**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**x**

**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE**

**ACT OF 1934**

 

**For the Quarterly Period Ended August 31, 2009**

 

**OR**

** ̈**

**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 ̈ Nox

 

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 October 14, 2009**

Common Stock

 

66,804,651 shares

 
 
 

 

TABLE OF CONTENTS

Sense Technologies Inc. Form 10-Q

**PART I-FINANCIAL INFORMATION**

**3**

 

 

ITEM 1. FINANCIAL STATEMENTS.

4

BALANCE SHEETS AS OF AUGUST 31, 2009 (UNAUDITED) AND FEBRUARY 28, 2009

4

STATEMENTS OF LOSSES FOR THE THREE AND SIX MONTHS  ENDED AUGUST 31, 2009 AND 2008 (UNAUDITED)

5

STATEMENTS OF CASH FLOWS FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2009 AND 2008 (UNAUDITED)

6

STATEMENT OF STOCKHOLDERS’ DEFICIENCY FOR THE SIX MONTHS ENDED AUGUST 31, 2009 

 

    (UNAUDITED) AND THE YEAR ENDED FEBRUARY 28, 2009 

7

NOTES TO UNAUDITED FINANCIAL STATEMENTS

8

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

11

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

12

ITEM 4T. CONTROLS AND PROCEDURES.

12

** **

 

**PART II-OTHER INFORMATION**

**14**

 

 

ITEM 1. LEGAL PROCEEDINGS.

14

ITEM 1A. RISK FACTORS.

14

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

14

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

14

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

14

ITEM 5. OTHER INFORMATION.

14

ITEM 6. EXHIBITS.

15

** **

 

**SIGNATURES**

**16**

 

**PART I-FINANCIAL INFORMATION
**Item 1. Financial Statements.**

**SENSE TECHNOLOGIES INC.**

**INTERIM FINANCIAL STATEMENTS**

**August 31, 2009**

(Stated in US Dollars) 

(Unaudited) 

**SENSE TECHNOLOGIES INC.**BALANCE SHEETS**As of****August 31, 2009 and February 28, 2009**(Stated in US Dollars)

(Unaudited) 

  

  

August 31, 

  

  

February 28, 

  

  

  

2009 

  

  

2009 

  

**ASSETS**

  

Current 

  

  

  

  

  

  

     Cash

$

26

 

$

645

 

     Accounts receivable

 

2,810

 

 

-

 

     Accounts receivable – related party

 

2,532

 

 

2,532

 

     Inventory 

 

26,981 

  

 

27,611

  

     Prepaids 

  

9,516 

  

  

14,345 

  

  Total Current Assets

  

41,865 

  

  

45,133 

  

  

  

  

  

  

  

  

Deposit 

  

84,928 

  

  

84,928 

  

Equipment – Net of accumulated depreciation

   of $86,162 and $79,012 at August 31, 2009

   and February 28, 2009, respectively

  

56,545 

  

  

63,695 

  

Intangible assets 

  

52 

  

  

52 

  

  Total Assets

$ 

183,390 

  

$ 

 193,808 

  

  

  

  

  

  

  

  

**LIABILITIES**   

  

Current 

  

  

  

  

  

  

     Bank overdraft 

$ 

-

  

$ 

 45,778 

  

     Accounts payable 

  

399,258 

  

  

188,976 

  

     Accounts payable – related party

 

44,695

 

 

44,552

 

     Accrued expenses

 

934,017

 

 

1,064,664

 

     Accrued expenses – related party

 

618,768

 

 

313,528

 

     Notes payable

 

469,786

 

 

499,842

 

     Notes payable – related party 

  

432,500

 

  

427,500

 

     Advances payable – related entity 

  

6,360

  

  

-

  

     Dividends payable 

  

218,937 

  

  

203,141 

  

     Convertible promissory notes payable 

  

584,447 

  

  

584,447 

  

  Total Current Liabilities

  

