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**UNITED STATES
   SECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549

**FORM 10-KSB**

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2006

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to
____________________

000-29990(Commission file number)

SENSE TECHNOLOGIES
INC.(Name of small business issuer in its charter)

|Yukon Territory                                 | 90010141           
|----------------------------------------------- | -------------------
|(State or other jurisdiction of                 | (I.R.S. Employer   
|incorporation or organization)                  | Identification No.)
|                                                |                    
|2535 N. Carleton Avenue, Grand Island, Nebraska | 68803              
|(Address of principal executive offices)        | (Zip Code)         

Issuers telephone number: (308) 381-1355

Securities registered pursuant to Section 12(b) of the Act: **None**

Securities registered pursuant to Section 12(g) of the Act: **Common
  Stock**

Check whether the issuer is not required to file reports pursuant
  to Section 13 or 15(d) of the Exchange Act. [   ]

Check whether the issuer (1) filed all reports required to be
  filed by Section 13 or 15(d) of the Exchange Act during the past 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 [   ]

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B is contained, and will not be contained, to the
  best of the registrants knowledge, in definitive proxy or information
  statements incorporated by reference in Part III of this Form 10-KSB or any
  amendment to this Form 10-KSB. [   ]

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Exchange Act). 
  Yes__ NoX

State issuers revenues for its most recent fiscal year:
  **US$74,903**

As of May 23, 2005, the aggregate market value of the voting
  common equity held by non-affiliates of the registrant was US$3,933,448, based
  on the closing trade reported on the NASD Over-the-Counter Bulletin Board quotation
  system. Shares of Common Stock held by each officer and director and by each
  person known to the issuer who owns 5% or more of the outstanding Common Stock
  have been excluded from this calculation as such persons may be considered to
  be affiliated with the Company.

As of June 28, 2006, the Registrants outstanding common
  stock consisted of 42,525,811 shares.

Transitional Small Business Disclosure Format: Yes [  
  ] No [X]

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SENSE TECHNOLOGIES INC.

Form 10-KSB

Table of Contents

|Part                 | Item No. |                                                                                                                       |   
|-------------------- | -------- | --------------------------------------------------------------------------------------------------------------------- | --
|                     |          |                                                                                                                       |   
|I                    | 1        | Description of Business                                                                                               | 3 
|                     |          |                                                                                                                       |   
|                     | 2        | Description of Property                                                                                               | 10
|                     |          |                                                                                                                       |   
|                     | 3        | Legal Proceedings                                                                                                     | 10
|                     |          |                                                                                                                       |   
|                     | 4        | Submission of Matters to a Vote of Security Holders                                                                   | 10
|                     |          |                                                                                                                       |   
|II                   | 5        | Market for Common Equity and Related Stockholder Matters                                                              | 10
|                     |          |                                                                                                                       |   
|                     | 6        | Managements Discussion and Analysis or Plan of Operation                                                             | 12
|                     |          |                                                                                                                       |   
|                     | 7        | Financial Statements                                                                                                  | 14
|                     |          |                                                                                                                       |   
|                     | 8        | Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure                            | 14
|                     |          |                                                                                                                       |   
|                     | 8A       | Controls and Procedures                                                                                               | 14
|                     |          |                                                                                                                       |   
|                     | 8B       | Other Information                                                                                                     | 14
|                     |          |                                                                                                                       |   
|III                  | 9        | Directors, Executive Officers, Promoters and Control Persons;
      Compliance with Section 61(a) of the Exchange Act | 14
|                     |          |                                                                                                                       |   
|                     | 10       | Executive Compensation                                                                                                | 15
|                     |          |                                                                                                                       |   
|                     | 11       | Security Ownership of Certain Beneficial Owners and Management                                                        | 16
|                     |          |                                                                                                                       |   
|                     | 12       | Certain Relationships and Related Transactions                                                                        | 17
|                     |          |                                                                                                                       |   
|IV                   | 13       | Exhibits                                                                                                              | 18
|                     |          |                                                                                                                       |   
|                     | 14       | Principal Accountant Fees and Services                                                                                | 17
|                     |          |                                                                                                                       |   
|Signatures           | 19      
|                     |          |                                                                                                                       |   
|Financial Statements | 19      

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SENSE TECHNOLOGIES INC. FORM 10-KSB

