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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-13328
For the quarterly period ending August 31, 2004 SENTEX SENSING TECHNOLOGY, INC.   New Jersey
    
    22-2333899(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)1801 East Ninth Street
Cleveland, Ohio
    
    44114(Address of principal executive offices)
    
    (Zip Code)
 (216) 687-0289   Securities registered pursuant to Section 12 (b) of the Act:  Securities registered pursuant to Section 12 (g) of the Act:  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities and
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 Number of shares of Common Shares (No Par Value) of SENTEX SENSING
TECHNOLOGY, Inc., issued and outstanding as of the latest practicable
date is 101,764,911




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SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 2003 AND AUGUST 31, 2004 November 30,
    
    August 31,2003
    
    2004(Audited)
    
    (Unaudited)ASSETSCURRENT ASSETSCash
    
    $
    45,330
    
    
    $
    13,112Accounts receivable  trade, net of allowance for
doubtful accounts of $35,000
    
    
    225,481
    
    
    
    330,530Inventory
    
    
    343,672
    
    
    
    156,639TOTAL CURRENT ASSETS
    
    
    614,483
    
    
    
    500,281FIXED ASSETSComputer equipment
    
    
    4,009
    
    
    
    4,009Less accumulated depreciation
    
    
    2,927
    
    
    
    3,3321,082
    
    
    
    677OTHER ASSETSRestricted stock investment
    
    
    4,800
    
    
    
    Goodwill
    
    
    36,042
    
    
    
    36,042Deposits
    
    
    990
    
    
    
    99041,832
    
    
    
    37,032TOTAL ASSETS
    
    $
    657,397
    
    
    $
    537,990LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESNotes payable:Bank
    
    $
    2,500,000
    
    
    $
    Related party
    
    
    3,453,125
    
    
    
    6,140,436Accounts payable ($612,066 & $1,062,721 to related parties)
    
    
    1,006,180
    
    
    
    1,424,395Accrued liabilities
    
    
    200,536
    
    
    
    182,898Consulting Contracts Payable
    
    
    21,249
    
    
    
    21,249Convertible subordinated notes payable
    
    
    12,423
    
    
    
    12,423TOTAL CURRENT LIABILITIES
    
    
    7,193,513
    
    
    
    7,781,401STOCKHOLDER EQUITYCommon stock, no par value
    
    
    2,867,579
    
    
    
    2,867,579Authorized - 200,000,000 sharesIssued - 109,460,911 sharesOutstanding - 101,764,911 sharesAccumulated deficit
    
    
    (9,134,227
    )
    
    
    (9,841,522
    )Treasury shares at cost, 7,696,000 shares
    
    
    (269,468
    )
    
    
    (269,468
    )TOTAL STOCKHOLDERS EQUITY
    
    
    (6,536,116
    )
    
    
    (7,243,411
    )TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    657,397
    
    
    $
    537,990
 See Notes to Consolidated Financial Statements 2




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SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS
ENDED AUGUST 31, 2003 AND AUGUST 31, 2004 (UNAUDITED) Three Months Ended
    
    Nine Months EndedAugust 31,
    
    August 31,
    
    August 31,
    
    August 31,2003
    
    2004
    
    2003
    
    2004REVENUESSales
    
    $
    669,433
    
    
    $
    1,305,970
    
    
    $
    2,726,351
    
    
    $
    2,680,314Interest and other income
    
    
    30,667
    
    
    
    24,256
    
    
    
    46,574
    
    
    
    59,889Total Revenues
    
    
    700,100
    
    
    
    1,330,226
    
    
    
    2,772,925
    
    
    
    2,740,203COST OF GOODS SOLD
    
    
    489,442
    
    
    
    997,675
    
    
    
    1,743,185
    
    
    
    2,144,379GROSS PROFIT
    
    
    210,658
    
    
    
    332,551
    
    
    
    1,029,740
    
    
    
    595,824OPERATING EXPENSESAdministration
    
    
    277,020
    
    
    
    357,762
    
    
    
    844,082
    
    
    
    1,141,941Total expenses
    
    
    277,020
    
    
    
    357,762
    
    
    
    844,082
    
    
    
    1,141,941PROFIT (LOSS) FROM OPERATIONS
    
    
    (66,362
    )
    
    
    (25,211
    )
    
    
    185,658
    
    
    
    (546,117
    )OTHER EXPENSEInterest Expense
    
    
    56,314
    
    
    
    51,903
    
    
    
    184,120
    
    
    
    161,178PROFIT (LOSS) BEFORE PROVISIONFOR INCOME TAX EXPENSE
    
    
    (122,676
    )
    
    
    (77,114
    )
    
    
    1,538
    
    
    
    (707,295
    )PROVISION FOR INCOME TAX EXPENSE
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET PROFIT (LOSS)
    
