  $            -
                                 --------------  ------------- ---------------  --------------

Expenses

  Sales and Marketing                         -         25,485               -          33,067
  General and Administrative            132,039        453,504         269,213         929,419
  Research and Development                    -        155,053               -         305,590
                                 --------------  ------------- ---------------  --------------

     Total Expenses                     132,039        634,042         269,213       1,268,076
                                 --------------  ------------- ---------------  --------------

Other Income (Expense)
  Interest Income                             -          1,930               -           3,851
  Interest Expense                      (72,592)       (49,003)       (141,259)        (78,772)
  Other Income (Expense)                 (4,098)             -          (3,998)              -
                                 --------------  ------------- ---------------  --------------

    Total Other Income (Expense)        (76,690)       (47,073)       (145,257)        (74,921)
                                 --------------  ------------- ---------------  --------------

Loss Before Taxes                      (208,729)      (681,115)       (414,470)     (1,342,997)

Income Taxes                                          -      -                      -        -
                                 --------------  ------------- ---------------  --------------

Net Loss After Taxes             $     (208,729) $    (681,115)$      (414,470) $   (1,342,997)
                                 ==============  ============= ===============  ==============

Weighted Average Shares

Outstanding                          12,674,807     12,163,221      12,674,807      12,161,689
                                 ==============  ============= ===============  ==============

Loss per Common Share            $       (0.02)  $      (0.06) $        (0.03)  $       (0.11)
                                 ==============  ============= ===============  ==============

See accompanying notes and accountants' report.

6

KLEVER MARKETING, INC.
STATEMENT OF CASH FLOWS

                                                                     For the Six Months
                                                                       Ended June 30,
                                                               -------------------------------
                                                                    2002             2001
                                                               ---------------  --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                                       $      (414,470) $   (1,342,997)

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

Stock issued for commissions                                                 -          15,000
(Increase) decrease in:
    inventory                                                                -               -
    accounts receivable                                                      -           7,670
    related party receivables                                                -          (1,163)
    prepaid expense & other assets                                      10,353           4,844
Increase (decrease) in:
   accounts payable                                                     13,500          59,205
   accrued liabilities                                                 166,965          70,511
   lease obligation                                                     (3,013)         (2,985)
   related party payables                                               (6,691)         70,213
Depreciation and Amortization                                          119,026         120,931
                                                               ---------------  --------------

Net cash used in operating activities                                 (114,330)       (998,771)
                                                               ---------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of equipment                                                     -          (5,023)
Disposal of equipment                                                   13,038               -
Acquisition of patents                                                 (14,088)        (22,128)
                                                               ---------------  --------------

Net cash used by investing activities                                   (1,050)        (27,151)
                                                               ---------------  --------------

7

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

                                                                     For the Six Months
                                                                       Ended June 30,
                                                               -------------------------------
                                                                    2002             2001
                                                               ---------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from capital stock                                    $             -  $      481,050
Proceeds from shareholder loans                                        118,195         840,000
Conversion of note payable to preferred stock                                -        (290,000)
                                                               ---------------  --------------
Net Cash Provided by Financing  Activities                             118,195       1,031,050
                                                               ---------------  --------------

Net Increase (Decrease) in

   Cash  and Cash Equivalents                                            2,815           5,128
Cash and Cash Equivalents at
   Beginning of the Period                                                   -           2,870
                                                               ---------------  --------------
Cash and Cash Equivalents at

   End of the Period                                           $         2,815  $        7,998
                                                               ===============  ==============

SUPPLEMENTAL DISCLOSURE OF CASH
-------------------------------
  FLOW INFORMATION:

Interest                                                       $             -  $            -
Income Taxes                                                   $             -  $            -

See accompanying notes and accountants' report.

8

KLEVER MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN

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

The unaudited financial statements as of June 30, 2002 and for the six months then ended reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of operations for the six months. Operating results for interim periods are not necessarily indicative of the results which can be expected for full years.

The accompanying financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.

Several conditions and events cast doubt about the Company's ability to continue as a "going concern". The Company has incurred net losses of approximately $414,470 for the six months ended June 30, 2002 and net losses of approximately $1,342,997 for the six months ended June 30, 2001, 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.

9

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (continued)

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.

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.

10

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Reclassifications

Certain reclassifications have been made in the 2001 financial statements to conform with the 2002 presentation.

Loss per Share

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

                                                                                  Per-Share
                                                    Loss           Shares           Amount
                                                  For the three months ended June 30, 2002
                                                  ----------------------------------------
BASIC LOSS PER SHARE
Loss available to common shareholders          $      (208,729)     12,674,807  $       (0.02)
                                               =============== ===============  ==============

                                                  For the three months ended June 30, 2001
                                                  ----------------------------------------
BASIC LOSS PER SHARE
Loss available to common shareholders          $      (681,115)     12,163,221  $       (0.06)
                                               =============== ===============  ==============

                                                   For the six months ended June 30, 2002
                                                   --------------------------------------
BASIC LOSS PER SHARE
Loss available to common shareholders          $      (414,470)     12,674,807  $       (0.03)
                                               =============== ===============  ==============

                                                   For the six months ended June 30, 2001
                                                   --------------------------------------
BASIC LOSS PER SHARE
Loss available to common shareholders          $    (1,342,997)     12,161,689  $       (0.11)
                                               =============== ===============  ==============

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 three and six months ended June 30, 2002 and 2001 are not presented as it would be anti-dilutive.

