SENSE TECHNOLOGIES INC - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - SENSE TECHNOLOGIES INC	Financial_Report.xls
EX-32.1 - EX-32.1 - SENSE TECHNOLOGIES INC	ex32-1.htm
EX-31.1 - EX-31.1 - SENSE TECHNOLOGIES INC	ex31-1.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, 2013


¨	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 January 14, 2014
Common Stock		105,993,448 shares

Table of Contents

TABLE OF CONTENTS

Sense Technologies Inc. Form 10-Q

PART I-FINANCIAL INFORMATION			1

ITEM 1.		FINANCIAL STATEMENTS	1
		BALANCE SHEETS AS OF NOVEMBER 30, 2013 (UNAUDITED) AND FEBRUARY 28, 2013	2
		STATEMENTS OF LOSSES FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (UNAUDITED)	3
		STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (UNAUDITED)	4
		STATEMENT OF STOCKHOLDERS’ DEFICIENCY FOR THE NINE MONTHS ENDED NOVEMBER 30, 2013 (UNAUDITED) AND THE YEAR ENDED FEBRUARY 28, 2013	5
		NOTES TO UNAUDITED FINANCIAL STATEMENTS	6

ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4T.		CONTROLS AND PROCEDURES	15

PART II-OTHER INFORMATION			17

ITEM 1.	LEGAL PROCEEDINGS		17
ITEM 1A.	RISK FACTORS		17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		17
ITEM 4.	MINE SAFETY DISCLOSURES		17
ITEM 5.	OTHER INFORMATION		17
ITEM 6.	EXHIBITS		17

SIGNATURES			18

Table of Contents

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

SENSE TECHNOLOGIES INC.

INTERIM FINANCIAL STATEMENTS

November 30, 2013

(Stated in US Dollars)

(Unaudited)

Page 1

Table of Contents

SENSE TECHNOLOGIES, INC.

BALANCE SHEETS

As of November 30, 2013 and February 28, 2013

(Stated in US Dollars)

	November 30			February 28
	2013 (Unaudited)			2013

ASSETS
Current
Cash	$	-		$	69,022
Accounts receivable		31,180			52,710
Prepaids		18,534			19,466
Total Current Assets		49,714			141,198
Deposit		800			800
Equipment – Net of accumulated depreciation of $132,593 and $125,516 at November 30, 2013 and February 28, 2013, respectively		10,114			17,191
Intangible assets		51			51
Total Assets	$	60,679		$	159,240

LIABILITIES
Current
Accounts payable	$	588,809		$	283,159
Accounts payable-related party		35,884			35,884
Accrued expenses		1,126,579			969,656
Accrued expenses-related party		70,811			70,811
Royalty payable – related party		480,000			480,000
Notes payable, current portion		504,983			533,934
Notes payable, current portion - default		263,000			263,000
Notes payable, -related party		21,760			-
Notes payable-related party - default		439,590			439,590
Advances payable – related entity		148,171			121,020
Dividends payable		353,200			329,507
Convertible promissory notes payable - default		584,447			584,447
Deferred Revenue		-			157,500
Total Current Liabilities		4,617,234			4,268,508

Notes payable, related party, long-term		92,622			-
Notes payable, long-term		60,728			36,666
Total Long-term Liabilities		153,350			36,666
Total Liabilities		4,770,584			4,305,174

STOCKHOLDERS' DEFICIENCY

Class A preferred shares, without par value, redeemable at $1 per share 20,000,000 shares authorized, 315,914 shares issued at November 30, 2013 (February 28, 2013: 315,914)		315,914			315,914
Common stock, without par value 150,000,000 shares authorized, 105,993,448 shares issued at November 30, 2013 (February 28, 2013: 102,768,448)		14,951,392			14,868,018
Common stock payable		171,889			154,889
Deficit		(20,149,100	)		(19,484,755	)
Total Stockholders’ Deficiency		(4,709,905	)		(4,145,934	)
Total Liabilities and Stockholders’ Deficiency	$	60,679		$	159,240

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

Page 2

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SENSE TECHNOLOGIES INC.