3,708,768 

  

  

3,372,428 

  

  

  

  

  

  

  

  

**STOCKHOLDERS' DEFICIENCY**   

  

  

  

  

  

  

  

  

Class A preferred shares, without par value, redeemable at $1 per         share 20,000,000 shares authorized, 315,914 shares issued

  

  

  

  

  

  

 at August 31, 2009 (February 28, 2009: 315,914)

  

315,914 

  

  

315,914 

  

Common stock, without par value 100,000,000 shares authorized,

  

  

  

  

  

  

 62,204,651 shares issued at August 31, 2009 (February 28, 2009:       62,204,651)

  

12,903,039 

  

  

12,903,039 

  

Common stock subscribed 

  

212,500 

  

  

32,500 

  

Common stock to be issued

 

88,889

 

 

88,889

 

Deficit 

  

(17,045,720 

) 

  

(16,518,962 

) 

  Total Stockholders’ Deficiency

  

(3,525,378 

) 

  

(3,178,620 

)  

  Total Liabilities and Stockholders’ Deficiency

$  

183,390 

  

$ 

 193,808 

  

SEE ACCOMPANYING NOTES TO THE FINANDIAL STATEMENTS

**SENSE TECHNOLOGIES INC.**STATEMENTS OF LOSS for the three and six months ended August 31, 2009 and 2008(Stated in US Dollars)

(Unaudited) 

  

  

Three months ended 

  

  

Six months ended 

  

  

  

August 31, 

  

  

August 31, 

  

  

  

2009 

  

  

2008 

  

  

2009 

  

  

2008 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales 

$ 

39,119 

  

$ 

96,992 

  

$ 

46,128 

  

$ 

113,667 

  

Direct costs 

  

  

  

  

  

  

  

  

  

  

  

  

     Cost of sales 

 

12,814

  

 

31,264

  

 

13,423

  

 

34,557 

  

     Research and development 

  

1,080 

  

  

3,300 

  

  

2,630 

  

  

3,300 

  

     Commissions

 

10,778

 

 

5,100

 

 

20,708

 

 

10,200

 

     Royalties

 

50,000

 

 

30,000

 

 

100,000

 

 

60,000

 

 

 

74,672

 

 

69,664

 

 

136,761

 

 

108,057

 

 

 

(35,553

)

 

27,328

 

 

(90,633

)

 

5,610

 

 Expenses 

   Advertising and marketing

  

18,025

  

  

      

70,221

  

  

51,658

 

  

  

120,369

 

  

   Consulting fees

  

  

8,700

1,000 

4,097 

 

  

  

      6,600

2,000

3,895 

  

  

  

  

9,500

5,179 

7,149 

  

  

  

  

24,900

5,000 

7,790 

  

  

   Contract labor

   Depreciation 

   Filing fees 

  

1,885 

  

  

1,750 

  

  

2,490 

  

  

1,750 

  

   Financing fees 

  

- 

  

  

36,354 

  

  

- 

  

  

36,354 

  

   Insurance 

  

6,742 

  

  

8,637 

  

  

14,069 

  

  

17,275 

  

   Interest and bank charges  

  

54,399 

  

  

37,080 

  

  

104,924 

  

  

69,956 

  

   Legal and accounting 

  

35,807 

  

  

357 

  

  

35,957 

  

  

51 

  

   Office and miscellaneous 

  

141,885 

  

  

10,475 

  

  

146,915

  

  

12,565 

  

   Rent 

  

17,210 

  

  

16,434 

  

  

34,413 

  

  

32,869 

  

   Shareholder information and printing 

  

62 

  

  

- 

  

  

62

  

  

- 

  

   Telephone and utilities 

  

627 

  

  

1,239 

  

  

1,531

  

  

2,340 

  

   Transfer agent fees 

  

2,315 

  

  

4,664 

  

  

2,315 

  

  

5,573 

  

   Travel and automotive 

  

1,101 

  

