SENSE TECHNOLOGIES INC - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - SENSE TECHNOLOGIES INC	Financial_Report.xls
EX-32.1 - SENSE TECHNOLOGIES INC	ex32.htm
EX-31.1 - SENSE TECHNOLOGIES INC	ex31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended August 31, 2011


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period From to

Commission File Number: 000-29990

SENSE TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

British Columbia		90010141
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2535 N. Carleton Avenue Grand Island, Nebraska		68803
(Address of principal executive offices)		(Zip Code)

(308) 381-1355

(Registrant’s telephone number, including area code)

None

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨		Smaller reporting company x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at December 5, 2011
Common Stock		94,451,782 shares

TABLE OF CONTENTS

Sense Technologies Inc. Form 10-Q

		Page
PART I	FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS.	1
	BALANCE SHEETS AS OF AUGUST 31, 2011 (UNAUDITED) AND FEBRUARY 28, 2011	2
	STATEMENTS OF LOSSES FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2011 AND 2010 (UNAUDITED)	3
	STATEMENTS OF CASH FLOWS FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2011 AND 2010 (UNAUDITED)	4
	STATEMENT OF STOCKHOLDERS’ DEFICIENCY FOR THE SIX MONTHS ENDED AUGUST 31, 2011 (UNAUDITED) AND THE YEAR ENDED FEBRUARY 28, 2011	5
	NOTES TO UNAUDITED FINANCIAL STATEMENTS	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	9
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	12
ITEM 4T.	CONTROLS AND PROCEDURES.	12

PART II	OTHER INFORMATION	14

ITEM 1.	LEGAL PROCEEDINGS.	14
ITEM 1A.	RISK FACTORS.	14
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	14
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	14
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.	14
ITEM 5.	OTHER INFORMATION.	14
ITEM 6.	EXHIBITS.	14

	SIGNATURES	15

Table of Contents

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

SENSE TECHNOLOGIES INC.

INTERIM FINANCIAL STATEMENTS

August 31, 2011

(Stated in US Dollars)

( Unaudited )

Table of Contents

SENSE TECHNOLOGIES INC.

BALANCE SHEETS

As of August 31, 2011 and February 28, 2011

(Stated in US Dollars)

(Unaudited)

	August 31,			February 28,
	2011			2011
ASSETS
Current
Cash	$	-		$	750
Accounts receivable		2,173			1,134
Accounts receivable – related party		2,532			2,532
Inventory		204,086			171,365
Prepaids		85,984			11,131
Total Current Assets		294,775			186,912

Equipment – Net of accumulated depreciation of $109,865 and $104,346 at August 31, 2011 and February 28, 2011, respectively		32,842			38,361
Deposits		800			800
Intangible assets		51			51
Total Assets	$	328,468		$	226,124

LIABILITIES
Current
Bank overdraft	$	1,123		$	8,485
Accounts payable		319,442			341,932
Accounts payable – related party		38,894			43,950
Accrued expenses		1,212,339			1,176,935
Accrued expenses – related party		70,811			70,811
Notes payable		572,589			461,380
Notes payable – related party		412,090			386,590
Advances payable – related entity		24,282			67,850
Dividends payable		282,119			266,323
Convertible promissory notes payable		584,447			584,447
Total Current Liabilities		3,518,136			3,408,703

STOCKHOLDERS' DEFICIENCY

Class A preferred shares, without par value, redeemable at $1 per share, 20,000,000 shares authorized, 315,914 shares issued at August 31, 2011 (February 28, 2011: 315,914)		315,914			315,914
Common stock, without par value 150,000,000 shares authorized, 94,451,782 shares issued and outstanding at August 31, 2011 (February 28, 2011: 87,951,781)		14,592,215			14,392,215
Common stock subscribed		133,889			88,889
Retained Deficit		(18,231,686	)		(17,979,597	)
Total Stockholders’ Deficiency		(3,189,668	)		(3,182,579	)
Total Liabilities and Stockholders’ Deficiency	$	328,468		$	226,124

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

Table of Contents

SENSE TECHNOLOGIES INC.

