SENSE TECHNOLOGIES INC - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - SENSE TECHNOLOGIES INC	Financial_Report.xls
EX-31.1 - SENSE TECHNOLOGIES INC	ex31-1.htm
EX-32.1 - SENSE TECHNOLOGIES INC	ex32-1.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 November 30, 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 o NO x

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 February 15, 2012
Common Stock		94,451,782 shares

Table of Contents

TABLE OF CONTENTS

Sense Technologies Inc. Form 10-Q

PART I-FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	1
	BALANCE SHEETS AS OF NOVEMBER 30, 2011 (UNAUDITED) AND FEBRUARY 28, 2011	2
	STATEMENTS OF LOSSES FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2011 AND 2010 (UNAUDITED)	3
	STATEMENTS OF CASH FLOWS FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2011 AND 2010 (UNAUDITED)	4
	STATEMENT OF STOCKHOLDERS’ DEFICIENCY FOR THE NINE MONTHS ENDED NOVEMBER 30, 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	11
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4T.	CONTROLS AND PROCEDURES	15

PART II-OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	16
ITEM 1A.	RISK FACTORS	16
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	16
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	16
ITEM 5.	OTHER INFORMATION	16
ITEM 6.	EXHIBITS	16

SIGNATURES		17

Table of Contents

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

SENSE TECHNOLOGIES INC.

INTERIM FINANCIAL STATEMENTS

November 30, 2011

(Stated in US Dollars)

( Unaudited )

Table of Contents

SENSE TECHNOLOGIES INC.

BALANCE SHEETS

As of November 30, 2011 and February 28, 2011

(Stated in US Dollars)

(Unaudited)

	November 30,			February 28,
	2011			2011
ASSETS
Current
Cash	$	-		$	750
Accounts receivable		2,173			1,134
Accounts receivable – related party		2,532			2,532
Inventory		189,888			171,365
Prepaids		74,802			11,131
Total Current Assets		269,395			186,912

Equipment – Net of accumulated depreciation of $112,624 and $104,346 at November 30, 2011 and February 28, 2011, respectively		30,083			38,361
Deposits		800			800
Intangible assets		51			51
Total Assets	$	300,329		$	226,124

LIABILITIES
Current
Bank overdraft	$	5,570		$	8,485
Accounts payable		316,198			341,932
Accounts payable – related party		37,687			43,950
Accrued expenses		1,230,922			1,176,935
Accrued expenses – related party		70,811			70,811
Notes payable		568,934			461,380
Notes payable – related party		412,090			386,590
Advances payable – related entity		6,242			67,850
Dividends payable		290,017			266,323
Convertible promissory notes payable		584,447			584,447
Total Current Liabilities		3,522,918			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 issuedat November 30, 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 November 30, 2011 (February 28, 2011: 87,951,781)		14,592,215			14,392,215
Common stock subscribed		192,389			88,889
Retained Deficit		(18,323,107	)		(17,979,597	)
Total Stockholders’ Deficiency		(3,222,589	)		(3,182,579	)
Total Liabilities and Stockholders’ Deficiency	$	300,329		$	226,124

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

Table of Contents

SENSE TECHNOLOGIES INC.

INTERIM STATEMENTS OF LOSS

for the three and nine months ended November 30, 2011 and 2010

(Stated in US Dollars)

(Unaudited)

	Three months ended						Nine months ended
	November 30,						November 30,
	2011			2010			2011			2010

Sales	$	75,856		$	47,355		$	138,207		$	195,288
Direct costs
Cost of sales		14,198			-			24,977			-
Manufacturing expenses		19,454			25,286			30,477			60,854
Research and development		3,850			-			9,000			-
Commissions		14,702			15,112			43,553			45,089
Royalties		19,520			15,000			51,094			82,000
		71,724			55,398			159,101			187,943
		4,132			(8,043	)		(20,894	)		7,345

Expenses
Advertising and marketing		-			500			2,876			1,518
Consulting fees		13,500			(400	)		49,672			29,200
Contract labor		3,000			3,000			9,000			9,000
Depreciation		2,759			2,760			8,278			8,279
Filing fees		841			1,195			8,657			5,130
Insurance		7,176			6,707			20,470			20,092
Bank charges		1,106			1,012			2,513			2,703
Legal and accounting		4,950			6,342			25,459			47,323
Office and miscellaneous		4,215			9,882			9,041			15,855
Rent		3,744			3,282			11,197			5,001
Telephone and utilities		86			14			275			14
Transfer agent fees		7,533			2,748			9,834			5,512
Travel and automotive		819			24			5,915			8,674
		49,729			37,066			163,187			158,301
Net Operating Loss		(45,597	)		(45,109	)		(184,081	)		(150,956	)