  

8,540 

  

  

10,709 

  

  

11,328 

  

  

  

293,855 

  

  

208,246 

  

  

426,871 

  

  

348,120 

  

Net Operating Loss

 

(329,408

)

 

(180,918

)

 

(517,504

)

 

(342,510

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Rental income

  

1,636

  

  

  -

  

  

6,544

  

  

-

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from operations 

 

 (327,772

) 

 

 (180,918 

) 

 

 (510,960 

) 

 

 (342,510 

)  

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends, paid or accrued

 

7,899

 

 

7,898

 

 

15,798

 

 

15,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

$

(335,771

)

$

(188,816

)

$

(526,758

)

$

(358,306

)

  

  

  

  

  

  

  

  

  

  

  

  

  

Basic and diluted loss per share 

$ 

 (0.01 

) 

$ 

 (0.01 

) 

$ 

 (0.01 

) 

$ 

 (0.01 

) 

  

  

  

  

  

  

  

  

  

  

  

  

  

Weighted average number of shares outstanding 

  

62,204,651 

  

  

50,378,408 

  

  

62,204,651 

  

  

50,326,203 

 

SEE ACCOMPANYING NOTES TO THE FINANDIAL STATEMENTS

**SENSE TECHNOLOGIES INC.**STATEMENTS OF CASH FLOWS for the three and six months ended August 31, 2009 and 2008(Stated in US Dollars)

(Unaudited)

  

 

3 Months

Ended

8/31/2009

 

  

6 Months ended 8/31/2009 

  

 

3 Months ended 8/31/2008

 

  

6 Months ended 8/31/2008 

  

  

 

 

 

  

  

  

 

 

 

  

  

  

Operating Activities 

 

 

 

  

  

  

 

 

 

  

  

  

     Net loss for the period 

$

(398,185

)

$ 

 (510,960 

) 

 

(180,918

)

$ 

 (342,510 

) 

     Adjustments to reconcile net loss to net cash used in 

         Operating activities: 

 

 

 

  

  

  

 

 

 

  

  

  

           Depreciation 

 

4,097

 

  

7,149 

  

 

3,895

 

  

7,790 

  

           Write-off of accounts payable 

 

-

 

  

- 

  

 

-

 

  

- 

  

     Changes in non-cash working capital balances related to operations: 

 

 

 

  

  

  

 

 

 

  

  

  

           Accounts receivable 

 

(690

)

  

(2,810 

)

 

(64,655

)

  

(68,270 

)

           Inventory 

 

22

 

  

630 

 

 

(82,637

)

  

(82,637 

) 

           Prepaids 

 

6,691

 

  

4,829 

 

 

(10,080

)

  

(3,123 

)

           Accounts payable and accrued liabilities

 

327,536

 

  

339,239

  

 

130,754

 

  

144,384 

 

           Advances payable 

 

(4,655

)

  

6,360 

 

 

55,250

 

  

(40,050 

) 

  

 

 

 

  

  

  

 

 

 

  

  

  

Net cash used in operating activities 

 

(65,184

)

  

(155,563 

) 

 

(148,391

)

  

(384,416 

)  

  

 

 

 

  

  

  

 

 

 

  

  

 

Financing Activities 

 

 

 

  

  

  

 

 

 

  

  

 

     Borrowing on debt 

 

(8,229

)

  

15,000

 

 

105,375

 

  

95,688

 

     Payments on debt

 

 

 

 

(40,056

)

 

 

 

 

 

 

     Advances payable – unrelated parties

 

-

 

 

-

 

 

-

 

 

225,000

 

     Borrowings from bank indebtedness 

 

-

 

  

- 

 

 

23,439

 

  

13,957 

  

     Proceeds from common share subscriptions 

 

70,000

 

  

180,000 

  

 

20,000

 

  

50,000 

  

  

 

 

 

  

  

  

 

 

 

  

  

  

Net cash provided by financing activities 

 