STATEMENTS OF LOSS

For the three and nine months ended November 30, 2013 and 2012

(Stated in US Dollars)

(Unaudited)

	Three months ended						Nine months ended
	November 30,						November 30,
	2013			2012			2013			2012

Sales	$	39,068		$	66,771		$	567,982		$	206,573
Direct costs		104,881			146,241			667,386			230,360

Gross profit (loss)		(65,813	)		(79,470	)		(99,404	)		(23,787	)

Operating Expenses
Consulting fees		230,281			11,500			251,281			56,000
Contract labor		3,000			3,000			9,000			9,000
Depreciation		2,359			2,533			7,077			7,599
Filing fees		2,876			6,996			10,652			9,046
Insurance		7,918			7,313			23,128			21,507
Bank charges		534			616			1,471			1,956
Legal and accounting		7,412			19,010			36,548			32,395
Office and miscellaneous		3,051			13,776			18,931			20,953
Rent		3,719			3,432			11,775			11,039
Telephone and utilities		143			57			426			295
Transfer agent fees		1,527			1,306			2,322			6,354
Travel and automotive		292			4,386			14,253			7,674
		263,112			73,925			386,864			183,818
Net operating loss		(328,925	)		(153,395	)		(486,268	)		(207,605	)

Other income and (expense)
Interest expense		45,032			36,129			154,383			121,986

Net loss		(373,957	)		(189,524	)		(640,651	)		(329,591	)

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

Net loss attributable to common stockholders	$	(381,855	)	$	(197,422	)	$	(664,345	)	$	(353,285	)

Basic and diluted loss per share	$	0.00		$	0.00		$	0.01		$	0.00

Weighted average number of shares outstanding – basic and fully diluted		103,619,814			102,768,448			103,334,993			102,158,630

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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Table of Contents

SENSE TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS

For the nine months ended November 30, 2013 and 2012

(Stated in US Dollars)

(Unaudited)

	Nine Months Ended November 30, 2013			Nine Months Ended November 30, 2012
Operating Activities
Net (loss) for the period	$	(640,651	)	$	(329,591	)
Adjustments to reconcile net loss to net cash used in Operating activities:
Depreciation		7,077			7,599
Amortization of debt discount		17,374			-
Changes in operating assets and liabilities related to operations:
Accounts receivable		21,530			(10,240	)
Inventory		-			(8,179	)
Prepaids		932			5,766
Deferred revenue		(157,500	)
Accounts payable		305,649			4,063
Accrued expenses		156,923			109,894
Advances payable		27,151			118,685

Net cash used by operating activities		(261,515	)		(102,003	)

Financing Activities
Borrowing on debt		179,998			80,029
Payments on debt		(70,505	)		(50,026	)
Proceeds from common share subscriptions		83,000			72,000

Net cash provided by financing activities		192,493			102,003

Increase (Decrease) in cash during the period		(69,022	)		-
Cash, beginning of period		69,022			-

Cash, end of period	$	-		$	-
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	26,338		$	13,205
Non-cash investing and financing activities:
Accrual of preferred stock dividend	$	23,694		$	23,694
Stock issued for common stock payable	$	36,000		$	58,500

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

Page 4

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SENSE TECHNOLOGIES, INC.

STATEMENT OF STOCKHOLDERS’ DEFICIENCY

As of the period ended November 30, 2013

(Stated in US Dollars)

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

Balance, February 29, 2012		100,818,448	$	14,783,215		315,914	$	315,914	$	141,389		$	(18,884,341	)	$	(3,643,823	)
Common stock issued for cash		1,200,000		36,000		-		-		-			-			36,000
Common stock issued for subscription		750,000		22,500		-		-		(22,500	)		-			-
Options issued to Directors		-		26,303		-		-		-			-			26,303
Common stock subscribed for cash		-		-				-		36,000			-			36,000
Dividends		-		-		-		-		-			(31,591	)		(31,591	)
Net income (loss) for the period		-		-		-		-		-			(568,823	)		(568,823	)
Balance, February 28, 2013		102,768,448		14,868,018		315,914		315,914		154,889			(19,484,755	)		(4,145,934	)
Common stock issued as inducement		1,025,000		17,374		-		-		-			-			17,374
Common stock issued for cash		1,000,000		30,000		-		-		-			-			30,000
Common stock issued for subscription		1,200,000		36,000		-		-		(36,000	)		-			-
Common stock subscribed for cash		-		-		-		-		53,000			-			53,000
Dividends		-				-		-		-			(23,694	)		(23,694	)
Net income (loss) for the period		-				-		-		-			(640,651	)		(640,651	)
Balance, November 30, 2013 (unaudited)		105,993,448	$	14,951,392		315,914	$	315,914	$	171,889		$	(20,149,100	)	$	(4,709,905	)

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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SENSE TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCUNTING

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, 2013 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, 2013.