Interest Expense		37,926			36,809			135,735			148,118

Net loss		(83,523	)		(81,918	)		(319,816	)		(299,074	)

Preferred dividends, paid or accrued		7,898			7,898			23,694			23,694

Net loss attributable to common stockholders	$	(91,421	)	$	(89,816	)	$	(343,510	)	$	(322,768	)

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

Weighted average number of shares outstanding		94,451,782			74,021,867			91,639,054			71,166,711

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 November 30, 2011 and 2010

(Stated in US Dollars)

(Unaudited)

	Three Months Ended November 30, 2011			Three Months Ended November 30, 2010			Nine Months Ended November 30, 2011			Nine Months Ended November 30, 2010
Operating Activities
Net income (loss) for the period	$	(83,523	)	$	(81,918	)	$	(319,816	)	$	(299,074	)
Adjustments to reconcile net loss to net cash used in Operating activities:
Depreciation		2,759			2,760			8,278			8,279
Amortization of Debt Discount		-			-			20,000			-
Changes in non-cash working capital balances related to operations:
Accounts receivable		-			19,650			(1,039	)		6,314
Inventory		14,198			(76,654	)		(18,523	)		(76,654	)
Prepaids		11,182			5,907			(63,671	)		(7,278	)
Accounts payable and accrued liabilities		538			57,573			(42,533	)		147,812

Net cash used by operating activities		(54,846	)		(72,682	)		(417,304	)		(220,601	)

Financing Activities
Borrowing on debt		5,500			-			155,036			40,774
Payments on debt		(9,154	)		(13,292	)		(21,982	)		(39,856	)
Proceeds from common share subscriptions		58,500			91,000			283,500			224,000

Net cash provided by financing activities		54,846			77,708			416,554			224,918

Increase (Decrease) in cash during the period		-			5,026			(750	)		4,317

Cash, beginning of period		-			-			750			709

Cash, end of period	$	-		$	5,026		$	-		$	5,026
Supplemental Disclosures of Cash Flow Information:
Forgiveness of related party accrual	$	-		$	-		$	-		$	602,907

Preferred dividends accrued	$	7,898		$	7,898		$	23,694		$	23,694

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

Table of Contents

SENSE TECHNOLOGIES INC.

STATEMENT OF STOCKHOLDERS’ DEFICIENCY

for the period ended November 30, 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		-		-		-		-		103,500			-			103,500
Dividends													(23,694	)		(23,693	)
Net loss for the period													(319,816	)		(319,816	)
Balance, November 30, 2011		94,451,782	$	14,592,215		315,914	$	315,914	$	192,389		$	(18,323,107	)	$	(3,222,589	)

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

Table of Contents

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 nine months to November 30, 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 June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. ASU 2011-02 has become effective for the Company on September 1, 2012. The Company does not believe that the guidance will have a material impact on its financial statements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations.” This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

Table of Contents

In December 2010, the FASB issued ASU 2010-28, “Intangible –Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts.” This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In April 2010, the FASB issued ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Subtopic 310-30”). Furthermore, the amendments clarify guidance about maintaining the integrity of a pool as the unit of accounting for acquired loans with credit deterioration. Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The amendments in this Update are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early adoption is permitted. The adoption of this ASU did not have a material impact on our financial statements.

In April 2010, the FASB issued ASU 2010-13, "Compensation—Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades (A consensus of the FASB Emerging Issues Task Force)" (“ASU 2010-13”). ASU 2010-13 clarifies that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, such an award should not be classified as a liability if it otherwise qualifies as equity. This clarification of existing practice is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010, with early application permitted. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements.

In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our financial statements.

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers. Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our 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 November 30, 2011, the Company had not yet achieved profitable operations, had an accumulated deficit of $18,323,107 (February 28, 2011 - $17,979,597) since its inception and incurred a net loss of $319,816 (2010 - $ 299,074) for the nine months ended November 30, 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.