Note Regarding Forward Looking Statements

This Form 10-KSB contains forward-looking statements, which may
be identified as statements containing, including without limitation, the words
believes, anticipates, intends, expects or similar words. These statements are
based on our belief as well as assumptions we made using information currently
available to us. Because these statements reflect our current views concerning
future events, these statements involve risks, uncertainties and assumptions.
Actual future results may differ significantly from the results discussed in the
forwards-looking statements. Some, but not all, of the factors that may cause
these differences include: risks related to political and economic
uncertainties; risks related to the implementation of our new business strategy;
our ability to obtain financing on acceptable terms; competition in the
automotive sensing device industry; our ability to obtain widespread acceptance
of our sensing devices in the automotive industry; our ability to manage growth;
our ability to protect our intellectual property rights; government regulation
of the automotive industry as it relates to use of sensing devices; and other
uncertainties described elsewhere herein. You should not place undue reliance on
these forward-looking statements.

PART I

Overview

We develop and market automotive safety devices that increase
driver awareness of people or obstacles located in vehicle blind spots. Our two
product lines consist of Guardian Alert® and ScopeOut®.

Our Guardian Alert® product uses Doppler radar technology to
warn vehicle drivers of the presence of people or obstacles in blind spots that
exist behind their vehicles when backing up. Marketing of the product has been
primarily to automobile and truck dealers, fleet operators, and other
after-market automotive industry participants. The Company began manufacturing
the Guardian Alert® Doppler Awareness System for the passenger car market during
the first quarter of fiscal 2003. We are expending marketing efforts to increase
our presence in the fleet vehicle market, passenger car aftermarket and
additional new channels. Changes in our management, business plan and the need
for additional financing has delayed our marketing and sales plans for the
product. In addition, we require additional funding to continue with development
of the product.

In 2004, we acquired the worldwide rights to market and sell
the ScopeOut® product. ScopeOut® is a system of specially designed mirrors which
are placed at specific points on automobiles, trucks, sport utility vehicles or
commercial vehicles to offer drivers a more complete view behind the vehicle.
Drivers using the product are able to have increased visibility when backing out
of parking spaces or garages, and have additional protection from blind spots
during lane changes in traffic. ScopeOut® is being marketed to department stores
and other retailers as an after-market automotive safety product, and is also
available on-line at www.sensetech.com.

Corporate History

Sense was incorporated under the laws of the Province of
British Columbia, Canada, on May 25, 1988 under the name Wizard Resources Ltd.
Our corporate name was changed to Graham Gold Mining Corporation on October 11,
1988 and subsequently to Sense Technologies Inc. on October 27, 1997 in
connection with the acquisition of our current business. On December 14, 2001,
we changed our jurisdiction of organization from British Columbia to the Yukon
Territories.

Our shares are currently quoted on the Over-the-Counter
Bulletin Board (OTCBB) under the trading symbol SNSG.OB. We were previously
listed on the both the Canadian Venture Exchange (now called the TSX Venture
Exchange) and the Nasdaq SmallCap Market. We voluntarily delisted our shares
from the Canadian Venture Exchange on October 3, 2001. On April 25, 2002 our
stock was delisted from the Nasdaq Small Cap Market as we were unable to meet
quantitative listing requirements.

Our administrative office is located at 2535 N. Carleton
Avenue, Grand Island, Nebraska.

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Industry Overview

We compete in the automotive backing awareness and safety
industry. Our products are designed to protect people from death or injury and
property from damage that can result from a collision with a vehicle that is
backing up or changing lanes. In those circumstances, vehicles have blind spots
that limit the ability of the operator to see obstacles or people that are
towards the rear or behind the vehicle. This has repeatedly resulted in death,
injury and property damage, which has in turn prompted several companies to
develop and manufacture backing awareness sensing products. The National Highway
Traffic Safety Administration reported that approximately 400 people die in the
United States annually from accidents involving vehicles backing up. In
addition, property damage and personal injury claims resulting from back-up
accidents all suggest a market need for backing awareness safety devices.

While there are no known products that are similar to our
ScopeOut® product, there are a number of backing awareness products available
that compete with our Guardian Alert® product.