INTERIM STATEMENTS OF LOSS

for the three and six months ended August 31, 2011 and 2010

(Stated in US Dollars)

(Unaudited)

	Three months ended						Six months ended
	August 31,						August 31,
	2011			2010			2011			2010

Sales	$	10,542		$	101,807		$	62,351		$	147,933
Direct costs
Cost of sales		-			-			10,779			-
Manufacturing expenses		3,338			25,314			11,023			35,568
Research and development		2,150			-			5,150			-
Commissions		16,824			21,751			28,851			29,977
Royalties		15,612			17,000			31,574			67,000
		37,924			64,065			87,377			132,545
		(27,382	)		37,742			(25,026	)		15,388
Expenses
Advertising and marketing		70			1,018			2,876			1,018
Consulting fees		20,172			6,900			36,172			29,600
Contract labor		3,000			3,000			6,000			6,000
Depreciation		2,759			2,760			5,519			5,519
Filing fees		7,593			200			7,816			3,935
Insurance		6,660			6,616			13,294			13,385
Bank charges		615			1,093			1,407			1,691
Legal and accounting		19,365			30,360			20,509			40,981
Office and miscellaneous		2,213			2,567			4,826			5,973
Rent		3,711			902			7,453			1,718
Telephone and utilities		105			-			189			-
Transfer agent fees		1,130			-			2,301			2,764
Travel and automotive		1,054			7,293			5,096			8,650
		68,447			62,709			113,458			121,234
Net Operating Loss		(95,829	)		(24,967	)		(138,484	)		(105,846	)

Interest Expense		57,910			36,807			97,809			111,309

Net loss		(153,739	)		(61,774	)		(236,293	)		(217,155	)

Preferred dividends, paid or accrued		7,898			7,899			15,796			15,798

Net loss attributable to common stockholders	$	(161,637	)	$	(69,643	)	$	(252,089	)	$	(232,953	)

Basic and diluted loss per share	$	0.00		$	(0.00	)	$	0.00		$	(0.00	)

Weighted average number of shares outstanding		92,544,173			72,704,650			90,247,977			69,754,651

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

Table of Contents

SENSE TECHNOLOGIES INC.

INTERIM STATEMENTS OF CASH FLOWS

for the three and six months ended August 31, 2011 and 2010

(Stated in US Dollars)

(Unaudited)

	Three Months Ended August 31, 2011			Three Months Ended August 31, 2010			Six Months Ended August 31, 2011			Six Months Ended August 31, 2010
Operating Activities
Net income (loss) for the period	$	(153,739	)	$	(61,774	)	$	(236,293	)	$	(217,155	)
Adjustments to reconcile net loss to net cash used in Operating activities:
Depreciation		2,760			2,760			5,519			5,519
Amortization of Debt Discount		20,000			-			20,000			-
Changes in non-cash working capital balances related to operations:
Accounts receivable		4,600			10,480			(1,039	)		(13,336	)
Inventory		-			-			(32,721	)		-
Prepaids		(74,322	)		(11,826	)		(74,853	)		(13,185	)
Accounts payable and accrued liabilities		(16,246	)		23,618			(43,071	)		90,238

Net cash used by operating activities		(216,947	)		(36,742	)		(362,458	)		(147,919	)

Financing Activities
Borrowing on debt		126,925			15,710			149,536			40,774
Payments on debt		(5,865	)		(8,968	)		(12,828	)		(26,564	)
Proceeds from common share subscriptions		95,000			30,000			225,000			133,000

Net cash provided by financing activities		216,060			36,742			361,708			147,210

Increase (Decrease) in cash during the period		(887	)		-			(750	)		(709	)

Cash, beginning of period		887			-			750			709

Cash, end of period	$	-		$	-		$	-		$	-
Supplemental Disclosures of Cash Flow Information:
Forgiveness of related party accrual	$	-		$	602,907		$	-		$	602,907

Preferred dividends accrued	$	7,898		$	7,898		$	15,796		$	15,796

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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SENSE TECHNOLOGIES INC.