Reclassification

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

Recently Adopted and Recently Enacted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

In October 2012, the FASB issued Accounting Standards Update ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

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In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 has not had a material impact on our financial position or results of operations.

In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 has not had a material impact on our financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.

NOTE 2 – GOING CONCERN

At November 30, 2013, the Company had not yet achieved profitable operations, had an accumulated deficit of $20,149,100 (February 28, 2013 - $19,484,755) since its inception and incurred a net loss of $640,651 (2012 - $ 329,591) for the nine months ended November 30, 2013 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, 2014 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.

NOTE 3 – PREPAID EXPENSES

As of November 30, 2013, included in prepaid expenses is $18,534 (February 28, 2013: $19,466) for an insurance premium for the directors of the Company financed through Flatiron Capital. Insurance policy is from August 23, 2013 to August 23, 2014.

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NOTE 4 – ACCRUED EXPENSES/ACCRUED EXPENSES – RELATED PARTY

Other liabilities and accrued expenses consisted of the following:

	November 30,		February 28,
	2013		2013
Accounts payable	$	588,809	$	283,159
Accounts payable – related party		35,884		35,884
Deferred Revenue		-		157,500
Accrued royalties payable – Guardian Alert		480,000		480,000

Detail of Accrued Expenses:
Accrued interest payable		850,914		741,483
Accrued non-resident withholding taxes, including accrued interest		168,346		163,304
Credit card		3,460		5,397
Commissions Payable		59,609		13,285
Accrued taxes payable		44,250		46,187
Total accrued expenses	$	1,126,579	$	969,656

Detail of Accrued Expense – Related party:
Accrued payroll – related party		53,694		53,694
Other accrued liabilities – related party		17,117		17,117
Total accrued expenses – related party	$	70,811	$	70,811

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NOTE 5 – NOTES PAYABLE, CONVERTIBLE NOTES PAYABLE, AND NOTES PAYABLE – RELATED PARTY

	November 30,			February 28,
	2013			2013
Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment terms between August 2012 and July, 2012. In default.	$	243,000		$	243,000

Promissory notes payable to related party, unsecured, bearing interest at the rate of 12% per annum with repayment due December 15, 2012. In default.		439,590			439,590

Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due January 12, 2012. In default.		10,000			10,000

Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due March 30, 2012. In default.		10,000			10,000

Promissory notes payable, personally guaranteed by a director of the Company, bearing interest at the rate of 5.5% per annum and maturing May 11, 2016		-			73,874

Finance agreement on directors and officers liability policy, bearing interest at 7.75%, maturing June 24, 2014. This agreement is repayable in monthly principal and interest payments of $1,705.		10,732			6,076

Finance agreement on directors and officers liability policy, bearing interest at 7.75% per annum, no maturity date.		-			6,985

Promissory note payable, unsecured, bearing interest at the rate of 5.25% per annum, no maturity date		100,000			100,000

Promissory note payable, unsecured, bearing interest at the rate of 12.0% per annum, no maturity date.		100,000			100,000

Promissory note payable, unsecured, bearing interest at the rate of 6% per annum, maturing June 1, 2014.		117,978			156,665

Promissory note payable, unsecured, bearing interest at the rate of 6% per annum, maturing January 31, 2014.		100,000			100,000

Promissory note payable, unsecured, bearing interest at the rate of 7% per annum, maturing October 16, 2013 and July 3, 2014.		50,000			25,000

Promissory note payable, unsecured, bearing interest at the rate of 7% per annum, maturing August 19, 2014.		75,000			-

Promissory note payable, unsecured, bearing interest at the rate of 7% per annum, maturing July 20, 2014		10,000			-

Promissory notes payable, personally guaranteed by a related party of a director of the Company, bearing interest at the rate of 4.0% per annum and maturing August 27, 2018.		114,382			-

Promissory note payable, no stated interest or maturity date		2,000			2,000
		1,382,682			1,273,190
Less current portion		(1,229,332	)		(1,236,524	)
Long-term portion	$	153,350		$	36,666

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The Company is in arrears with respect to four notes payable totaling $702,590.