Various backing awareness products are currently being
installed by automobile manufacturers and dealers as optional equipment on
consumer and commercial vehicles. However, backing awareness products can range
in sophistication and effectiveness. Such products include loud beeping alerts
that sound when a vehicle is placed in reverse gear. A beeping alert is limited
in effectiveness as it does not notify the driver of obstacles behind the
vehicle. Young children up to four years old typically do not have the capacity
to understand what the beeping noise means or to understand the possibility of
injury from remaining behind a reversing vehicle. Other awareness products
include large round convex mirrors placed at the rear of a vehicle which provide
the driver with a line of vision across the rear area of their vehicle. These
devices can be effective for a small class of vehicles such as delivery vans,
however are not practical for most consumer or commercial vehicles due to their
size and need for training.

There are also backing awareness products, including our
Guardian Alert(® Doppler Awareness System product, that use
ultrasound and radar technologies to sense obstacles and people behind a
reversing vehicle. These electronic sensing and alert systems will warn a driver
to the existence of obstacles behind a vehicle. Ultrasound backing awareness
products are currently being used by some automobile manufacturers as a
factory-installed option on certain new vehicle lines. These products are
designed primarily to protect the vehicle from damage in parallel parking
situations. They are designed to detect the bumper of another vehicle when
parking and accordingly will typically not detect obstacles below ten inches
from the ground. These sensors must be kept clear of dirt and dust in order to
ensure proper functioning. The system requires that four ultrasonic sensors be
placed at various locations on the rear bumper. The sensors extend through the
skin of the bumper, thereby changing the appearance of the exterior of the
vehicle. Backing awareness systems also exist that use pulse radar to detect
obstacles. These systems are installed on the exterior of a vehicle thereby
affecting aesthetics of the vehicle, and are typically used for commercial
vehicles.

Our Guardian Alert Product

Guardian Alert®

Our Guardian Alert® Doppler Awareness System backing awareness
products use a patented process based on Doppler radar technology. Our Doppler
radar sensing products offer several advantages over ultrasonic and pulse radar
sensors. The Guardian Alert® Doppler Awareness System creates a
three-dimensional awareness zone behind a vehicle that extends from the rear of
the vehicle outward for the width of the vehicle. Vertically, the awareness zone
begins at ground level and rises up to approximately five feet. The operator of
the vehicle is alerted should any person or obstacle come within the awareness
zone as the vehicle is reversing. The Guardian Alert® Doppler Awareness System
consists of a single sensor that can be placed under the skin of a plastic
bumper thereby not altering the appearance of the vehicle. We also have a number
of other product shapes and installation options to accommodate a wide range of
consumer and commercial vehicles. Our products are designed to be robust and to
operate in almost all weather and road conditions. In contrast to ultrasound and
some other backing awareness products, our sensor using the Doppler radar
technology is not affected by dust, dirt, snow or other environmental materials
that can cover a sensor.

Our Guardian Alert® Doppler Awareness System products are based
on a patented system using Doppler radar technology. We acquired and hold
worldwide rights to manufacture and sell the system.

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The Guardian Alert® Doppler Awareness System consists of a
radar transceiver, a flat antenna, a signal processor, and an audio-visual
display unit. The transceiver and antenna are enclosed in an environmentally
sealed, high impact resistant, resin housing and mounted on the rear of the
vehicle. When activated by placing the vehicle in reverse, the transceiver
continuously projects signals and the antenna receives return signals reflected
off of objects within the predefined awareness zone. Doppler Shift technology is
based on the principle that signals return on a slightly different frequency
than they are projected. The relationship between the phase of the projected
signals and the returning signals is used by the product to determine the
distance between the rear of the vehicle and the object. The signal processor
then sends a signal to the audio-visual display unit typically located on the
dashboard of the vehicle thereby alerting the vehicle operator to the presence
of a person or object. The display unit informs the operator about the presence
of an obstacle via a sequence of green, yellow, and red lights set to illuminate
at preset distances such as twelve feet, five feet and three feet. In
conjunction with the visual alarm, the audio alarm alerts the driver at
corresponding distances with a pulsating tone changing to a constant tone. The
visual display is approximately the size of a small box of matches.

The external units are produced by us using various suppliers.
The external units can be manufactured in various shapes to suit a wide variety
of vehicles. For example, we produce a trailer hitch mount version which fits
directly into the receiver on a trailer hitch when not towing. We also produce a
version that is mounted under the skin of a plastic bumper in order that the
esthetics of a vehicle are not affected. Our distribution partner has developed
six design options ranging from a license plate mount, to sensors protected by
steel casings for commercial applications.