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

for the period ended August 31, 2011

(Stated in US Dollars)

(Unaudited)

	Common Stock				Preferred Stock				Common
	Issued				Issued				Stock			Accumulated
	Shares		Amount		Shares		Amount		Subscribed			Deficit			Total

Balance, February 28, 2010		66,804,651	$	13,135,268		315,914	$	315,914	$	190,889		$	(17,433,657	)	$	(3,791,586	)
Common Stock issued		21,147,130		634,414		-		-		(102,000	)		-			532,414
Options Issued to Directors		-		19,626		-		-					-			19,626
Dividends		-		-		-		-		-			(31,591	)		(31,591	)
Write-off of related party gain on conversion of debt		-		71,138		-		-					-			71,138
Forgiveness of related party royalties		-		523,335		-		-					-			523,335
Write-off gain on forgiveness of related party accounts payable		-		8,434		-		-					-			8,434
Net loss for the period		-		-		-		-					(514,349	)		(514,349	)

Balance, February 28, 2011		87,951,781		14,392,215		315,914		315,914		88,889			(17,979,597	)		(3,182,579	)
Common Stock Issued		6,500,001		200,000		-		-		-			-			200,000
Common Stock Subscribed		-		-		-		-		45,000			-			45,000
Dividends													(15,796	)		(15,796	)
Net loss for the period													(236,293	)		(236,293	)
Balance, August 31, 2011		94,451,782	$	14,592,215		315,914	$	315,914	$	133,889		$	(18,231,686	)	$	(3,189,668	)

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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SENSE TECHNOLOGIES INC.

NOTES TO THE INTERIM FINANCIAL STATEMENTS

Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its obligations and commitments in the normal course of operations. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

While the information presented in the accompanying six months to August 31, 2011 financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these interim unaudited financial statements be read in conjunction with the Company’s audited financial statements for the year ended February 28, 2011.

SIGNIFICANT ACCOUNTING POLICIES:

Recently Adopted And Recently Enacted Accounting Pronouncements

In April 2008, the FASB issued ASC 350-10, "Determination of the Useful Life of Intangible Assets." ASC 350-10 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under ASC 350-10, "Goodwill and Other Intangible Assets." ASC No. 350-10 is effective for fiscal years beginning after December 15, 2008. The adoption of this ASC did not have a material impact on our consolidated financial statements.

In April 2009, the FASB issued ASC 805-10, "Accounting for Assets Acquired and Liabilities assumed in a Business Combination That Arise from Contingencies—an amendment of FASB Statement No. 141 (Revised December 2007), Business Combinations". ASC 805-10 addresses application issues raised by preparers, auditors and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. ASC 805-10 is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. ASC 805-10 will have an impact on our accounting for any future acquisitions and its consolidated financial statements.

In May 2009, the FASB issued ASC Topic 855, “Subsequent Events”. ASC Topic 855 established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. ASC Topic 855 also requires disclosure of the date through which subsequent events are evaluated by management. ASC Topic 855 was effective for interim periods ending after June 15, 2009 and applies prospectively. Because ASC Topic 855 impacts the disclosure requirements, and not the accounting treatment for subsequent events, the adoption of ASC Topic 855 did not impact our consolidated results of operations or financial condition. See Note 10 for disclosures regarding our subsequent events.

Effective July 1, 2009, we adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 105-10, Generally Accepted Accounting Principles—Overall ("ASC 105-10"). ASC 105-10 establishes the FASB Accounting Standards Codification (the "Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates ("ASUs"). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout these consolidated financials have been updated for the Codification.

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In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value measurements. This ASU is effective October 1, 2009. We are currently evaluating the impact of this standard, but would not expect it to have a material impact on the our consolidated results of operations or financial condition.

In March 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-11 (ASU 2010-11), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.” The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of the Update. The Company does not expect the provisions of ASU 2010-11 to have a material effect on the financial position, results of operations or cash flows.