11

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Concentration of Credit Risk

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.

Fixed Assets

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

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

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

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

Intangibles

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

Other Current Assets

During 2000, the Company purchased supplies of batteries and parts related to research and development of the Klever-Kart System. These supplies are carried at fair market value on the balance sheet. Due to technological changes, these supplies have become obsolete. The parts supplies were sold in January 2001. The batteries were written-off and expensed during 2001.

NOTE 3 - INCOME TAXES

The Company has accumulated tax losses estimated at $15,000,000 expiring in years 2007 through 2022. 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.

12

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 4 - LEASE COMMITMENT

The Company currently leases approximately 1,620 square feet of office space from Four Cabo's Enterprises, Ltd. on a month to month basis. The lease payments are approximately $2,025 per month.

The Company has also entered into lease agreements for the rental of computer equipment. These leases expire between September 2003 and May 2004. The total monthly lease payments due on the above leases is approximately $210.

During 2000, the Company entered into a financing agreement for the purchase of a laser printer. The payments on this agreement are $312 per month for a term of 36 months.

The minimum future lease payments under these leases for the next five years are:

      Year Ended December 31,
------------------------------------
        2002                                   $      8,289
        2003                                          5,774
        2004                                            890
        2005                                              -
        2006                                              -
                                               ------------
        Total minimum future lease payments    $     14,953
                                               ============

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 three months ended June 30, 2002 and 2001, the Company expended $0 and $155,053, respectively for research and development of the technology involved with its patents.

NOTE 6- 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 2000, principle payments of $155,850 and $62,500 were paid toward these loans.

13

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 6- RELATED PARTY TRANSACTIONS (continued)

During the year ended December 31, 2000, a shareholder loaned the Company $1,100,000. This loan is secured by the Company's inventory, accounts receivable, equipment, patents and any proceeds related to these assets. This note is payable within one year plus interest at 10% per annum.

During the year ended December 31, 2001, shareholders loaned the Company $1,017,323. These loans are secured by the Company's inventory, accounts receivable, equipment, patents and any proceeds related to these assets. These notes are payable within one year plus interest at 10% per annum. During the six months ended June 30, 2002, shareholders loaned the Company $118,195. The total balance of notes payable due as of June 30, 2002 is $2,364,106.

During the year ended December 31, 2001, the Company accrued additional related party liabilities. These liabilities resulted from an agreement with a shareholder and interest due on accrued compensation. The total amount of these liabilities at June 30, 2002 is $78,880.

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. As of July 31, 2001, the total balance on the note receivable was $98,375. On July 31, 2001, the Company forgave the remaining amount owed on the receivable in exchange for 100,000 shares of common stock that were returned to the Company.

NOTE 7- 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 2001 and 2000 is $0 and $297,686. The following is a summary of transactions:

14

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 7- STOCK OPTIONS (continued)

                                                                     Shares Under Option
                                                               -------------------------------
                                                                  June 30,       December 31,
                                                               -------------------------------
                                                                    2002             2001
                                                               ---------------  --------------
Outstanding, beginning of year                                       2,124,392       2,685,049
Granted during the year                                              1,539,381       2,299,367
Canceled during the year                                               (20,000)     (2,860,024)
Exercised during the year                                                    -               -
                                                               ---------------  --------------

Outstanding, end of year (at prices
ranging from $.01 to $3.00 per share)                                3,643,773       2,124,392
                                                               ===============  ==============

Eligible, end of year for exercise currently (at prices
ranging from $.01 to $3.00 per share)                                3,033,470       1,458,500
                                                               ===============  ==============

NOTE 8 - 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.

15

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 8 - PREFERRED STOCK (continued)

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

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

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

On September 24, 2000 the Board of Directors authorized and established "Class B Voting Preferred Stock" ("Class B Shares") as a class of its $.01 par value, 2,000,000 shares authorized, preferred stock. Class B Shares consisted of 250,000, 125,000 shares thereof were designated as Series 1 shares. On May 20, 2002, the Board of Directors amended the number of authorized shares of Class B voting preferred stock to 42,000 shares.

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

16

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 8 - PREFERRED STOCK (continued)

holder of a Class B Share shall be entitled to receive, when and as declared, a dividend equal to each dividend declared and paid on the shares of Common Stock, on a share for share basis, so the holders of the Class B Shares shall be entitled to participate equally on a share for share basis with the holders of the shares of Common Stock. If there is a share split or dividend on the Common Stock, then the Class B Share dividends shall be adjusted as if a similar split or dividend had occurred with respect to the Class B Shares.

Class B Shareholders shall be entitled to one vote for each share of Common Stock into which such Class B Shares could then be converted and shall have voting rights and powers equal

to the voting rights and powers of a holder of shares of Common Stock. The holders of Class B Shares shall vote with the holders of shares of Common Stock and not as a separate class.

Class B Shares shall carry a liquidation preference of $17 per share plus any accrued but unpaid dividends on such shares, if any, and adjusted for combinations, splits, dividends or distributions of shares of stock with respect to such shares.

The Class B Shares shall be redeemable by the Company, in whole or in part, at the option of the Board of Directors of the Company, at any time and from time to time on or after March 24, 2004 for Series 1, and such date as determined by the Board of Directors for each additional Series. The redemption price shall be $17.00 per share together with accrued but unpaid dividends on such shares, if any.