The focus of our current business strategy is the
commercialization of our Guardian Alert® Doppler Awareness System products.
There are a number of product extensions and new applications that we may
develop in the future as we grow. These products include side blind spot
awareness and docking aids for industrial safety and velocity sensing
applications.

Production of our Guardian Alert® Doppler
Awareness System

We outsource the manufacture of the components of our Guardian
Alert® Doppler Awareness System. Our objective is to secure high-volume,
low-cost production capabilities. The entire family of products has the same
interior components, while the exterior enclosure and mount is available in a
variety of options appropriate for different types of vehicles.

The display unit and the radar sensor components of our
products are manufactured by Microwave Solutions Limited of Hertfordshire,
England. Our cabling is available from a number of local sources. Assembly and
packaging is done in North Carolina. We believe that currently production of our
products is more cost effectively achieved by outsourcing the manufacturing and
assembly of the components.

A June, 1998 license agreement with S&S Distributing, LLC
to market Sense products in the fleet vehicle market is no longer in effect.
However, S&S Distributing, LLC continues to sell units in that market.

Market and Marketing of our Guardian Alert ® Doppler
Awareness System

The end user of our Guardian Alert® Doppler Awareness System
product is the safety conscious vehicle owner or operator seeking to minimize
the risk of loss associated with backing accidents. Users of backing awareness
sensing products, may purchase the product as a factory installed option from
the vehicle manufacturer, purchase the product after-market or directly from
distributor for installation in commercial or fleet vehicles, or purchase as an
after-market consumer add-on to their vehicle.

Accordingly, the target market for our Guardian Alert® Doppler
Awareness System product can be identified as follows:

- Manufacturers of vehicles, including cars, sport utility vehicles, light
  trucks, heavy vehicles and equipment, and original equipment suppliers to
  these manufacturers.
- Owners of commercial fleet vehicles and government departments and
  agencies using fleet vehicles.
- Consumer outlets of after-market automotive accessories, including
  dealerships, automotive service shops and automotive retailers, direct sales
  via the Internet and infomercials.

The North American automotive manufacturers segment has been
growing consistently for the last several years beginning with the emergence of
the minivan as a force in the market and continuing with the more recent trend
towards sport utility vehicles. We believe this segment and the large luxury
sedan segment provide the best markets for our products. Our primary efforts
will initially be focused on the mid to higher end of this market that is

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expected to be less price sensitive and more interested in new
technologies. We are actively marketing to decision makers in the original
equipment market through manufacturers. Our marketing emphasis has, however,
been to the higher margin market including dealerships and consumer outlets.
Dealerships provide an opportunity to add our product to a vehicle after it
leaves the manufacturer, but before it is sold.

The 200 million vehicles currently on US roads also provide a
number of opportunities for marketing our backing awareness products. There are
also eight million large trucks owned by commercial enterprises and
approximately 4.5 million fleet vehicles on dealership service plans, which
provide a significant point of sale opportunity. Millions of vehicles each year
are repaired at collision centers, which could offer the product in conjunction
with the repair of a rear bumper. Additionally, most new car warranties require
regular oil changes, which are often performed at dealerships. These visits will
provide additional point of sale opportunities for dealerships that are already
stocked with Guardian Alert® Doppler Awareness Systems.

Our product can result in economic benefit as well as improved
vehicle safety to fleet operators and consumers in these markets. Based on our
research and experience in the fleet market tells us that fleet operators and
risk managers place a greater emphasis on statistical economic analysis than
consumers. Equipping fleets of vehicles requires a significant capital
expenditure that needs to be evaluated relative to the fleet owner's other needs
and limited capital.

We believe that consumers weigh cost, safety benefit to persons
and property and aesthetic appeal in making a decision to purchase a backing
awareness product. We believe that the products ease of demonstration and high
degree of functionality can provide a consumer with an appreciation of the
benefits in protection of property and person. We estimate the cost of a system
installed on a consumer vehicle would generally range between $300 to $700 which
we believe would appeal to most new-vehicle buyers that are interested in the
safety and protection aspect of the product. In perspective, the cost of the
product is less than typical insurance deductibles and therefore avoiding one
incident would allow the product to pay for itself. In addition to actual repair
cost, Guardian Alert ® Doppler Awareness System purchasers also receive the
benefit of saving the considerable time and inconvenience of having their
vehicle repaired and processing insurance claims. Our product can also be
installed beneath the plastic skin of a bumper, thereby not altering the
appearance of the vehicle.