In February 2010, the FASB Accounting Standards Update 2010-11 (ASU 2010-11), “Consolidation (Topic 810): Amendments for Certain Investment Funds.” The amendments in this Update are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Company’s adoption of provisions of ASU 2010-10 did not have a material effect on the financial position, results of operations or cash flows.

In February 2010, the FASB issued ASU No. 2010-09 “Subsequent Events (ASU Topic 855) “Amendments to Certain Recognition and Disclosure Requirements” (“ASU No. 2010-09”). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The adoption did not have an impact on the Company’s financial position and results of operations.

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of ASU 2010-06 did not have a material impact on the Company’s financial statements.

Reclassification

Certain amounts reported in the prior period financial statements have been reclassified to the current period presentation.

Note 2 GOING CONCERN

At August 31, 2011, the Company had not yet achieved profitable operations, had an accumulated deficit of $18,231,686 (February 28, 2011 - $17,979,597) since its inception and incurred a net loss of $236,293 (2010 - $ 217,155) for the six months ended August 31, 2011 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers obtaining additional funds by equity financing and/or from related party. Management expects the Company’s cash requirement over the twelve-month period ended February 28, 2012 to be $300,000. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds for operations.

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Note 3 COMMON STOCK

a) Commitments:

Stock-based Compensation Plan

	August 31,				February 28,
	2011				2011
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding and exercisable beginning of period		3,000,000	$	0.04		2,000,000	$	0.04
Expired		-		-		-		-
Outstanding and exercisable end of the period		3,000,000	$	0.04		2,000,000	$	0.04

At August 31, 2011, the following employee and director common share purchase options were outstanding entitling the holders thereof the right to purchase one common share for each share purchase option held:

Number		Exercise Price		Expiry Date
	1,000,000	$	0.05	December 31, 2012
	1,000,000	$	0.03	December 31, 2014
	1,000,000	$	0.03	December 31, 2015

Common Shares Subscribed

As of August 31, 2011, the Company has issued 6,500,001 shares of common stock in the amount of $200,000. The company received proceeds of $45,000 of private placements of 1,500,000 common shares at $.03 per share.

Note 4 RELATED PARTY TRANSACTIONS

The Company incurred the following items with directors and companies with common directors and shareholders:

	August 31,
	2011		2010
Royalties	$	-	$	17,000
Interest expense	$	46,444	$	41,364

As of August 31, 2011, included in accounts payable is $33,495 (February 28, 2011: $33,495) owing to an accounting firm in which a director of the Company is a partner and $5,399 (February 28, 2011: $10,455) to a shareholder with respect to unpaid fees and interest on promissory notes, $480,000 (February 28, 2011: $480,000) owing to shareholders of the Company in respect of royalties payable with no interest accruing, and $53,694 (February 28, 2010: $53,694) owing to the former president of the Company in respect of unpaid wages.

As of August 31, 2011, included in advances payable is $24,282 (February 28, 2011: $67,850) owed to a company controlled by a director.

As of August 31, 2011, promissory notes payable of $412,090 (February 28, 2010: $386,590) is due to a profit-sharing and retirement plan administered by a director of the Company. Terms are:

Date Due:	Amount
December, 2011	$	216,372
December, 2011		168,218
April, 2012		15,000
June, 2012		12,500
Total	$	412,090

All bear interest at 12% per annum.

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Note 5 PREPAID EXPENSES

As of August 31, 2011, included in prepaid expenses is $63,000 for prepaid royalties per a trademark license with Escort, Inc. (February 28, 2011: $0).