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

17

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 8 - PREFERRED STOCK (continued)

from the date of its original issuance and shall accrue from day to day, whether or not earned or declared. Such dividends shall be cumulative and may be paid in cash or in kind through the distribution of .0425 Class C Shares, of the same Series for which the dividend is accrued, for each outstanding Class C Share, on each dividend payment date; provided, that if such dividends in respect of any period shall not have been paid or declared and set apart for payment for all outstanding Class C Shares by each payment date, then until all unpaid dividends thereon shall be paid or set apart for payment to the holders of such shares, the Corporation may not pay, declare or set apart any dividend or other distribution on its shares of Common Stock or other shares junior to the Class C Shares, nor may any other distributions, redemptions or other payments be made with respect to the shares of Common Stock or other junior shares. In addition to the foregoing, each holder of a Class C Share shall be entitled to receive, when and as declared, a dividend equal to each dividend declared and paid on the shares of Common Stock, on a share for share basis, so the holders of the Class C Shares shall be entitled to participate equally on a share for share basis with the holders of the shares of Common Stock. If there is a share split or dividend on the Common Stock, then the Class C Share dividends shall be adjusted as if a similar split or dividend had occurred with

respect to the Class C Shares.

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

Class C Shares shall carry a liquidation preference of $6.60 per share plus any accrued but unpaid dividends on such shares, if any, and adjusted for combinations, splits, dividends or distributions of shares of stock with respect to such shares.

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").

18

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 8 - PREFERRED STOCK (continued)

Class D Shares are convertible into Common Stock at an initial conversion price of $1.05 (subject to adjustment).

Holders of Class D Shares shall be entitled to receive when and as declared by the Board of Directors of the Corporation out of any funds at the time legally available therefore dividends at the rate of the Original Issue Price divided by 11.8181818 per share per annum, payable semi-annually on the first day of January and July of each year. Such dividends shall accrue on each such share from the date of its original issuance and shall accrue from day to day, whether or not earned or declared. Such dividends shall be cumulative and may be paid in cash or in kind through the distribution of .0425 Class D Shares for each outstanding Class D Share, on each dividend payment date; provided, that if such dividends in respect of any period shall not have been paid or declared and set apart for payment for all outstanding Class D Shares by each payment date, then until all unpaid dividends thereon shall be paid or set apart for payment to the holders of such shares, the Corporation may not pay, declare or set apart any dividend or other distribution on its shares of Common Stock or other shares junior to the Class D Shares, nor may any other distributions, redemptions or other payments be made with respect to the shares of Common Stock or other junior shares. In addition to the foregoing, each holder of a Class D Share shall be entitled to receive, when and as declared, a dividend equal to each dividend declared and paid on the shares of Common Stock, on a share for share basis, so the holders of the Class D Shares shall be entitled to participate equally on a share for share basis with the holders of the shares of Common Stock. If there is a share split or dividend on the Common Stock, then the Class D Share dividends shall be adjusted as if a similar split or dividend had occurred with respect to the Class D Shares.

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

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.

19

KLEVER MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(continued)

NOTE 9 - CONTINGENCIES

On September 18, 2001, a Complaint was filed in Superior Court of the State of California, County of San Francisco, by eiKart, L.L.C. ("eiKart") against the Company. The Complaint arises out of a written agreement between the Company and eiKart dated May 11, 2001. Pursuant to the agreement, eiKart was to pursue certain financing sources for the Company. The Complaint also alleges that eiKart was requested by and performed for the Company certain additional financing consulting services. The Complaint also claims that the Company defrauded eiKart by stating that it was seeking interim financing when in reality, the Company was not seeking financing, but trying to "go private" and that the Company defrauded eiKart by not executing an amendment to the written agreement. eiKart seeks payment in the form of stock options and cash as required pursuant to said written agreement as if all benchmarks were satisfied, payment for the fair value of financing services rendered (alleged to be in excess of $300,000) and recovery of damages suffered as a result of the fraudulent misrepresentations in the amount to be proven at trial. The Company disputes all claims as invalid and intends to vigorously defend this action. Management believes that the Company will prevail in this matter, therefore no provision has been made in the financial statements related to this claim.

NOTE 10 - SUBSEQUENT EVENTS

During August 2001, the Company issued 507,048 shares of common stock as a prepayment for services to be rendered over the next twelve months. This resulted in a prepaid asset of $195,213 and expenses of $139,438. Approximately 40% of the agreement was completed. On August 15, 2002, the Company received a refund of 304,229 shares of stock for services that were never rendered.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL - This discussion should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's annual report on Form 10-KSB for the year ended December 31, 2001.

PLAN OF OPERATIONS - The Company's goal is to become the leading supplier of in-store promotions and advertising technology for grocery and other mass-merchandise retailers. To accomplish this goal, the Company intends to expand its product offerings to include: (i) electronic couponing (2003) to eliminate the need for and reduce the costs related to paper coupons (including fraud, mis- redemption and mal-redemption); (ii) the establishment of targeted Internet-type content to enhance customer loyalty; (iii) capturing Point-of-Selection data in the aggregate for providing data warehousing and mining services to various interested parties; (iv) certain other in-store services.

20

Additionally, the Company intends to expand the Klever-Kart System's application to other retailers including superstores, discount stores, toy stores and warehouse stores. Following is a description of the Company's growth strategy, which is dependent upon the Company securing additional financing:

SYSTEM DEVELOPMENT AND PRODUCT MOVEMENT TEST.