61,771

 

  

109,165 

  

 

148,814

 

  

384,645 

  

  

 

 

 

  

  

  

 

 

 

  

  

  

Decrease in cash during the period 

 

(3,413

)

  

(619) 

 

 

423

 

  

229

  

  

 

 

 

  

  

  

 

 

 

  

  

  

Cash, beginning of period 

 

3,439

 

  

645 

  

 

794

 

  

988 

 

  

 

 

 

  

  

  

 

 

 

  

  

  

Cash, end of period 

$

26

 

$ 

26 

  

$

1,217

 

$ 

1,217 

  

SEE ACCOMPANYING NOTES TO THE FINANDIAL STATEMENTS

**SENSE TECHNOLOGIES INC.**STATEMENT OF STOCKHOLDERS’ DEFICIENCY for the period ended August 31, 2009(Stated in US Dollars) 

  

Common Stock 

 

 

Preferred Stock 

 

 

 

Common 

 

 

 

Common

 

 

 

 

 

 

  

Issued 

 

 

 

 

 

Issued 

 

 

 

 

 

 

Stock 

 

 

Subscriptions 

Stock to

 

 

Accumulated 

 

 

 

  

Shares 

 

 

Amount 

 

 

Shares 

 

 

Amount 

 

 

 

Subscribed 

 

 

Receivable 

Be Issued

 

 

Deficit 

 

 

Total 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

 

  

  

  

  

  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, February 29, 2008

 45,575,551

 

 

$   12,499,471  

 

 

315,914

 

 

$  315,914

 

 

 

$      650,500   

 

 

$     (891,432)

288,889   

 

 

$    (15,473,645)

 

 

$    (2,610,303)

Common share subscriptions

 

 

 

 (524,016)

 

 

 

 

 

 

 

 

 

      245,000   

 

 

524,016  

 

 

 

 

 

 

  245,000

Common Stock issued

8,929,100

 

 

495,584

 

 

 

 

 

 

 

 

 

      ( 863,000) 

 

 

367,416  

 

 

 

 

 

 

 

Management fee shares issued

2,500,000

 

 

200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

   (200,000)

 

 

 

 

 

 

Consulting fees

3,000,000

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100,000

Royalties Payable

2,200,000

 

 

132,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

132,000

Dividends 

 

  

  

 

  

  

 

 

 

 

 

 

 

 

 

  

 

 

 

 

(31,591)

 

 

(31,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1,013,726)

 

 

   (1,013,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, February 28, 2009

62,204,651

 

 

12,903,039

 

 

315,914

 

 

315,914

 

 

 

32,500

 

 

 

88,889

 

 

(16,518,962)

 

 

  (3,178,620)

Common share subscriptions

 

 

 

 

 

 

 

 

 

 

 

 

 

180,000

 

 

 

 

 

 

 

 

 

180,000

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,798)

 

 

(15,798)

Net loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(510,960)

 

 

(510,960)

Balance, August 31, 2009

62,204,651

 

$     12,903,039

 

 

315,194

 

$   315,194

 

 

$        212,500

 

 

88,889

 

$     (17,045,720)

$    (3,525,378)

SEE ACCOMPANYING NOTES TO THE FINANDIAL STATEMENTS 

**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 twelve months to August 31, 2009 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, 2009. 

 

 

Note 2 

Common Stock 

  

a) 

Escrow : 

  

 

At August 31, 2009, there are 5,970,190 performance shares held in escrow by the Company’s transfer agent. Included in this amount are 3,250,000 escrow shares to be earned out on the basis of one share for each $0.50 of cash flow generated by the Company. Once these shares are earned out, the remaining 2,720,190 escrow shares are to be earned out for each $5.00 of cash flow generated by the Company. The release of these shares is subject to the direction or determination of the relevant regulatory authorities. 