Convertible notes payable	November 30,		February 29,
	2012		2012
Series B secured promissory notes payable, secured by a charge over the Company’s inventory, bearing interest at 10% per annum and are payable on demand, along with accrued interest thereon, on or after August 30, 2005. These notes plus accrued interest may be redeemed at any time after August 30, 2005. These notes may be converted into common shares of the Company at any time prior to demean for payment at the rate of one common share for each $0.29 of principal and interest owed. As of February 28, 2013 and February 28, 2011, these notes were in arrears.	$	534,447	$	534,447

Unsecured promissory notes bearing interest at 10% per annum. These notes plus accrued interest are convertible into common shares of the Company at the rate of one common share for each $5.40 of principal and interest owed. These notes have matured and the holders thereof have received default judgments against the Company.		50,000		50,000
	$	584,447	$	584,447

The Company is in arrears with respect to nine convertible notes payable totaling $584,447.

Future minimum note payments as of November 30, 2013 are as follows:

Years Ending February 28,
2014	$	1,301,823
2015		22,618
2016		23,540
Thereafter		34,701

NOTE 6 – PREFERRED STOCK

Dividends on preferred shares are payable annually on July 31 of each year. During the nine months ended November 30, 2013 and the year ended February 28, 2013, the Company accrued dividends payable of $23,694 and $31,591, respectively. Dividends are currently accruing and total $353,200.

NOTE 7 – COMMON STOCK

a) Common stock payable

During the nine months ended November 30, 2013, the Company issued promissory notes with stock granted as an incentive. The stock was valued with a total relative value of $17,374 recorded as a debt discount. As the debt was due on demand, the discount was fully expensed in the second quarter ended August 31, 2013. The Company issued 1,025,000 shares during the quarter ended November 30, 2013 for this inducement.

During the nine months ended November 30, 2013, the Company issued 2,200,000 shares of common stock for cash proceeds of $66,000 of which $36,000 was received in prior quarters and record as Common Stock Payable

During the nine months ended November 30, 2013, the Company received $53,000 of common stock subscribed in common stock payable for 1,766,667 shares.

d) Options

Stock-based Compensation Plan

The Company has adopted a Stock Option Plan (‘the plan”) in which the Compensation Committee of the Board of Directors makes a determination to whom options should be granted and at what price and their terms of vesting.

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The Company has elected to use the Black-Scholes option pricing model to determine the fair value of stock options granted. For employees, the compensation expense is amortized on a straight-line basis over the requisite service period which approximates the vesting period. Compensation expense for stock options granted to non-employees is amortized over the contract services period or, if none exists, from the date of grant until the options vest. Compensation associated with unvested options granted to non-employees is re-measured on each balance sheet date using the Black-Scholes option pricing model.

The expected volatility of options granted has been determined using the historical stock price. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. For non-employees, the expected term of the options approximates the full term of the options. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. Based on the best estimate, management applied the estimated forfeiture rate of Nil in determining the expense recorded in the accompanying Statement of Loss. The Company has granted directors common share purchase options. These options were granted with an exercise price equal to the market price of the Company’s stock on the date of the grant.

	November 30, 2013
	Options		Weighted Average Exercise Price
Outstanding and exercisable at beginning of the year		3,000,000	$	0.04
Issued during the year		-		-
Outstanding and exercisable, November 30, 2013		3,000,000	$	0.04

	February 28, 2013
	Options			Weighted Average Exercise Price
Outstanding and exercisable at beginning of the year		3,000,000		$	0.04
Expired during the year		(1,000,000	)		(0.05	)
Issued during the year		1,000,000			0.03
Outstanding and exercisable, February 28, 2013		3,000,000		$	0.04

At November 30, 2013, the following director common share purchase options were outstanding entitling the holders thereof the right to purchase one common share for each share purchase option held:

	Exercise
Number	Price		Expiry Date

3,000,000	$	0.03	December 31, 2014

Warrants

As of November 30, 2013 and February 28, 2013, the Company had no outstanding warrants.

NOTE 8 – RELATED PARTY TRANSACTIONS

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

	November 30,
	2013		2012
Interest expense	$	38,738	$	38,117

As of November 30, 2013, included in accounts payable and accrued expenses are $33,495 (February 28, 2013: $33,495) owing to an accounting firm in which a director of the Company is a partner and $2,389 (February 28, 2013: $2,389) to a shareholder with respect to unpaid fees and interest on promissory notes, $480,000 (February 28, 2013: $480,000) owing to shareholders of the Company in respect of royalties payable with no interest accruing, and $53,694 (February 28, 2013: $53,694) owing to the former president of the Company in respect of unpaid wages.