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

COST REDUCTION & ENHANCEMENT.

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

In early third quarter 2000, the Company installed stores for testing of the Phase II system. In November 2000, the Company commenced engineering design and development of Phase III. Phase III focused on improved consumer ergonomics, enhanced user interface, modular design, improved graphics, and longer battery life. The Company intends to complete this phase and proceed with a roll out into stores.

FUTURE BUSINESS DEVELOPMENT

1. TECHNOLOGICAL INNOVATION AND EXPANDED PRODUCT OFFERINGS

The Company is in the process of developing various product enhancements for its retail grocer and consumer goods manufacturer clients and expects to offer these enhancements commencing in 2003. These product enhancements include electronic coupons and the Klever-Kard* enhancement to existing frequent shopping programs ("Klever-Kard Program").

ELECTRONIC COUPONING

The Company expects to complete the development and testing of the electronic coupon feature of the Klever-Kart System in 2003. The Company expects the electronic coupon feature to be well received by the consumer goods companies, retailers and consumers because it (i) reduces handling costs for both the retailer and consumer goods manufacturer; (ii) virtually eliminates mis- redemption, mal-redemption and fraud associated with paper coupons; and (iii) makes coupon use convenient for the consumer. In addition, this feature is expected to permit the consumer goods

21

manufacturer or retailer to electronically alter the face value of coupon to rapidly customize it for competitive situations, seasonal trends or to alter its value or expiration based upon predetermined redemption rates.

Industry sources indicate the number of coupons redeemed annually in the U.S. is approximately 5.3 billion with coupon fraud accounting for more than $300 million in losses to the consumer goods companies. The Company believes the electronic coupon feature of the Klever-Kart System will be superior to competitor product offerings due to the virtual elimination of mis-redemption, mal- redemption and fraud associated with paper coupons.

KLEVER-KARD PROGRAM

The Company expects to introduce the Klever-Kard Program in 2003. The Klever-Kard Program is a frequent shopper program enhancement that is expected to permit consumer goods companies and retailers to target specific promotional campaigns to individual consumers based upon demographics and personal buying history. Further development of the Klever-Kard Program is expected to include targeted Internet tie-ins, direct mail, rebates, download of shopping lists/recipes, product sampling and electronic contest entry. Information from individual consumer card usage is expected to produce individual customer profiles and track specific marketing and purchasing trends. Using this precedent in conjunction with the Klever-Kart System, the Company expects to sell customer shopping behavior information to consumer research companies, consumer goods companies and retailers.

2. EXPAND RETAILER BASE

The Company expects to expand the Klever-Kart System's orientation to other store formats including superstores, discount stores, toy stores, do-it-yourself (DIY) stores and warehouse stores. The Company plans to install the Klever-Kart System in a pilot store at two or more key retailers across the U.S. The Company believes that the existing Klever-Kart System can be easily adapted to meet the requirements of retailers operating in a variety of environments.

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 limited 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 $53,000 and $443,000 for the three months ended June 30, 2002 and 2001, respectively.

Investing activities used cash of $12,000 and $21,000 for the three months ended June 30, 2002 and 2001. Investing activities primarily represent purchases of patents relating to the electronic in-store advertising, directory and coupon devices, and purchases of office equipment.

22

Financing activities provided cash of $67,000 and $201,000 for the three months ended June 30, 2002 and 2001, respectively. Financing activities primarily represent sales of the Company's common and preferred stock, and loans from shareholders.

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On September 18, 2001, a Complaint was filed in Superior Court of the State of California, County of San Francisco, by eiKart, L.L.C. ("eiKart") against the Company. The Complaint arises out of a written agreement between the Company and eiKart dated May 11, 2001. Pursuant to the agreement, eiKart was to pursue certain financing sources for the Company. The Complaint also alleges that eiKart was requested by and performed for the Company certain additional financing consulting services. The Complaint also claims that the Company defrauded eiKart by stating that it was seeking interim financing when in reality, the Company was not seeking financing, but trying to "go private" and that the Company defrauded eiKart by not executing an amendment to the written agreement. eiKart seeks payment in the form of stock options and cash as required pursuant to said written agreement as if all benchmarks were satisfied, payment for the fair value of financing services rendered (alleged to be in excess of $300,000) and recovery of damages suffered as a result of the fraudulent misrepresentations in the amount to be proven at trial. The Company disputes all claims as invalid and intends to vigorously defend this action. Management believes that the Company will prevail in this matter, therefore no provision has been made in the financial statements related to this claim.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION

None.

23

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

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

10.01Separation Agreement between Paul G. Begum and the Registrant Dated January 8, 2001 (2)

10.02 Stock Incentive Plan, effective June 1, 1998 (2)

10.03Amended and Restated Promissory Note (Secured) of the Registrant payable to Presidio Investments, LLC, dated June 27, 2000, with Financing Statement and Exhibit "A" (2)

10.04Intercreditor Agreement between Seabury Investors III, Limited Partnership, The Olson Foundation, Presidio Investments, LLC, and the Registrant dated August 27, 2001 (4)

24

(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 10KSB, dated May 15, 2002.

SIGNATURES

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

Klever Marketing, Inc.

(Registrant)

DATE:       August 19, 2002
     ----------------------------------


By:  /s/ Richard J. Trout
    -------------------------------

Richard J. Trout
President & Director

By:  /s/ D. Paul Smith
    ---------------------------------
D. Paul Smith

C.F.O.