    $
    (122,676
    )
    
    $
    (77,114
    )
    
    $
    1,538
    
    
    $
    (707,295
    )NET PROFIT (LOSS) PER SHARE(BASIC AND DILUTED)
    
    $
    (0.00
    )
    
    $
    (0.00
    )
    
    $
    0.00
    
    
    $
    (0.01
    )WEIGHTED NUMBER OF SHARES OUTSTANDING
    
    
    101,764,911
    
    
    
    101,764,911
    
    
    
    101,764,911
    
    
    
    101,764,911
 See Notes to Consolidated Financial Statements 3




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SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE NINE MONTHS
ENDED AUGUST 31, 2003 AND AUGUST 31, 2004 (UNAUDITED) Nine Months EndedAugust 31,
    
    August 31,2003
    
    2004OPERATING ACTIVITIES:Net profit (loss)
    
    $
    1,538
    
    
    $
    (707,295
    )Depreciation
    
    
    
    
    
    
    405Adjustment to reconcile net (loss) income to net
cash provided by (used in) operating
activities:Change in assets and liabilities:(Increase) decrease in:Accounts receivable
    
    
    (307,318
    )
    
    
    (105,049
    )Inventories
    
    
    (210,708
    )
    
    
    187,033Other assets
    
    
    257,057
    
    
    
    4,800Increase (decrease) in:Accounts payable
    
    
    92,220
    
    
    
    293,565Accrued liabilities
    
    
    64,784
    
    
    
    (17,639
    )TOTAL ADJUSTMENTS
    
    
    (103,965
    )
    
    
    363,115Net cash used by operating activities
    
    
    (102,427
    )
    
    
    (344,180
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds on notes and accounts payable  related party
    
    
    
    
    
    
    2,811,962Payment on note payable  related party
    
    
    37,642
    
    
    
    Payment on note payable  bank
    
    
    
    
    
    
    (2,500,000
    )Net cash provided by financing activities
    
    
    37,642
    
    
    
    311,962NET INCREASE (DECREASE) IN CASH
    
    
    (64,785
    )
    
    
    (32,218
    )CASH  BEGINNING OF PERIOD
    
    
    74,633
    
    
    
    45,330CASH  END OF PERIOD
    
    $
    9,848
    
    
    $
    13,112
 See Notes to Consolidated Financial Statements 4




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SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) In the opinion of management, the unaudited financial statements contain
all adjustments (consisting of only normal recurring accruals and repayments)
necessary to present fairly the financial position at August 31, 2004 and the
results of operations and cash flows for the nine months ended August 31, 2003
and August 31, 2004. These interim statements should be read in conjunction with the audited
financial statements and notes thereto included in the Companys Annual Report
on Form 10-KSB for the fiscal year ended November 30, 2003 (Commission File No.
2-13328) (2) The results of operations for the nine months ended August 31, 2003 and
August 31, 2004 are not necessarily indicative of the results to be expected
for the full year. (3) PROFIT (LOSS) PER SHARE Profit (loss) per share is calculated using the weighted average number of
common shares outstanding. Potentially dilutive securities are insignificant. (4) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Sentex Sensing
Technology, Inc. and its wholly-owned subsidiaries (the Company). All
material inter-company accounts and transactions have been eliminated in
consolidation. (5) RESTRICTED STOCK INVESTMENT During the Companys third quarter ending August 31, 2003, substantially all of
the business and assets of Metrisa, Inc. were sold to Galvanic Applied
Sciences, Inc. (a Canadian corporation). The purchase price was approximately
$2,500,000 of which approximately $251,000 has been held in escrow for a period
of eighteen months pending the satisfaction of other financial obligations. It
is anticipated that approximately $ .25 to $ .40 per chare will be available to
the current stockholders of Metrisa as a liquidating distribution. As of
August 27, the board of PA Instruments (formerly Metrisa) approved a
distribution of 15 cents per share and was received on September 13, 2004.
The investment was reclassified as a current receivable at August 31, 2004. (6) LEGAL PROCEEDINGS State of Ohio, Department of Administrative Services v. IQ Solutions,
LLC, et al.; Case No. 03-CVH05-6054; Franklin County Common Pleas Court,
Ohio. During October 2004, the Company was dismissed without prejudice from the
above-caption and previously disclosed matter. 5