As of November 30, 2013, included in advances payable is $148,171 (February 28, 2013: $121,020) owed to a company controlled by a director.

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As of November 30, 2013, promissory notes payable of $439,590 (February 28, 2013: $439,590) are due to a profit-sharing and retirement plan administered by a director of the Company. Terms are:

Date Due:	Amount
August, 2012	$	12,500
December, 2012		384,590
April, 2013		15,000
November, 2013		27,500
Total	$	439,590

All bear interest at 12% per annum.

As of November 30, 2013, promissory note payable of $114,382 (February 28, 2013: $nil) is personally guaranteed by a related party of the director of the company.

NOTE 9 – CONCENTRATIONS AND CONTINGENCIES

Concentrations

Approximately 95% of the Company’s revenues are obtained from two (2) customers and one of these customers represents a significant portion of the accounts receivable. The Company is exposed to significant sales and accounts receivable concentration. Sales to these customers are not made pursuant to a long term agreement. Customers are under no obligation to continue to purchase from the Company.

For the nine months ended November 30, 2013, there were two (2) customers that accounted for 95% of the sales revenue. For the nine months ended November 30, 2012, there were three (3) customers that accounted for 89% of sales revenue.

For the nine months ended November 30, 2013, there was one (1)) customer that accounted for 69% of the accounts receivable. For the nine months ended November 30, 2012, there was one (1) customer that accounted for 58% of the accounts receivable.

Contingencies

During the normal course of business we may from time to time be involved in litigation or other possible loss contingencies. As of November 30, 2013 and February 28, 2013 management is not aware of any possible contingencies that would warrant disclosure pursuant to SFAS 5.

Commitments

Our future minimum royalty payments on the ScopeOut® agreement consist of the following:

A 5% royalty with a $.75 per unit maximum “minimum royalty” to retain exclusivity with the following volumes:

End of calendar year containing the second anniversary:	30,000 units
End of calendar year containing the third anniversary:	60,000 units

NOTE 10 – SUBSEQUENT EVENTS

Management has evaluated subsequent events through January 29, 2014, the date of which the financial statements were issued.

Management’s Discussion And Analysis

Sense Technologies Inc. Form 10-Q

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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, 2013 and our audited Financial Statements and notes thereto for the year ended February 28, 2013.

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, 2013 as compared to the three and nine month period ended November 30, 2012.

	For the three months ended				For the nine months ended
	November 30, 2013		November 30, 2012		November 30, 2013		November 30, 2012
Sales
Sales Guardian Alert		39,068		66,771		567,982		206,573
Sales Scope Out		-		-		-		-
		39,068		66,771		567,982		206,573

Sales for the nine months ended November 30, 2013 increased by 175% from $206,573 to $567,982 due to increased 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, 2013 decreased by 42% from 66,771 to 39,068 due to decreased demand from key customers.

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, 2013		November 30, 2012		November 30, 2013		November 30, 2012
Direct Cost
Scope Out Direct Costs
Manufacturing expenses		-		-		-		-
Research and development		-		-		-		-
Commissions		-		-		-		-
Royalties - related party		15,000		15,000		45,000		45,000
Total Scope Out Direct Costs		15,000		15,000		45,000		45,000

Guardian Alert Direct Costs
Manufacturing expenses		62,935		97,873		492,460		108,940
Research and development		10,500		6,623		26,500		17,623
Commissions		16,446		22,739		103,426		44,714
Royalties		-		4,006		-		14,083
Total Guardian Alert Direct Costs		89,881		131,241		622,386		185,360
Total Direct Costs		104,881		146,241		667,386		230,360

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 $15,000 and $15,000 for the three month periods ended November 30, 2013 and 2012, and $45,000 and $45,000 for the nine month period ended November 30, 2013 and 2012.

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Direct costs related to Guardian Alert® were $622,386 and $185,360 for the nine month period ending November 30, 2013 and 2012, respectively. This change represents an increase of 236%. Commission expenses were $103,426 and $44,714 for the six month period ended November 30, 2013 and 2012, respectively. Commission expense increased 131% due to an increase in commissioned sales. Manufacturing expenses were $492,460 and $108,940 for the nine month period ended November 30, 2013 and 2012, respectively. Manufacturing expenses in Direct Costs for the Guardian Alert® for the nine months ended in 2013 and 2012 represents assembly costs for the sales achieved for the same period.