25

CERTIFICATE OF DESIGNATION OF RIGHTS, PRIVILEGES AND PREFERENCES OF

CLASS D VOTING PREFERRED STOCK, OF
KLEVER MARKETING, INC.

The undersigned, Richard J. Trout, hereby certifies that:

A. He is the duly elected and acting President of Klever Marketing, Inc., a Delaware corporation (hereafter the "Corporation");

B. The following resolutions of the Board of Directors of the Corporation, duly adopted as of May 20, 2002 pursuant to Section 151 of the General Corporation Law of the State of Delaware and Article IV of the Corporation's Certificate of Incorporation set forth the rights, preferences and privileges of the various series of Corporation's Class D Voting Preferred Stock.

Pursuant to the provisions of its Certificate of Incorporation, the Corporation hereby authorizes and establishes a series of its preferred stock, par value $.01 per share, consisting of 500,000 shares, to be known as "Class D Voting Preferred Stock," having the following designations, rights and preferences:

1. Designation and Amount. Of the 2,000,000 shares of preferred stock of the Corporation, par value $.01 per share, as authorized by Article IV of the Corporation's Certificate of Incorporation, 500,000 shares are hereby designated "Class D Voting Preferred Stock" (the "Class D Shares").

2. Definitions. For purposes of this Certificate, the following terms shall have the following definitions:

2.1 "Class D Shares" shall mean the Class D Voting Preferred Stock.

2.2 "Preferred Stock" shall mean the Class D Shares and all other authorized Preferred Shares, collectively.

2.3 "Common Stock" shall mean the Corporation's authorized shares of Common Stock.

2.4 "Liquidation Preference" for Class D Shares shall be the Original Issue Price, plus in each case any accrued but unpaid dividends on such shares, if any, appropriately adjusted for combinations, splits, dividends or distributions of shares of stock (a "Share Combination or Division") with respect to such shares.

2.5 "Redemption Price" for the Class D Shares, are set forth in Section 6.1 hereof.

2.6 "Original Issue Date" shall mean June 14, 2002.

2.7 "Original Issue Price" of the Class D Shares is Ten Dollars and fifty cents ($10.50) per share.

2.8 "Act" shall mean the General Corporation Law of the State of Delaware, as amended.

3. Dividends. The holders of Class D Shares shall be entitled to receive when and as declared by the Board of Directors of the Corporation out of any funds at the time legally available therefore dividends at the rate of the Original Issue Price divided by 11.8181818 per share per annum, payable semi-annually on the first day of January and July of each year. Such dividends shall accrue on each such share from the date of its original issuance and shall accrue from day to day, whether or not earned or declared. Such dividends shall be cumulative and may be paid in cash or in kind through the distribution of .0425 Class D Shares for each outstanding Class D Share, on each dividend payment date; provided, that if such dividends in respect of any period shall not have been paid or declared and set apart for payment for all outstanding Class D Shares by each payment date, then until all unpaid dividends thereon shall be paid or set apart for payment to the holders of such shares, the Corporation may not pay, declare or set apart any dividend or other distribution on its shares of Common Stock or other shares junior to the Class D Shares, nor may any other distributions, redemptions or other payments be made with respect to the shares of Common Stock or other junior shares. In addition to the foregoing, each holder of a Class D Share shall be entitled to receive, when and as declared, a dividend equal to each dividend declared and paid on the shares of Common Stock, on a share for share basis, so the holders of the Class D Shares shall be entitled to participate equally on a share for share basis with the holders of the shares of Common Stock. If there is a share split or dividend on the Common Stock, then the Class D Share dividends shall be adjusted as if a similar split or dividend had occurred with respect to the Class D Shares. No other right to dividends shall accrue to holders of Class D Shares as a result of a failure to declare or pay dividends with respect to any period.

4. Voting Rights. Except as otherwise expressly provided herein or as required by law, and unless the Act provides for the holders of Class D Shares to vote separately from the holders of shares of Common Stock on a matter, the holder of each Class D Share shall be entitled to one vote for each share of Common Stock into which such Class D Shares could then be converted (with any fractional share determined on an aggregate conversion basis being rounded up or down to the nearest whole share) 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, and shall be entitled to notice of any shareholders meeting in accordance with the Bylaws of the Corporation.

5. Liquidation Rights. In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, distributions to the shareholders of the Corporation shall be made in the following manner.

5.1 Class D Shares. The holders of Class D Shares shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of shares of Common Stock or any other Preferred Stock that are not expressly deemed to be on a par with or senior to the Class D Shares, an amount equal to their Liquidation Preference for each Class D Share then held by them. For this purpose, Preferred Stock Classes A, B and C, shall be on a par with Class D Shares. If such assets and funds are insufficient to permit the payment to the holders of Class D Shares of such full preferential amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed pro-rata among the holders of the Class D Shares and Preferred Stock Classes A, B and C in the proportion to their ownership.

5.2 Remaining Liquidation Rights. After payment to the holders of Class D Shares and other Preferred Stock on a par with or senior to Class D Shares of the amounts set forth in Section 5.1 above, the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed among the holders of all outstanding shares of Common Stock pro-rata, based on the number of shares of Common Stock held by each holder.

5.3 Consolidation, Merger, Sale of Assets. Neither the consolidation or the merger of the Corporation into or with any other entity or entities, nor the sale or transfer by the Corporation of all or substantially all of its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of the provisions of this Section 5, unless such sale, lease or conveyance shall be in connection with a plan of liquidation, dissolution, or winding up of the Corporation.