Sense has designed distinct pricing strategies for each of its
three primary markets according to the following principles:

- The product should be priced at a level readily acceptable to SUV and
  light truck purchasers;
- Attractive margin must be made available to OEMs and distribution
  partners;
- Fleet products must offer attractive ROI to owners; and
- Margins to Sense will increase faster with higher volume than higher
  pricing.

We believe our price points are superior to competing products
and additionally provide us with immediate operating margin contribution. Over
the long-term, as volumes grow to higher levels, there will be sufficient
opportunity to lower manufacturing costs.

Competition and Our Competitive Advantages

The backing awareness industry includes manufacturers of active
sensing devices using ultrasonic, infrared and radar technology to detect the
presence of obstacles or persons behind a reversing vehicle. There are also a
number of passive systems such as convex rear cross-view mirrors, rearward
facing television cameras and reversing sound alerts. While we compete with all
backing awareness devices, we view our primary source of competition as being in
the active sensing market. Passive devices require driver training and are
susceptible to driver error as they do not actively warn a driver of the
presence of obstacles or people behind the vehicle. We have identified seven
competitors in the active sensor market: Echo Vision, Hindsight 20/20, Bosch,
Delphi, Valeo, Rostra and Groenveld which is manufactured by Gintec LTD in
Israel.

We believe the Guardian Alert® Doppler Awareness System is
superior to any competing technology in each active sensor category. Our system
is the only patented Doppler radar device available. Among Doppler radar
products, our Guardian Alert® Doppler Awareness System is the only product that
uses a single sensor, which we believe results in easier and less expensive
installation. Ease of installation is a primary concern among vehicle dealers
which provides us with a competitive advantage over other Doppler radar sensing
and ultrasonic products.

Other systems use infrared or ultrasonic sensors. Infrared
sensors project infrared beams and detect reflected infrared light from objects
in the scanned zone behind the vehicle, which in turn activates an audio or
visual alarm.

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Ultrasonic Systems work on the principle of emitting an
ultrasonic sound burst and detecting a reflected energy wave returned to the
source by contact with an object in the detection zone, again activating an
alarm. Both systems require a clean sensor in order to function properly, and
accordingly performance can be affected by environmental conditions.

We believe our product has competitive advantages over
ultrasonic systems. Ultrasonic systems have emerged as a factory installed
option on some vehicle lines. Due to the four precisely tuned sensors and the
in-bumper design requirements of these systems it is not practical to install
them outside of the factory on cars or light trucks. The most important
distinguishing characteristic between the Guardian Alert® Doppler Awareness
System and ultrasonic systems is that ultrasonic systems are designed primarily
to detect the bumper of another vehicle while parallel parking. They do not
provide coverage all of the way to the ground and therefore tend to offer the
vehicle operator a false sense of security. Additionally, since the sensors
cannot see through a bumper, the systems cannot be mounted behind the skin of
the bumper, which affects the aesthetic appearance of the vehicle.

We also believe our product has competitive advantages over
infrared systems as those systems require a clear line of site with the obstacle
in order to function properly, which means effectiveness may diminish with
environmental conditions such as dirt or bright light.

The infrared and ultra sonic technologies were independently
tested and evaluated along with a microwave radar system by the U.S. Bureau of
Mines (Bureau of Mines Circular/1986) in a study of back-up driver's aid systems
for mining vehicles. Infrared Systems were found to be the least reliable for
detecting objects in the rear blind area. Bright sunlight and reflections from
bright objects could trigger false alarms and their range depends upon the
reflectivity of the detected object. Also, the narrow beam pattern necessitates
the use of arrays of sensors to scan the desired zone, increasing system cost
and complexity and decreasing reliability. Furthermore, both of the competitive
technologies are to some degree affected by adverse weather conditions such as
rain, fog, snow, ice or wind. The Bureau of Mines Study found that the microwave
radar system was not affected by weather conditions.

Our product is robust, uses a single sensor that is not
affected by most environmental conditions, and provides a full range of
detection behind the vehicle, including near ground level. We have also priced
our product competitively or below most other competing products.