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SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS On July 2, 2001, the Company purchased Regency Technologies, LLC from
Regency Steel, LLC and other members. Regency Technologies specializes in the buying, selling, and trading of
information technology equipment (primarily computer equipment). The
primary focus of our business revolves around acquiring unneeded, older
computer equipment and reselling that equipment to certain consumers on
a global basis. FINANCIAL CONDITION Working Capital and Liquidity During the last several fiscal years, the Company has incurred losses and
significant working capital deficits. In addition, the Companys certified
public accountants, Hausser + Taylor LLC, have included in their auditors
report, which covers the Companys financial statements for the years ended
November 30, 2002 and November 30, 2003, a statement that the Companys
recurring losses and significant working capital deficits raised substantial
doubt about the Companys ability to continue as a going concern. To address the Companys working capital needs, the Company, in July 1998,
established a bank line of credit of $2,000,000, and in August 2001, in
connection with a refinancing, an additional $500,000 was provided, all of
which was secured by the personal guarantee of Robert S. Kendall, the Chairman
of the Company. This loan was restructured in June 2004. From time to time,
CPS has provided the Company with temporary working capital loans and as of
August 31, 2004, there was an outstanding borrowing of $6,140,436 on those
loans. Net Operating Losses The Company has approximately $15,700,000 in net tax operating loss
carryforwards as of August 31, 2004, which will expire at various dates through
the year 2023 that are mainly attributable to losses incurred by Monitek.
Federal tax law imposes restrictions on the use of net operating loss
carry-forwards in the event of a change in ownership, such as a merger. Due to
the merger with Monitek, approximately $6,265,000 of the $15,700,000 net
operating losses may be subject to these limitations and potentially may not be
able to provide any economic benefit to the Company. RESULTS OF OPERATIONS Nine Months ended August 31, 2004 compared to Nine Months Ended August 31,
2003. The results of the third quarter 2004 improved significantly over the first and
second quarter, as the previously anticipated equipment programs came on
stream. This growth is expected to continue for the balance of the year
thereby growing our revenue and margins substantially. Year to date revenues
are virtually even with those of 2003, and the full year will be substantially
higher than last year due to the completion of the equipment programs referred
to above. Our quest for capital is continuing and we are optimistic that we can complete
a successful program and get our platform acquisition completed immediately
thereafter. 6




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SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued) We restructured our $2,500,000 bank debt which had been a major impediment to
raising the necessary growth capital that we need to complete our acquisition
and grow dramatically. The State of Ohio has dropped its legal proceeding against the Company during
October 2004. This will also be helpful in allowing us to complete our capital
raising successfully. While this has been in process for months now, we feel we are getting close to
a successful conclusion. CHANGES IN ACCOUNTING STANDARDS In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation (FIN) No. 46, Consolidation of Variable Interest Entities,
which requires the consolidation of and disclosures about variable interest
entities (VIEs). VIEs are entities for which control is achieved through means
other than voting rights. In December 2003, the FASB revised FIN No. 46 to
incorporate all decisions, including those in previously issued FASB Staff
Positions, into one Interpretation. The revised Interpretation superseded the
original Interpretation. The requirements were effective for us at the end of
the first quarter of fiscal 2005, however, FIN No. 46 did not have an impact on
our consolidated financial statements. CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOUR OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. Certain statements in the Managements Discussion and Analysis of
Financial Condition and Results of Operations and the Financial
Statements included in this Annual Report on Form 10-KSB, in the
Companys press releases and in oral statements made by or with the
approval of an authorized executive officer of the Company constitute
forward-looking statements as that term is defined under the Private
Securities Litigation Reform Act of 1995. These may include statements
projecting, forecasting or estimating Company performance and industry
trends. The achievement of the projections, forecasts or estimates is
subject to certain risks and uncertainties. Actual results and events
may differ materially from those projected, forecasted or estimated.
The applicable risks and uncertainties include general economic and
industry conditions that affect all business, as well as matters that
are specific to the Company and the markets it serves. Specific risks to the Company include an inability of the Company to
finance its working capital needs. In light of this and other
uncertainties, the inclusion of a forward-looking statement herein
should not be regarded as a representation by the Company that the
Companys plans and objectives will be achieved. 7




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SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized: Date: October 5, 2004
    
    SENTEX SENSING TECHNOLOGY, INC.By:
    /s/ Robert S. KendallRobert S. Kendall, Chief Executive Officer/s/ Julius L. HessJulius L. Hess, Secretary and Director/s/ William R. SprowWilliam R. Sprow, Chief Financial Officer/s/ William R. SprowWilliam R. Sprow, Controller
 8




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EXHIBITS AND REPORTS ON FORM 8-K a)
    
    Exhibit 31.1
    
    302 Certification of Chief Executive OfficerExhibit 31.2
    
    302 Certification of Chief Financial OfficerExhibit 32.1
    
    Certification Pursuant To 18 U. S. C. Section 1350, As
Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002Exhibit 32.2
    
    Certification Pursuant To 18 U. S. C. Section 1350, As
Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002b)
    
    No reports on Form 8-K were filed with the Commission during the
Registrants third quarter.
 9