6. Redemption. The Class D Shares shall be redeemable by the Corporation, in whole or in part, at the option of the Board of Directors of the Corporation, at any time and from time to time on or after May 14, 2007.

6.1 Redemption Price. The Redemption Price of the Class D Shares shall be the Original Issue Price, together with accrued but unpaid dividends on such shares, if any. The date fixed by the Corporation for any such redemption is herein called the "Redemption Date". In the event of a redemption of only a part of the Class D Shares then outstanding, the Corporation shall effect a redemption of Class D Shares pro-rata among the holders of such Shares .

6.2 Redemption Procedure. At least thirty (30) days prior to each Redemption Date, the Corporation shall give written notice of such redemption to each holder of record of the Class D Shares. Written notice shall be by certified mail enclosed in a postage paid envelope addressed to such holder at such holder's address as the same shall appear on the books of the Corporation. Such notice shall (i) state that the Corporation has elected to redeem such shares pursuant to
Section 5.1 hereof, (ii) state the Redemption Date, and (iii) call upon such holder to surrender to the Corporation on or after such date at its principal office in Salt Lake City, Utah (or at such other place as may be designated by the Corporation) certificate or certificates representing the number of Class D Shares to be redeemed in accordance with such notice. On or after the Redemption Date, each holder of Class D Shares to be so redeemed shall present or surrender the certificate or certificates for such shares to the Corporation at the place designated in such notice and, thereupon, the Redemption Price of such shares shall be paid to, or to the order of, the person whose name appears on such certificate or certificates as the owner thereof. From and after the Redemption Date, unless default shall be made by the Corporation in providing for the payment of the Redemption Price pursuant to such notice, all rights of the holders of the Class D Shares so redeemed, except the right to receive the Redemption Price (but without interest thereon) shall cease and terminate.

6.3 Reissue of Redeemed Shares. Unless the Board of Directors of the Corporation shall determine otherwise with respect to a specific transaction, Class D Shares redeemed by the Corporation shall not be retired but shall constitute authorized but unissued shares that may be reissued by the Corporation as it sees fit.

7. Conversion. The holders of the Class D Shares shall have conversion rights as follows (the "Conversion Rights"):

7.1 Right to Convert/Automatic Conversion.

(a) Each Class D Share shall be convertible, at the option of the holder thereof, at any time after the Original Issue Date, at the office of the Corporation or any transfer agent for the Class D Shares, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the Conversion Price for Class D Shares at the time in effect. The initial Conversion Price for Class D Shares shall be the Original Issue Price divided by ten (10); provided, however, that the Conversion Price shall be subject to adjustment as set forth in this
Section 7.

(b) Each Class D Share shall automatically be converted into shares of Common Stock at the then effective Conversion Price
(i) immediately prior to the closing of the Corporation's sale of shares of its Common Stock to the public in a bona fide, underwritten public offering pursuant to a registration statement under the Securities Act of 1933, as amended, in which (a) the aggregate price paid for such shares by the public is at least $25 million and (b) the price paid by the public for such shares (before deduction of underwriting discounts and registration expenses) results in a market valuation of the Corporation of at least $200 million, or (ii) promptly upon receipt of the affirmative vote of the holders of two-thirds of the outstanding Class D Shares.

7.2 Mechanics of Conversion.

(a) To convert Class D Shares, the holder thereof shall surrender the certificate or certificates representing such shares, duly endorsed, at the principal corporate office of the Corporation or of any transfer agent for the Class D Shares, and shall give written notice to the Corporation at its principal corporate office of the election to convert the same and shall state therein the name or names in which the certificate or certificates for Common Shares are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Class D Shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid, and a check payable to the holder in the amount of any cash amounts payable to the holder in lieu of fractional shares, as provided in Section 7.7. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate representing the Class D Shares to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date.

(b) In the event of an automatic conversion pursuant to
Section 7.1(b) the Class D Shares shall not be deemed to be converted until immediately prior to the closing of such sale of securities or one business day after the completion of the vote referenced in clause (ii) of Section 7.1(b). Upon the closing of such an offering or the day after the completion of the vote, the outstanding Class D Shares shall be converted automatically without further action by the holders of said shares and whether or not the certificates representing said shares are surrendered to the Corporation or its transfer agent; provided, however, the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of any Class D Shares unless certificates evidencing such Class D Shares are either delivered to the Corporation or any transfer agent, or the holder notifies the Corporation that said certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation against any loss incurred by it in connection therewith. Upon the occurrence of the automatic conversion, the holders of Class D Shares shall surrender the certificates representing the shares at the office of the Corporation or of any transfer agent for the Class D Shares. Thereupon, there shall be issued and delivered to such holder, promptly at such office and in such holder's name as shown on such surrendered certificate or certificates (or such other name as such holder may designate), a certificate or certificates for the number of shares of Common Stock into which the Class D Shares surrendered were convertible on the date on which the event effecting the automatic conversion occurred.