  

b) 

Commitments : 

  

 

Stock-based Compensation Plan 

 

 

 

  

  

  

August  31,

  

  

February 28, 

  

  

  

  

2009 

  

  

2009 

  

  

  

  

  

  

  

Weighted 

  

  

  

  

  

Weighted 

  

  

  

  

  

  

  

Average 

  

  

  

  

  

Average 

  

  

  

  

  

  

  

Exercise 

  

  

  

  

  

Exercise 

  

  

  

  

Shares 

  

  

Price 

  

  

Shares 

  

  

Price 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Outstanding and exercisable at 

  

  

  

  

  

  

  

  

  

  

  

  

  

beginning of period 

  

1,025,000 

  

 

$0.07 

  

  

1,025,000 

  

 

$0.07 

  

  

Expired 

  

(25,000 

)

 

(1.00

)

  

(25,000 

)

 

(1.00

)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Outstanding and exercisable at 

  

  

  

  

  

  

  

  

  

  

  

  

  

end of the period 

  

1,000,000 

  

 

$0.05

  

  

1,000,000 

  

 

$0.05 

  

 

At August 31, 2009, 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

Common Stock Subscribed 

 

For the six months ended August 31, 2009, the Company has received $180,000 in respect of private placements of 3,600,000 common shares. As at August 31, 2009, 4,100,000 shares had not been issued; 3.600,000 relating to the current period and 500,000 relating to prior periods. 

 

Note 3 

Related Party Transactions 

 

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

  

  

  

  

  

August 31,         

  

  

  

  

  

  

2009 

  

  

2008

  

  

  

  

  

  

  

  

  

  

  

 

Royalties

 

 

$

100,000

 

$

60,000

 

  

Interest expense 

 

  

$ 

95,986 

  

$ 

 20,106 

 

 

As of August 31, 2009, included in accounts payable is $33,774 (February 28, 2009: $33,774) owing to an accounting firm in which a director of the Company is a partner and a shareholder with respect to unpaid fees and interest on promissory notes,  $480,000 (February 28, 2009: $480,000) owing to shareholders of the Company in respect of royalties payable with no interest accruing, $373,335 (February 28, 2009: $273,500) owing to a director of the Company in respect of royalties payable and $50,992 (February 28, 2009: $50,992) owing to the former president of the Company in respect of unpaid wages. 

As of August 31, 2009, included in advances payable is $6,360 (February 28, 2009: $0) owed to a company controlled by a director. 

As of August 31, 2009, promissory notes payable of $432,500 (February 28, 2009: $427,500) is due to a profit-sharing and retirement plan administered by a director of the Company.  Terms are:

 

Due June, 2009

$   20,000

May, 2009

   150,000

August, 2009

    90,000

September, 2009

    50,000

October, 2009

    75,000

November, 2009

    22,500

December, 2009

    20,000

June, 2010

      5,000

   Total

$432,500

All bear interest at 12% per annum.

 

Note 4

Accrued Liabilities

 

 

 

  

August 31,

2009

February 28, 2009

Accrued fees 

24,611

40,194 

Accrued payroll 

55,721

55,869

Accrued interest payable 

448,150

356,858 

Accrued non resident withholding taxes, including 

 accrued interest  

120,956

120,956 

Accrued royalties payable 

853,334

753,334 

Accrued taxes payable 

50,013

50,981 

  

  $1,552,785      

$1,378,192 

Note 5 

Concentrations

The Company operates in one industry segment being the production, marketing and distribution of safety awareness products in the automotive industry. Substantially, all of the Company’s operations, and assets are located in the United States. During the six months ended August 31, 2009, there were two customers that accounted for $44,273 (97%) of sales revenue.   During the six months ended August 31, 2008, there were three customers that accounted for $101,757 (91%) of sales revenue.