Our ScopeOut® Product

ScopeOut®

ScopeOut® is a system of specially designed mirrors which are
placed at specific points on automobiles, trucks, vans, sport utility vehicles
and commercial vehicles, to offer drivers a more complete view of the blind
spots located toward the rear of the vehicle. Drivers are able to have increased
visibility when backing out of parking spaces or garages, and have additional
protection from blind spots during lane changes in traffic. ScopeOut®s
high-tech aerodynamic mirrors help drivers see approaching traffic and more
easily detect a host of potential hazards behind the vehicle that might
otherwise be blocked from view.

This after-market automotive device installs easily on vehicles
within minutes, and it provides drivers with 270 degrees of rear visibility,
allowing drivers to see a panoramic view behind them. Two models are available,
one for cars and one designed to fit most sport utility vehicles, trucks,
minivans, station wagons or hatchbacks. Either model fits a wide variety of
vehicles, can be installed with no special equipment, and can be removed at any
time without altering or damaging the vehicle.

We have entered an exclusive worldwide license agreement to
manufacture and market the ScopeOut® adjustable mirrors system. The product is a
stand-alone or complementary product to the existing Guardian Alert® product
line.

Production of our ScopeOut® Product

All of our manufacturing and engineering is being out-sourced
to a firm located in Phoenix, Arizona. The product is manufactured in China in
order to reduce manufacturing costs. The ScopeOut® product is ready for
immediate commercial production and sales, which we anticipate to commence in
the third quarter of 2005.

Market and Marketing of our ScopeOut® Product

The potential market for ScopeOut® is owners or operators of
cars, vans, SUVs and trucks worldwide. There are

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over 200 million vehicles on the road at any given time, and 16
to 18 million new vehicles being built and sold each year. In combination with
our Guardian Alert®, we have the only Surround Safety System that addresses
all the blind spots encountered around the rear of most vehicles at a cost that
permits us to set price points that are affordable for most consumers.

There are a number of ways to market this product, both
individually, or as a combination.

Marketing outlets include, but are not limited to, the
following:

- New and used auto dealers
- AAA Insurance
- AARP
- Mass merchandisers
- Drugstore chains
- Insurance companies
- Rental car companies
- Electronics stores
- Supermarket chains
- Independent auto aftermarket stores
- OEM market
- Internet and infomercials
- QVC and HSN

We are presently building a National Representative
Organization that will allow for our products to be introduced to all the
various markets.

Competition and Our Competitive Advantages

In our research, we have found no products comparable in
pricing and design to ScopeOut® that addresses the hazard created with vehicles
backing out blind in parking lots and driveways, while offering an additional
lane-changing safety feature.

Our Patents, Trademarks & Licenses

Patents & Trademarks

The following countries have granted patent rights respecting
the Guardian Alert® Doppler Awareness System backing awareness system in the
following countries: United States, Canada, Australia, South Africa, Taiwan, the
United Kingdom, Korea and Japan. The Guardian Alert® Doppler Awareness System is
a registered trademark.

We have also received a US Patent on our trailer hitch mount
sensor product that easily installs in the receiver-hitch on any vehicle
equipped with such a hitch.

The ScopeOut® product is generally covered by US Patent Numbers
6,715 893 and 6,799,857, with various other patent applications currently
pending, all of which are included in the exclusive license agreement.

Licenses & Royalties

We hold worldwide rights to develop, manufacture, market and
license the Guardian Alert® Doppler Awareness System technology and products. We
hold these rights pursuant various license agreements with S&S and Driver
Alert Group, the original group of patent holders and Stinson & Associates,
a holder of certain rights under license from Driver Alert Group. These license
agreements provide us with the right to market the products to all federal,
state, local and foreign governments and agencies, including the postal service,
the rights to enter into manufacturing and marketing agreements with automotive
and other manufacturers worldwide, and generally the rights to any other markets
including school buses, construction equipment and mining equipment.

7

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Pursuant to these licenses, we are required to make royalty
payments to the licensors and meet sales targets as follows:

| | a) | $6.00(US) per unit on the first one million units
      sold;                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | thereafter, the greater of $4.00(US) per unit sold or 6%
      of the wholesale selling price on units sold; and                                                                                             
| | c) | 50% of any fees paid to Sense in consideration for
      tooling, redesign, technical or aesthetic development or, should the
      licensors receive a similar fee, the licensors will pay 50% to
    Sense.