7.3 Conversion Price Adjustment. The Conversion Price of the Class D Shares shall be subject to adjustment from time to time as follows:

(a) (i) If the Corporation shall issue any "Additional Stock" (as defined in Section 7.3(b) below) for a consideration per share less than the Conversion Price of the Class D Shares in effect immediately prior to the issuance of such Additional Stock, then the applicable Conversion Price for the Class D Shares in effect immediately prior to each such issuance shall forthwith be adjusted to a price determined by dividing the aggregate consideration received by the Corporation for all Additional Stock issued by the Corporation during the preceding 12 month period, including the consideration to be received by the Corporation for the issuance of such Additional Stock, by the aggregate number of shares of Additional Stock issued during such preceding 12 month period, including the number of shares of Additional Stock to be issued in the new issuance. Immediately after any shares of Additional Stock are deemed to be issued pursuant to Section 7.3(a)(v), such shares of Additional Stock shall be deemed to be outstanding.

(ii) No adjustment of the applicable Conversion Price shall be made in an amount less than one cent ($.01) per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, on a cumulative basis, amounts to an adjustment of one cent ($0.01) per share or more in the Conversion Price. Except to the limited extent provided for in Sections 7.3(a)(v)(3) and 7.3(a)(v)(4), no adjustment of such Conversion Price pursuant to this Section 7.3(a) shall have the effect of increasing such Conversion Price above the Conversion Price in effect immediately prior to such adjustment.

(iii) In the case of the issuance of shares of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefore before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof.

(iv) In the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors irrespective of any accounting treatment.

(v) In the case of the issuance of options to purchase or rights to subscribe for shares of Common Stock, securities by their terms convertible into or exchangeable for shares of Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable securities (that are not expressly excluded from the definition of Additional Stock), the following provisions shall apply:

(1) The aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for shares of Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Sections 7.3(a)(iii) and 7.3(a)(iv)), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the shares of Common Stock covered thereby.

(2) The aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities, or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion of or exchange thereof, shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration, if any, received by the Corporation for any such securities, or for any such options or rights, plus the minimum additional consideration, if any, to be received by the Corporation upon the conversion or exchange of related securities, for such shares of Common Stock (the consideration in each case to be determined in the manner provided in Sections 7.3(a)(iii) and 7.3(a)(iv)).

(3) In the event of any change in the number of shares of Common Stock deliverable or any increase in the consideration payable to the Corporation upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, including, but not limited to, a change resulting from the antidilution provisions thereof, the Conversion Price of the Common Stock obtained with respect to the adjustment which was made upon the issuance of such options, rights or securities, and any subsequent adjustments based thereon, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of shares of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such related securities.

(4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of the Class D Shares obtained with respect to the adjustment which was made upon the issuance of such options, rights or securities or options or rights related to such securities, and any subsequent adjustments based thereon, shall be recomputed to reflect the issuance of only the number of shares of Common Stock actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights and conversion or exchange of such related securities.

(b) "Additional Stock" shall mean any shares of Common Stock issued either directly or upon exercise or conversion of a derivative instrument (or deemed to have been issued pursuant to Section 7.3(a)(v)) by the Corporation after the Original Issue Date other than:

(i) Shares of Common Stock issued pursuant to a transaction described in subsection 7.3(c) hereof;

(ii) Shares of Common Stock issuable or issued to employees, officers, directors or consultants of the Corporation directly or pursuant to a stock option plan or agreement or restricted stock plan or agreement approved by the Board of Directors of the Corporation, when the total number of shares of Common Stock so issuable or issued does not exceed seven hundred fifty thousand (750,000) shares (appropriately adjusted to reflect subsequent Share Combinations or Divisions, and net of any such shares repurchased by the Corporation at cost upon termination of employment or services, and net of any such options which may expire unexercised);

(iii) Shares of Common Stock issued or issuable in connection with debt or lease financing approved by the Board of Directors; (iv) Shares of Common Stock issued or issuable in connection with any acquisition approved by the Board of Directors; (v) Shares of Common Stock issued or issuable upon conversion of the Preferred Stock Classes A, B, C or D; (vi) Common Stock issued or issuable as dividend payments or accruals; or (vii) Shares of Common Stock issued prior to the Original Issue Date or pursuant to subscription agreements entered into by the Corporation prior to the Original Issue Date.

(c) In the event the Corporation should at any time or from time to time after the Original Issue Date fix a record date to effect a split of the outstanding shares of Common Stock or the determination of holders of shares of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such split, dividend or distribution if no record date is fixed), the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each Class D Share shall be increased in proportion to such increase of outstanding shares (and/or shares deemed to be outstanding as determined in accordance with Section 7.3(a)(v)).

(d) If the number of shares of Common Stock outstanding at any time after the Original Issue Date is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each Class D Share shall be decreased in proportion to such decrease in the number of outstanding shares of Common Stock .

7.4 Adjustment for Reclassification, Exchange and Substitution. If at any time or from time to time after the Original Issue Date, the shares of Common Stock issuable upon the conversion of the Class D Shares are changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a share combination or division provided for elsewhere in this Section 7), in any such event each holder of the Class D Shares shall have the right thereafter to convert such shares into the kind and amount of securities and property receivable upon such recapitalization, reclassification or other change by holders of the shares of Common Stock into which such Class D Shares could have been converted immediately prior to such recapitalization, reclassification or change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 7 with respect to the rights of holders of Class D Shares after such recapitalization, reclassification or the like to the end that the provisions of this Section 7 (including adjustment of the Conversion Price then in effect and the number of shares of Common Stock receivable upon conversion of the Class D Shares) shall be applicable after that event and be as nearly equivalent as possible.