Direct costs related to Guardian Alert® were $89,881 and $131,241 for the three month period ending November 30, 2013 and 2012 respectively. This change represents a decrease of 32%. Commission expenses were $16,446 and $22,739 for the three month period ended November 30, 2013 and 2012, respectively. Commission expense decreased 28% due to decreased commissioned sales for the three months. Manufacturing expenses were $62,935 and $97,873 for the three month period ended November 30, 2013 and 2012, respectively. Manufacturing expenses in Direct Costs for the Guardian Alert® for the three months ended in 2012 represents assembly costs for the sales achieved for the same period.

Selling, General, and Administrative

	For the three months ended				For the nine months ended
	November 30, 2013		November 30, 2012		November 30, 2013		November 30, 2012
Consulting fees	$	230,281	$	11,500	$	251,281	$	56,000
Contract labor		3,000		3,000		9,000		9,000
Depreciation		2,359		2,533		7,077		7,599
Filing fees		2,876		6,996		10,652		9,046
Insurance		7,918		7,313		23,128		21,507
Bank charges		534		616		1,471		1,956
Legal and accounting		7,412		19,010		36,548		32,395
Office and miscellaneous		3,051		13,776		18,931		20,953
Rent		3,719		3,432		11,775		11,039
Telephone and utilities		143		57		426		295
Transfer agent fees		1,527		1,306		2,322		6,354
Travel and automotive		292		4,386		14,253		7,674
Interest expense		45,032		36,129		154,383		121,986
		308,144		110,054		541,247		305,804

Sense Technologies, Inc. had selling, general and administrative expenses of $541,247 for the nine month period ended November 30, 2013 compared to selling, general and administrative expenses of $305,804 for the nine month period ended November 30, 2012, an increase in selling, general and administrative expenses of 77% from the prior period.

General and administrative expenses of $308,144 for the three month period ended November 30, 2013 compared to selling, general and administrative expenses of $110,054 for the three month period ended November 30, 2012, a 180% increase in selling, general and administrative expenses from the prior period.

Consulting fees increased from $56,000 for the nine month period ended November 30, 2012 to $251,281 for the nine month period ended November 30, 2013. The increase was a result of consulting related to Guardian Alert product sales. An agreement to pay back consulting fees of $200,000 was implemented during the quarter ended November 30, 2013.

Consulting fees increased from $11,500 for the three month period ended November 30, 2012 to $230,281 for the three month period ended November 30, 2013. The increase was a result of consulting related to Guardian Alert product sales.

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 increased from $32,395 in the nine month period ended November 30, 2012 to $36,548 for the nine month period ended November 30, 2013.

Legal and accounting fees decreased from $19,010 in the three month period ended November 30, 2012 to $7,412 for the three month period ended November 30, 2013.

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

							Increase		% Increase
	2013			2012			(Decrease)		(decrease)

Sales		567,982			206,573			361,409		174.95
Direct Costs		667,386			230,360			437,026		189.71
General and Administrative expenses		541,247			305,804			235,443		76.99
Net Loss		(640,651	)		(329,591	)		311,060		94.38
Basic and Diluted Loss per share		.01			(.00	)		.01

We had a loss from operations of $640,651 for nine month period ended November 30, 2013, compared to a loss from operations of $329,591 for the nine month period ended November 30, 2012, an increase in loss from operations of $311,060 from the prior year.

Liquidity and Capital Resources

Our cash position at November 30, 2013 was $nil as compared to $69,022 at February 28, 2013. This decrease was due to our use of cash in operating and investing activities and cash provided by financing activities as described below.

We have a working capital deficit of 4,709,905 and 4,145,934 as of November 30, 2013 and February 28, 2013, respectively. If we are unable to raise adequate working capital for fiscal 2013, 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 2014, 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 $261,515 in 2013, compared to $102,003 in 2012. The increase in cash used in 2013 was largely due to the increase in accounts payable and accrued expenses.

Net cash provided by financing activities

Net cash provided by financing activities was $192,493 in 2013 compared to net cash provided of $102,003 in 2012.

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 and principal financial 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 November 30, 2013 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, 2013.

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, 2013.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

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.


January 30, 2014	/s/ BRUCE E. SCHREINER
	Bruce E. Schreiner
	Chief Executive Officer, President, Director, Chief Financial Officer and Principal Accounting Officer

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SENSE TECHNOLOGIES INC Reports

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