If we obtain a royalty agreement with a vehicle manufacturer,
other than General Motors, whereby the manufacturer produces the product for its
own equipment, the royalty shall be shared, one-third to Sense and two-thirds to
the licensors.

The license agreements also provide that we are required to
manufacture and sell a minimum number of units as follows:

| | (i)   | 30,000 units by the end of the calendar year containing
      the second anniversary of the date of commencement of commercial
      production;                          
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | a cumulative total of 60,000 units by the end of the
      calendar year containing the third anniversary of the date of commencement
      of commercial production;     
| | (iii) | a cumulative total of 110,000 units by the end of the
      calendar year containing the fourth anniversary of the date of
      commencement of commercial production;   
| | (iv)  | a cumulative total of 210,000 units by the end of the
      calendar year containing the fifth anniversary of the date of commencement
      of commercial production; and
| | (v)   | an additional 125,000 units by the end of each calendar
      year thereafter.                                                                                            

In the event these minimum sales are not realized, we are
obligated to pay an amount in lieu of royalties equal to the royalties that
would have been payable if the minimum number of units were manufactured and
sold. Commencement of Commercial Production took place on October 1, 1999.
During the fiscal year ended February 28, 2002 we paid a minimum royalty payment
of $128,388 to maintain the licenses in good standing. In 2003, 2004, 2005 and
2006, the Company did not pay its minimum royalty payment. The effect of this is
to convert the license from exclusive to non-exclusive status. All other
provisions remain the same.

We entered into a sub-license agreement with S&S
Distributing, LLC of Elkhorn, Nebraska whereby S&S acquired certain rights
to develop, market and distribute Guardian Alert® Doppler Awareness System
products in 1998, but it is no longer in effect. The sub-license agreement
provided for certain minimum purchases of products from Sense, and certain
expenditure requirements for development and marketing. The sub-license also
provided that any new versions of the sensing device that are developed by
S&S will be made available for manufacture and distribution by Sense.
S&S is continuing to sell Sense units.

Pursuant to a consulting and engineering agreement with Maple
Consulting, we agreed to pay a royalty of $0.50 for each Guardian Alert® Doppler
Awareness System sold that was designed pursuant to the agreement, up to a
maximum of 200,000 units.

We hold a world-wide exclusive and perpetual license with
ScopeOut® products pursuant to a license agreement with Palowmar Industries, LLC
and Lowell Martinson.

Our ScopeOut® license called for $150,000 to be paid over two
years (which did occur) along with a royalty of 10% of wholesale price for each
ScopeOut® unit sold, but not less than $2.00 per unit.

Minimum quantities are:

| | (i)   | 30,000 units per year beginning in years 1-2              
| | ----- | ----------------------------------------------------------
| | (ii)  | 60,000 units per year beginning in years 3-4              
| | (iii) | 100,000 units per year beginning in years 5 and
    above.

Governmental Approval

Because our Guardian Alert product is an emitting device, the
Federal Communications Commission (FCC) we were required to obtain equipment
authorization which was granted on October 31, 1995. The microwave signals
emitted by the device can potentially interfere with radar detectors and other
existing emitting systems. All FCC

8

---

tests have been completed and a FCC certification in the name
of Sense Technologies Inc. has been obtained. There are no other material
regulatory approvals required for Sense to achieve its stated business
objectives.

Employees

We currently are selling product by paying commissions on
achieved sales, and have no payroll.

Item 2. Description of Property

Sales inquiries for Guardian Alert® products are being
processed for Sense by Tim Goldsbury and Associates, Inc., at Alhambra Plaza,
725 N. Hwy A-1-A, Jupiter, FL 33477, and for Scopeout® by Lowell Martinson at
the Sense offices at 4043 W. Kitty Hawk, Suite 7, Chandler, AZ 85226.
Administration is handled from offices located at 2535 N Carleton Avenue, Grand
Island, Nebraska. Both the Florida and Nebraska office spaces are provided to us
at no cost.

Item 3. Legal Proceedings

To the best of our knowledge, there are no legal actions
pending, threatened or contemplated against us. We are aware of one product
manufacturer that we believe is infringing our Doppler radar patents and will
continue to evaluate whether to pursue litigation as resources permit.

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

No matters were submitted to a vote of the Companys
shareholders during the fourth quarter of fiscal 2005.