Note 6 

Commitments and Contingencies

The Company is in arrears with respect to its lease of property with San Tan Development. As a result, the company is being faced 

with a judgment in an amount equal to the remaining months of lease commitments and attorney’s fees and costs. Sense has booked a liability in the amount of the judgment and have accrued attorney’s fees. The amount of the lease liability is $107,372. The estimated attorneys fees are based on 20% of damages sought and total $21,474. If the property is sub-leased for any part of the remaining lease term, or other arrangements with the landlord are made, the liability will be accordingly adjusted.

Note 7 

Subsequent Events

The Company issued 4,600.000 shares previously subscribed for on September 23, 2009.

**Management’s Discussion And Analysis**

Sense Technologies Inc. Form 10-Q 

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

The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto for the period ended August 31, 2009 and our Financial Statements and notes thereto for the period ended August 31, 2008.

**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 six month period ended August 31, 2009 as compared to the period ended August 31, 2008.*

Sales for the period ended August 31, 2009 decreased by 41% from $113,667 to $46,128 due to reduced demand.  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.

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.

Direct costs in 2009 were higher due to higher minimum royalties under the ScopeOut® license and increase in commissions paid.  Direct costs in 2008 were also high due to minimum royalties under the ScopeOut® license.

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/unsaleable inventory.

Management periodically reviews inventory and makes a determination as to whether any inventory is obsolete.  If we determine that certain materials and or products are not in saleable condition and that the likelihood of them being sold is remote, management will make a decision to write off the inventory and or parts of inventory that it deems will not sell.  If previously written-off inventory later sells, costs of sale are significantly lower due to the previous write-off of those costs.  This can materially affect period gross profit ratios.

Regarding intangible assets, the company conducts reviews annually in accordance with SFAS 142 regarding possible impairment of related assets.   We have written off the GuardianAlert® license agreement intangible asset in 2005 and the ScopeOut® license agreement intangible asset in 2007 due to poor sales performance results in the past and the uncertainty of the recoverability of the assets.

After careful consideration, management felt the ScopeOut® license should be treated as fully impaired at February 28, 2007.  The initial license was entered in September, 2004, and the first molds for the first iteration of the product were completed in September of 2005.  

The initial inventory, now all written off, was manufactured and delivered to the Company in November 2005.  Significant marketing efforts were undertaken with respect to that first version which resulted in significant promise for potential large sales to occur based on initial meetings introducing the product.  It generally took several meetings with each such potential customer to ultimately learn that the products' aesthetics were not acceptable for mass consumer acceptance.  This was especially true with respect to dealers' installation of the product on its new and used car inventory for such vehicle to be sold with the product intact.  

In late 2006, and by fiscal year end February 28, 2007, solutions to those aesthetic problems were being developed.  We still expected that inventory of the first iteration was saleable, but likely not with large customers such as retail chains.  Some automobile dealerships previously contacted also had not yet made a final decision whether to use the product on its existing inventory for resale.

**Management’s Discussion And Analysis**

Sense Technologies Inc. Form 10-Q 

 

The Company undertook the effort to redesign the products using the qualified engineers that assisted with the first design, and physically-feasible aesthetics solutions were determined and evaluated.  The new designs iterations were finally approved in August of 2007, and the first inventory of both versions of the new iterations were manufactured and delivered in November, 2007.

Based on this, management believed at February 28, 2007 that existing inventory was still resalable, though likely not in the large volumes per customer as originally anticipated.  Further, management believed that the product could successfully be redesigned, engineered, and prototyped and manufactured in the appropriate aesthetic versions necessary to achieve such large customer sales.  Based on this, when the initial 10-KSB was filed and financial statements issued, no impairment of the intangible asset was believed to exist.  However, management now believes that the total impairment of that intangible asset as of that date is appropriate as there was no assurance at the time that our expectations of solving the aesthetics and other marketing problems would actually be successful.  This is further because no significant sales of the new versions of the product have yet occurred, notwithstanding significant marketing effort to do so.  Since six months have elapsed since the new iteration versions of the products have arrived for demonstration and marketing purposes, within which such sales could have occurred, it seems most appropriate to look at that historical result to anticipate what potential sales might occur in the future.  Unit sales of ScopeOut® products were as follows:

**Sense Technologies Inc.**
**Schedule of Scope-Out unit sales**
**for the fiscal years ended February 29, 2008**

**and February 28, 2007, 2006 and 2005**

 

**2005**

**2006**

**2007**

**2008**

 

 

 

 

 

Car model

          -    

10

6

13

SUV model

      -

18

7

10

Total ScopeOut® units

      - 

28

13

23

 

 

 

 

 

Accordingly, the Company has concluded that based on the approximately two-year period from entering the ScopeOut® license to February 28, 2007, and considering all events subsequent to that date, the circumstances merited an impairment in value of the ScopeOut® license effective February 28, 2007, in the full amount of the license value, $196,107.        

Also, we expensed the amounts we paid to attorneys to obtain ScopeOut® patents in foreign jurisdictions in our revised Financial Statements.  Originally, the company chose to capitalize these amounts because of the Company's experience with intellectual properties embodied in issued patents.

First, management understood that in the United States, an issued patent maintains a presumption of validity until determined otherwise.  While that is our understanding of the law in the United States, it may not necessarily that of any or all foreign countries. However, it was our presumption that that should more often than not be the case.  Additionally, the Company is presently interacting with a major company in informally evaluating the scope of the patents in covering a product they sell.  That added to management's presumption of a valid patent, insofar as that effort has not yet been completed.  The company's intent was to react with appropriate reductions in values should this informal effort result negatively for the Company.

Secondly, our experience in filing for foreign patents has led to opportunities for evaluation of the subject invention in foreign marketplaces.  Evidently such documents become databases of opportunities for interested companies in the foreign venues for consideration of business relationships.  Such information contained in the application provides for a sufficient amount of means to contact the Company by any interested party in the foreign location.  Accordingly, there is a value with respect to the potential of such networking opportunities to enter business relationships regarding the product by such interested parties.  

Notwithstanding, since the Company has determined that a total impairment of the ScopeOut® license is appropriate at February 28, 2007, such would be indicative that the value of all of the underlying patents to the ScopeOut® license would also be in-turn impaired.  Such weighs on whether any foreign patents should therefore maintain any intangible value for the Company.  Based on these overall circumstances, management believes again that these costs should be treated as expense.

We also wrote off equipment of $19,341 and an uncollectible promissory note receivable from a group of original investors in the Company in the amount of $585,000 during 2008. This note had been outstanding for several years and its collection was contingent on successful resolution of a bankruptcy proceeding of an unrelated company. During the year ended February 29, 2008, management made the determination that the possibility of collection on this note was remote and determined it should be written-off.

**Management’s Discussion And Analysis**

Sense Technologies Inc. Form 10-Q 

Royalties increased from $60,000 in 2008 to $100,000 in 2009, and increase of 67%, due to the increased requirement of minimum royalties necessary to maintain the exclusivity regarding the ScopeOut® license.

Consulting fees decreased from $24,900 in 2008 to $9,500 in 2009, a decrease of 39%.  Advertising and marketing expenses decreased from $120,369 in 2008 to $51,658 in 2009, a decrease of 43%, both as a result of adjustments in the Company’s efforts to market the ScopeOut® products.

Following summarizes the overall operations results:

 

 

 

**Increase**

**%  Increase**

 

**     2009**

**    2008**

**( Decrease)**

**(decrease)**

 

 

 

 

 

Sales

46,128

113,667

(67,539)

(40.58)

Direct Costs

136,761

108,057

28,704

26.56

General and Administrative expenses

426,871

348,120

(56,615)

(83.74)

Net Loss

(517,504)

(342,510)

184,248

53.80

Basic and Diluted Loss per share

(        .01)

(        .01)

-    

-

The stockholders and directors of the Company have been advised in the independent auditors report that there is substantial doubt that our company has the ability to continue as a going concern.