Note 6 ACCRUED LIABILITIES/ACCRUED LIABILITIES – RELATED PARTY

	August 31, 2011		February 28, 2011
Accrued Liabilities:
Lease Settlement		24,672		45,065
Credit card payable		-		4,119
Accrued interest payable		515,650		453,568
Accrued non resident withholding taxes, including accrued interest		143,136		143,136
Accrued royalties		480,000		480,000
Accrued taxes payable		48,881		51,047
	$	1,212,339	$	1,176,935

Accrued payroll- related party		53,694		53,694
Accrued liabilities – related party		17,117		17,117
	$	70,811	$	70,811

Note 7 CONCENTRATIONS

The Company operates in one industry segment being the production, marketing and distribution of safety awareness products in the automotive industry. Substantially, all of the Company’s operations and assets are located in the United States. During the six months ended August 31, 2011, there were three customers that accounted for $59,072 (94%) of sales revenue. During the six months ended August 31, 2010, there were two customers that accounted for $139,265 (93%) of sales revenue.

Note 8 LAWSUIT SETTLEMENT

In August 2009, the Company settled litigation related to breach of lease and past due rent for $73,065. Prior to August 31, 2011, the Company paid $48,393 (February 28, 2011: $28,000) of this judgment. The remaining balance of $24,672 is presented as Accrued Expenses as of August 31, 2011.

Note 9 SUBSEQUENT EVENTS

Management has evaluated subsequent events through December 5, 2011, the date of which the financial statements were available to be issued.

Management’s Discussion And Analysis

Sense Technologies Inc. Form 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto for the period ended August 31, 2011 and our Financial Statements and notes thereto for the period ended August 31, 2010.

1. Overview of Operations

Sense holds a non-exclusive license to manufacture, distribute, market and sublicense world-wide, a patented technology which is used to produce the Guardian Alert® backing awareness system for motor vehicles utilizing microwave radar technology. The Company assembles the product in Charlotte, NC. The company also holds a non-exclusive license to manufacture, distribute, market and sublicense world-wide, the ScopeOut® product, a patented system of specially-designed mirrors which are placed at specific points on vehicles to offer drivers a more complete view of the blind spots toward the rear of the vehicle. This product is manufactured in China through an outsourced vendor.

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2. Results of Operations

For the three and six month period ended August 31, 2011as compared to the three and six month period ended August 31, 2010.

	Three months ended August 31				Six months ended August 31
	2011		2010		2011		2010
Sales
Sales Guardian Alert		10,542		101,807		62,351		147,933
Sales Scope Out		-		-		-		-
		10,542		101,807		62,351		147,933

Sales for the six months ended August 31, 2011 decreased by 58% from $147,933 to $62,351 due to decreased demand for Guardian Alert and a shift of our focus from Scope Out to Guardian Alert sales. Revenue is recognized by management only upon receipt of an actual purchase order from a customer, and the related invoicing to the company or, in the absence of a purchase order (i.e., verbal order), the actual invoicing to the customer, when the products are shipped and collection is reasonably assured.

Sales for the three months ended August 31, 2011 decreased by 90% from $101,807 to $10,542 due to decreased demand from key customers basically due to the weak economy.

We continued to market both products. While it is the company objective to grow sales, no assurance can be given that we will be successful in this manner and sustain comparable sales in future periods.

	For the three months ended August 31				For the six months ended August 31
	2011		2010		2011		2010
Direct Cost
Scope Out Direct Costs
Cost of sales		-		-		-		-
Manufacturing expenses		-		-		-		-
Research and development		-		-		-		-
Commissions		-		-		-		-
Royalties		15,000		17,000		30,000		67,000
Total Scope Out Direct Costs		15,000		17,000		30,000		67,000

Guardian Alert Direct Costs
Cost of sales		-		-		10,779		-
Manufacturing expenses		3,338		25,314		11,023		35,568
Research and development		2,150		-		5,150		-
Commissions		16,824		21,751		28,851		29,977
Royalties		612		-		1,574		-
Total Guardian Alert Direct Costs		22,924		47,065		57,377		65,545
Total Direct Costs		37,924		64,065		87,377		132,545

Overall direct costs for the current three and six months ending decreased due primarily to reduced royalty costs of the Scope Out® product and commissions on reduced sales on the Guardian Alret®.

Direct costs typically include the cost of raw materials necessary to make our products. It also includes the cost of shipping the products from manufacturing location to our warehouse. Direct costs also include costs in respect of obsolete inventory.