Table of Contents

Note 3 COMMON STOCK

a) Commitments:

Stock-based Compensation Plan

	November 30,				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 November 30, 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 November 30, 2011, the Company has issued 6,500,001 shares of common stock in the amount of $200,000. The company received proceeds of $103,500 of private placements of 3,450,000 common shares at $.03 per share.

Table of Contents

Note 4 RELATED PARTY TRANSACTIONS

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

	November 30,
	2011		2010
Royalties	$	-	$	-
Interest expense	$	57,981	$	176,382

As of November 30, 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 $2,859 (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 November 30, 2011, included in advances payable is $6,242 (February 28, 2011: $67,850) owed to a company controlled by a director.

As of November 30, 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
April, 2012	$	15,000
June, 2012		12,500
December, 2012		216,372
December, 2012		168,218
Total	$	412,090

All bear interest at 12% per annum.

Table of Contents

Note 5 PREPAID EXPENSES

As of November 30, 2011, included in prepaid expenses is $59,226 for prepaid royalties per a trademark license with Escort, Inc. (February 28, 2011: $0).

Note 6 ACCRUED LIABILITIES/ACCRUED LIABILITIES – RELATED PARTY

	November 30, 2011		February 28, 2011
Accrued Liabilities:
Lease Settlement		6,236		45,065
Credit card payable		-		4,119
Commission Payable		2,126		-
Accrued interest payable		551,626		453,568
Accrued non resident withholding taxes, including accrued interest		143,136		143,136
Accrued royalties		480,000		480,000
Accrued taxes payable		47,798		51,047
	$	1,230,922	$	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 nine months ended November 30, 2011, there were two customers that accounted for $109,450 (79%) of sales revenue. During the nine months ended November 30, 2010, there were two customers that accounted for $183,040 (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 November 30, 2011, the Company paid $66,829 (February 28, 2011: $28,000) of this judgment. The remaining balance of $6,236 is presented as Accrued Expenses as of November 30, 2011.

Note 9 SUBSEQUENT EVENTS

Management has evaluated subsequent events through March 5, 2012, the date of which the financial statements were available to be issued.

Table of Contents

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 November 30, 2011 and our Financial Statements and notes thereto for the period ended November 30, 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.

2. Results of Operations

For the three and nine month period ended November 30, 2011as compared to the three and nine month period ended November 30, 2010.

	Three months ended				Nine months ended
	November 30				November 30
	2011		2010		2011		2010
Sales
Sales Guardian Alert		75,856		47,355		138,207		195,288
Sales Scope Out		-		-		-		-
		75,856		47,355		138,207		195,288

Sales for the nine months ended November 30, 2011 decreased by 30% from $195,288 to $138,207 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 November 30, 2011 increased by 60% from $47,355 to $75,856 due to increased demand from key customers.

Table of Contents

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				For the nine months ended
	November 30				November 30
	2011		2010		2011		2010
Direct Cost
Scope Out Direct Costs
Cost of sales		-		-		-		-
Manufacturing expenses		-		-		-		-
Research and development		-		-		-		-
Commissions		-		-		-		-
Royalties		15,000		15,000		30,000		82,000
Total Scope Out Direct Costs		15,000		15,000		30,000		82,000

Guardian Alert Direct Costs
Cost of sales		14,198		-		24,977		-
Manufacturing expenses		19,454		25,286		30,477		60,854
Research and development		3,850		-		9,000		-
Commissions		14,702		15,112		43,553		45,089
Royalties		4,520		-		21,094		-
Total Guardian Alert Direct Costs		56,724		40,398		129,101		105,943
Total Direct Costs		71,724		55,398		159,101		187,943

Overall direct costs for the current nine months ending decreased due primarily to reduced royalty costs of the Scope Out® product.

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 $82,000 for the nine month periods ended November 30, 2011 and 2010, respectively, a decrease of 63%. The decrease is primarily attributable to the decrease in royalty costs.

Direct costs related to Guardian Alert were $129,101 and $105,943 for the nine month period ending November 30, 2011 and 2010 respectively. This change represents an increase of 22%. Commission expenses were comparable for the nine month period ended November 30, 2011 and 2010, respectively. Commission expense decreased 3% due to decreased sales for the nine months. Manufacturing expenses were $30,477 and $60,854 for the nine month period ended November 30, 2011, and 2010, respectively. Manufacturing expenses in Direct Costs for the Guardian Alert® for the nine months ended in 2011 represents assembly costs for the sales achieved for the same period.