With respect to the financial condition beyond the fiscal year ending February 28, 2009, the Company will need access to additional funding to meet operating requirements based on its current state of affairs.  Access to funding may come from debts, loans from related parties, stock placement or a combination of the available options. Revenues for fiscal year ended February 28, 2009 were $75,546 and thus, expenses exceeded revenues.  Accordingly, the Company does not expect to be able to fund operations from internally-generated funds until such time as its sales exceed expenses.

As of the date of this filing, the Company had no other funding commitments and there can be no assurance that any such commitments in the future would be obtained on favorable terms, if at all.

The Company has previously maintained its operations from the sale of capital stock and advances and loans from related and unrelated parties.

Although management is cautiously optimistic about its progress for resolutions to its financing needs, no assurances can be made that its plans will be successful.  Adverse market conditions, general economic conditions and limited access to capital markets can adversely impact the Company and its progress as a going concern.

**Liquidity and Capital Resources**

Our cash position at August 31, 2009 was $26 as compared to $1,217 at August 31, 2008. This decrease was due to our use of cash in operating and investing activities and cash provided by financing activities as described below.

**Net cash used in operating activities**

Net cash used in operating activities was $155,563 in 2009, compared to $384,416 in 2008. The decrease in cash used in 2009 was largely due to the decrease in ScopeOut® marketing activities. 

**Net cash provided by financing activities**

Net cash provided by financing activities was $154,944 in 2009 compared to net cash provided of $384,645 in 2008.

In 2009, we received $180,000 through subscriptions to private placements of our common shares. 

**Management’s Discussion And Analysis**

Sense Technologies Inc. Form 10-Q 

 

**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 August 31, 2009 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.

**PART II-OTHER INFORMATION
**Item 1. Legal Proceedings.**

We are a party to a legal proceeding regarding our lease in Chandler, Arizona.

**Item 1A. Risk Factors.**

There were no material changes in our risk factors from our Form 10-K for the year ended February 28, 2009.

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

There were no unregistered sales of equity securities during the quarter ended August 31, 2009.

**Item 3. Defaults Upon Senior Securities.**

None.

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

We did not submit any matter to a vote of our stockholders during the quarter ended August 31, 2009.

**Item 5. Other Information.**

None.

Sense Technologies Inc. Form 10-Q 

**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

 

 

 

 

 

**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.**

 

 

Date

Signature

 

 

 

 

October 20, 2009

/S/ BRUCE E. SCHREINER

 

Bruce E. Schreiner, President

 

(principal executive officer) and Director

 

 

 

**Exhibit 31.1**

 

**CERTIFICATIONS**

I, Bruce E. Schreiner, certify that:

1.

I have reviewed this report of the fiscal quarter ended August 31, 2009 of Sense Technologies, Inc.

2.   

Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statement, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.

The small business issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15e)) for the small business issuer and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made know to us by others within those entities, particularly during the period in which the annual report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c)

evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation.

5.

The small business issuer’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of small business issuer’s board of directors (or persons performing the equivalent function):

a.

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b.

any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s control over financial reporting.

October 20, 2009

 

S/ BRUCE E. SCHREINER

 

Bruce E. Schreiner, Chief Executive Officer

 

 

 

 

 
**Exhibit 32.1**

 

**CERTIFICATION**

**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**

In connection with the Quarterly Report of Sense Technologies Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended August 31, 2009 as filed with the Securities and Exchange Commission (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, and Rule 13a-14(b), that to his knowledge:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 20, 2009

/S/ BRUCE E. SCHREINER

 

Bruce E. Schreiner, President

 

(principal financial and accounting officer)

 

[A signed original of this written statement required by Section 906 has been provided to Pinpoint Recovery Solutions Corp. and will be retained by Pinpoint Recovery Solutions Corp and furnished to the Securities and Exchange Commission or its staff upon request.]

 

 

 

 ****