Direct costs related to Scope Out® were $30,000 and $67,000 for the six month periods ended August 31, 2011 and 2010, respectively, a decrease of 55%. The decrease is primarily attributable to the decrease in royalty costs.

Direct costs related to Scope Out® for the three month period ended August 31, 2011 and 2010 decreased 12% from $17,000 to $15,000 due to the decrease in royalty costs.

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Direct costs related to Guardian Alert were $57,377 and $65,545 for the six month period ending August 31, 2011 and 2010 respectively. This change represents an decrease of 12%. Commission expenses were $28,851and $29,977 for the six month period ended August 31, 2011 and 2010, respectively. Commission expense decreased 4% due to decreased sales for the six months. Manufacturing expenses were $11,023 and $35,568 for the six month period ended August 31, 2011, and 2010, respectively. Manufacturing expenses in Direct Costs for the Guardian Alert® for the six months ended in 2011 represents assembly costs for the sales achieved for the same period.

Direct costs related to Guardian Alert® were $22,924 and $47,065 for the three month period ending August 31, 2011 and 2010 respectively. This change represents a decrease of 51%. Commission expenses were $16,824 and $21,751 for the three month period ended August 31, 2011 and 2010, respectively. Commission expense decreased 23% due to decreased sales for the three months. Manufacturing expenses were $3,338 and $25,314 for the three month period ended August 31, 2011 and 2010, respectively. Manufacturing expenses in Direct Costs for the Guardian Alert® for the three months ended in 2011 represents assembly costs for the sales achieved for the same period.

	Selling, General, and Administrative
		For the three months ended August 31				For the six months ended August 31
		2011		2010		2011		2010
Advertising and marketing			70		1,018		2,876		1,018
Consulting fees			20,172		6,900		36,172		29,600
Contract labor			3,000		3,000		6,000		6,000
Depreciation			2,759		2,760		5,519		5,519
Filing fees			7,593		200		7,816		3,935
Insurance			6,660		6,616		13,294		13,385
Bank charges			615		1,093		1,407		1,691
Legal and accounting			19,365		30,360		20,509		40,981
Office and miscellaneous			2,213		2,567		4,826		5,973
Rent			3,711		902		7,453		1,718
Telephone and utilities			105		-		189		-
Transfer agent fees			1,130		-		2,301		2,764
Travel and automotive			1,054		7,293		5,096		8,650
Total			68,447		62,709		113,458		121,234

Sense Technologies, Inc. had selling, general and administrative expenses of $113,458 for the six month period ended August 31, 2011 compared to selling, general and administrative expenses of $121,234 for the six month period ended August 31, 2010, a decrease in selling, general and administrative expenses of 6% from the prior period.

General and administrative expenses of $68,447 for the three month period ended August 31, 2011 compared to selling, general and administrative expenses of $62,709 for the three month period ended August 31, 2010, a 9% increase in selling, general and administrative expenses from the prior period.

Advertising and marketing fees increased as compared to the prior six month period. We had marketing fees of $2,876 and $1,018 for the six month period ended August 31, 2011 and 2010, respectively.

For the three month period advertising and marketing fees decreased 93%. We had marketing fees of $70 and $1,018 for the three month period ended August 31, 2011 and 2010, respectively

Consulting fees increased from $29,600 for the six month period ended August 31, 2010 to $36,172 for the six month period ended August 31, 2011. The increase was a result of increased consulting related to Guardian Alert® and ScopeOut® product sales.

Consulting fees increased from $6,900 for the three month period ended August 31, 2010 to $20,172 for the three month period ended August 31, 2011. The increase was a result of the increase of consulting mainly related to Scope Out® product.

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The Company determined that prior expenses for marketing and advertising costs related to the sales plan for ScopeOut® were not producing results. Management believed it was in the best interest of the company to discontinue these costs. The Company is concentrating on Guardian Alert® sales based on market interest, and in doing so as cost-efficiently as possible, the Company has replaced those costs with a “little-to-no cost” effort of asking existing fleet-customers to refer the Guardian Alert® products to other fleets. Additionally, the company is paying more in commissions, as previously stated, because of the efforts to incentivize the sales of the Guardian Alert® to fleets.