Direct costs related to Guardian Alert® were $56,724 and $40,398 for the three month period ending November 30, 2011 and 2010 respectively. This change represents a increase of 40%. Commission expenses were comparable for the three month period ended November 30, 2011 and 2010, respectively. Commission expense decreased 3% due to decreased sales for the three months. Manufacturing expenses were $19,454 and $25,286 for the three month period ended November 30, 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.

Table of Contents

Selling, General, and Administrative

	For the three months ended November 30					For the nine months ended November 30
	2011		2010			2011		2010
Advertising and marketing		-		500			2,876		1,518
Consulting fees		13,500		(400	)		49,672		29,200
Contract labor		3,000		3,000			9,000		9,000
Depreciation		2,759		2,760			8,278		8,279
Filing fees		841		1,195			8,657		5,130
Insurance		7,176		6,707			20,470		20,092
Bank charges		1,106		1,012			2,513		2,703
Legal and accounting		4,950		6,342			25,459		47,323
Office and miscellaneous		4,215		9,882			9,041		15,855
Rent		3,744		3,282			11,197		5,001
Telephone and utilities		86		14			275		14
Transfer agent fees		7,533		2,748			9,834		5,512
Travel and automotive		819		24			5,915		8,674
Total		49,729		37,066			163,187		158,301

Sense Technologies, Inc. had selling, general and administrative expenses of $163,187 for the nine month period ended November 30, 2011 compared to selling, general and administrative expenses of $158,301 for the nine month period ended November 30, 2010, an increase in selling, general and administrative expenses of 3% from the prior period.

General and administrative expenses of $49,729 for the three month period ended November 30, 2011 compared to selling, general and administrative expenses of $37,066 for the three month period ended November 30, 2010, a 34% increase in selling, general and administrative expenses from the prior period.

Advertising and marketing fees increased as compared to the prior nine month period. We had marketing fees of $2,876 and $1,518 for the nine month period ended November 30, 2011 and 2010, respectively.

For the three month period advertising and marketing fees decreased 100%. We had marketing fees of $0 and $500 for the three month period ended November 30, 2011 and 2010, respectively

Consulting fees increased from $29,200 for the nine month period ended November 30, 2010 to $49,672 for the nine month period ended November 30, 2011. The increase was a result of increased consulting related to Guardian Alert® and ScopeOut® product sales.

Consulting fees increased from $nil for the three month period ended November 30, 2010 to $13,500 for the three month period ended November 30, 2011. The increase was a result of the increase of consulting mainly related to Scope Out® product.

Table of Contents

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 $47,323 in the nine month period ended November 30, 2010 to $25,459 for the nine month period ended November 30, 2011. The decrease was mainly due to prior year legal expenses related to lease agreements for ScopeOut®.

Legal and accounting fees decreased from $6,342 in the three month period ended November 30, 2010 to $4,950 for the three month period ended November 30, 2011.

Following summarizes the overall operations results for the nine month period ended November 30:

							Increase			% Increase
	2011			2010			( Decrease)			(decrease)

Sales		138,207			195,288			(57,081	)		(29.23	)
Direct Costs		159,101			187,943			(28,842	)		(15.35	)
General and Administrative expenses		163,187			158,301			4,886			3.09
Net Loss		(319,816	)		(299,074	)		20,742			6.94
Basic and Diluted Loss per share		( 0 .00	)		( 0 .00	)

Liquidity and Capital Resources

Our cash position at November 30, 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 3,222,589 and 3,182,579 as of November 30, 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 $417,304 in 2011, compared to $220,601 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 $416,554 in 2011 compared to net cash provided of $224,918 in 2010.

In 2011, we received $283,500 through subscriptions to private placements of our common shares.

Table of Contents

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.

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 November 30, 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.

Table of Contents

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 November 30, 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 November 30 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

Table of Contents

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.


March 19, 2012	/S/ BRUCE E. SCHREINER
	Bruce E. Schreiner, President
	(principal executive officer) and Director

Table of Contents

SENSE TECHNOLOGIES INC - FORM 10-Q - March 19, 2012

Attached files

SENSE TECHNOLOGIES INC Reports