7.5 Reorganizations, Mergers, Sale of Assets. If at any time or from time to time after the Original Issue Date the Corporation effects a merger, sale or conveyance of all or substantially all of the assets of the Corporation, or similar reorganization (other than a reclassification, exchange or substitution provided for in Section 7.4), then as a part of such merger, sale or conveyance of assets, or other reorganization provision shall be made so that the holders of Class D Shares shall thereafter be entitled to receive upon conversion of the Class D Shares the number of shares of stock or other securities or property of the Corporation to which a holder of the number of shares of Common Stock deliverable upon conversion of such Class D Shares would have been entitled upon such merger, sale or conveyance of assets or other reorganization, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 7 with respect to the rights of the holders of Class D Shares after the merger, sale or conveyance of assets or other reorganization to the end that the provisions of this Section 7 (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Class D Shares) shall be applicable after that event and be nearly equivalent as practicable.

7.6 No Impairment. The Corporation will not, without the approval of the holders of Class D Shares as required under Section 8, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 7 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights against impairment.

7.7 No Fractional Shares. No fractional shares shall be issued upon conversion of any of the Class D Shares, and the number of shares of Common Stock to be issued upon conversion shall be rounded down to the nearest whole share. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay the holder cash equal to the fraction multiplied by the fair market value of one share of Common Stock immediately prior to the conversion, as determined by the Board of Directors in good faith. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of Class D Shares the holder is at the time converting into shares of Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

8. Protective Provisions for Class D Shares. As long as at least an aggregate of fifty thousand (50,000) of the Class D Shares (as appropriately adjusted for Share Combinations or Divisions) shall be outstanding, the Corporation shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of not less than a majority of the total number of Class D Shares then outstanding, voting together as one class:

8.1 Certain Class D Share Changes. Amend or repeal any provision of, or add any provision to, the Corporation's certificate of incorporation or bylaws, if such action would alter or change the rights, preferences, privileges or restrictions of the Class D Shares;

8.2 Senior Securities or Debt Instruments. Issue shares of any series or class of stock having any preference or priority as to dividends, assets or other rights superior to any such preference or priority enjoyed by the holders of the Class D Shares and/or the issuance of any debt security instruments having a preference or other rights superior to any preference or priority enjoyed by the holders of the Class D Shares.

8.3 Dividends. Declare or pay any dividends on account of shares of Common Stock, except for share dividends issued pro rata to the holders of shares of Common Stock;

8.4 Redemption. Purchase or redeem any capital stock of the Corporation except pursuant to Section 6 hereof or through a purchase or redemption of shares of Common Stock from an officer, employee, director or consultant of the Corporation upon termination of employment or services pursuant to the terms of a stock purchase or stock option plan or agreement

9. Board of Director Seat. In the event there are at least 100,000 shares of Class D Shares outstanding that were purchased for cash, as opposed to conversion of indebtedness, (the "Cash Purchased Class D Shares) the holders of the Cash Purchased Class D Shares shall be entitled to elect by majority vote one member of the board of directors at closing of their cash purchase and at each election of the Board of Directors of the Corporation.

10. Notices.

10.1 Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, or right to purchase or otherwise acquire any securities or property of the Corporation, or any other right (other than the right to vote shares), the Corporation shall mail to each holder of the Class D Shares at least fifteen (15) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or rights, and the amount and character of such dividend, distribution or right.

10.2 Manner of Notice. Any notice required or permitted to be given by the provisions of this Certificate of Incorporation to the holders of Class D Shares (or any Class thereof) shall be given in writing and shall be deemed to have been duly given if delivered personally or when mailed by registered or certified mail, postage prepaid, to each such holder of record of Class D Shares at such holder's address appearing on the books of this Corporation.

IN WITNESS WHEREOF, Klever Marketing, Inc., has caused this Certificate to be executed this 14th day of June 2002, by its undersigned duly authorized officer.

KLEVER MARKETING, INC.

By: ___________________________________
Richard J. Trout
Its: President


AMENDMENT TO THE
CERTIFICATES OF DESIGNATION OF RIGHTS, PRIVILEGES AND PREFERENCES OF CLASS A, B AND C VOTING PREFERRED STOCK, OF

KLEVER MARKETING, INC.

The undersigned, Richard J. Trout, hereby certifies that:

A. He is the duly elected and acting President of Klever Marketing, Inc., a Delaware corporation (hereafter the "Corporation").

B. Pursuant to a resolutions of the Board of Directors of the Corporation, duly adopted as of May 20, 2002, and pursuant to Section 151 of the General Corporation Law of the State of Delaware and Article IV of the Corporation's Certificate of Incorporation the Certificates of Designation of Rights, privileges and Preferences of Class A Voting Preferred Stock, Class B Voting Preferred and the Class C Voting Preferred are each amended to decrease the number of authorized shares in each class to that number provided as follows:
1. 55,000 shares of Class A Voting Preferred,

2. 42,000 shares of Class B Voting Preferred and

3. 150,000 shares of Class C Voting Preferred.

C. As amended above, the Certificates of Designation of Rights, Privileges and Preferences of the Class A Voting Preferred Stock, Class B Voting Preferred and the Class C Voting Preferred are ratified and confirmed.

IN WITNESS WHEREOF, Klever Marketing, Inc., has caused this Certificate to be executed this 12th day of June, 2002, by its undersigned duly authorized officer.

KLEVER MARKETING, INC.

By:_______________________________
Richard J. Trout, its President