Legal and accounting fees decreased from $40,981 in the six month period ended August 31, 2010 to $20,509 for the six month period ended August 31, 2011. The decrease was mainly due to prior year legal expenses related to lease agreements for ScopeOut®.

Legal and accounting fees decreased from $30,360 in the three month period ended August 31, 2010 to $19,365 for the three month period ended August 31, 2011.

Following summarizes the overall operations results for the six month period ended August 31:

							Increase			% Increase
	2011			2010			( Decrease)			(decrease)

Sales		62,351			147,933			(85,582	)		(57.85	)
Direct Costs		87,377			132,545			(45,168	)		(34.08	)
General and Administrative expenses		113,458			121,234			(7,776	)		(6.41	)
Net Loss		(236,293	)		(217,155	)		21,138			9.73
Basic and Diluted Loss per share		( 0 .00	)		( 0 .00	)

Liquidity and Capital Resources

Our cash position at August 31, 2011 was $0 as compared to $750 at February 28, 2011. This decrease was due to our use of cash in operating activities and cash provided by financing activities as described below.

We have a working capital deficit of 3,189,668 and 3,182,579 as of August 31, 2011 and February 28, 2011 respectively. If we are unable to raise adequate working capital for fiscal 2012, we will be restricted in the implementation of our business plan. If this were to happen, the value of our securities would diminish and we may be forced to change our business plan for fiscal 2012, which would result in the value of our securities declining in value and/or becoming worthless. If we raise an adequate amount of working capital to implement our business plan, we anticipate incurring significant expenses relating to paying down our notes payable and royalties that are in arrears. Additionally we will incur net losses until a sufficient client base can be established, of which there can be no assurance.

Net cash used in operating activities

Net cash used in operating activities was $362,458 in 2011, compared to $147,919 in 2010. The increase in cash used in 2011 was largely due to the increase in inventory and prepaid royalties.

Net cash provided by financing activities

Net cash provided by financing activities was $361,708 in 2011 compared to net cash provided of $147,210 in 2010.

In 2011, we received $225,000 through subscriptions to private placements of our common shares.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including its chief executive officer (who is also acting in the capacity as the principal accounting officer), of the effectiveness of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Company’s principal executive officer has concluded that, as of the end of the period covered in this report, the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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The Company, including its principal executive officer and principal financial officer, does not expect that its disclosure controls and procedures or its internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, the Company performed additional analysis and other post-closing procedures in an effort to ensure its consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, the Company believes that the financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented.

The Company’s internal conclusion related to its disclosure and procedural controls is due to the number and magnitude or changes to its draft 10Q recommended by the Company’s independent auditor.

The Company plans to continue working with competent outside professionals to help it with quarterly reporting and if its business plan is successful additional improvements in the Company’s accounting department will be made.

Changes in Internal Control over Financial Reporting

In addition, the Company with the participation of its chief executive officers have determined that no change in our internal control over financial reporting occurred during or subsequent to the quarter ended August 31, 2011 that has materially affected, or is (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There were no material changes in our risk factors from our Form 10-K for the year ended February 28, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the quarter ended August 31, 2011.

Item 3. Defaults Upon Senior Securities.

None.

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

We did not submit any matter to a vote of our stockholders during the quarter ended August 31, 2011.

Item 5. Other Information.

Sense Technologies has entered an agreement with a global company to market the Guardian Alert® under a registered trade name.

Item 6. Exhibits.

31.1	Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange act of 1934
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(b) or Rule 15d-14(b) of the U.S. Securities Exchange Act of 1934
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SENSE TECHNOLOGIES INC.

December 5, 2011	By:	/S/ BRUCE E. SCHREINER
		Bruce E. Schreiner, President
		(principal executive officer) and Director

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SENSE TECHNOLOGIES INC Reports

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