PART II

Item 5. Market for Common equity and Related Stockholder
Matters

Market and Trading Price

Price quotations for trades in our shares are currently posted
on the Over-the-Counter Bulletin Board (OTCBB), which is a quotation service
administered by the National Association of Securities Dealers (NASD). Our
trading symbol on this service is SNSG. From June of 2000 to April 25, 2002,
our shares were traded on the Nasdaq SmallCap Market. Our shares were also
listed on the Canadian Venture Exchange (now called the TSX Venture Exchange)
until October 3, 2001, when we voluntarily delisted.

The following table shows the high and low sales prices, in
U.S. dollars, of our common stock on the Nasdaq SmallCap Market and high/low
trading prices on the OTCBB for each quarter within the last two fiscal
years:

Quarter Ended
      High
      LowFebruary 28, 2006
    $0.31
    $0.17November 30, 2005
    $0.55
    $0.16August 31, 2005
    $0.50
    $0.17May 31, 2005
    $0.45
    $0.15February 29, 2005
    $0.38
    $0.08November 30, 2004
    $0.14
    $0.05August 31, 2004
    $0.08
    $0.05May 31, 2004
    $0.18
    $0.06


As of February 28, 2006, there were 329 shareholders of record
holding 42,225,811 shares of our common stock.

Dividends

There are no dividend restrictions in the Company.

Recent Sales of Unregistered Securities

On March 15, 2005, we issued 5,494,852 common shares to 16
investors pursuant to the conversion of 1,249,927 Class A Preferred Shares and
the subscription, under Rule 506 of Regulation D, equal to the amount of accrued

9

---

dividends payable by the Company at $0.13 per share. The shares
are restricted pursuant to Rule 144 promulgated under the U.S. Securities
Act of 1933.

On March 30, 2005, we issued 25,000 common shares to one
investor under Rule 506 of Regulation D, at a deemed price of US$0.15, pursuant
to a bonus granted by the Company. The shares are restricted pursuant to Rule
144 promulgated under the U.S. Securities Act of 1933.

On March 30, 2005, one investor under Rule 506 of Regulation D,
subscribed for 200,001 common shares at a price of US$0.15 per share for total
proceeds to the Company of US$30,000. The shares are restricted pursuant to Rule
144 promulgated under the U.S. Securities Act of 1933.

On May 9, 2005, 12 investors under Rule 506 of Regulation D,
subscribed for an aggregate of 5,304,000 units at a price of US$0.05 per unit
for total proceeds to the Company of US$265,200. The price per unit was
determined by management based on the stage of development of the Company and
the fact that there were no significant operations or assets in the Company.
Each unit consists of one common share and one common share purchase warrant.
Each warrant entitles the holder thereof upon due exercise to acquire one
additional common share in the capital stock of the company at a price of
USD$0.15 for a period of eighteen months from the date of closing of the sale of
the units. If the market price for the companys common stock, as quoted on a
quotation facility or stock exchange, exceeds USD$0.40 for 5 consecutive trading
days, the company may, require the holder to exercise the warrants on or before
60 calendar days from delivery of such notice, failing which any unexercised
warrants will be deemed expired.

On June 3, 2005, one investor under Rule 506 of Regulation D,
subscribed for an aggregate of 80,000 units at a price of US$0.05 per unit for
total proceeds to the Company of US$4,000. Each unit consists of one common
share and one common share purchase warrant. Each warrant entitles the holder
thereof upon due exercise to acquire one additional common share in the capital
stock of the company at a price of USD$0.15 for a period of eighteen months from
the date of closing of the sale of the units. If the market price for the
companys common stock, as quoted on a quotation facility or stock exchange,
exceeds USD$0.40 for 5 consecutive trading days, the company may, require the
holder to exercise the warrants on or before 60 calendar days from delivery of
such notice, failing which any unexercised warrants will be deemed expired.

On October 19, 2005, one investor under Rule 506 of Regulation
D, subscribed for an aggregate of 3,061,800 common shares at a price of US$0.24
per share for total proceeds to the Company of US$734,832. The shares are
restricted pursuant to Rule 144 promulgated under the U.S. Securities Act
of 1933.

On December 14, 2005, seven investors under Rule 506 of
Regulation D, subscribed for an aggregate of 925,000 common shares at US$0.20
per share for total proceeds to the Company of US$185,000. The shares are
restricted pursuant to Rule 144 promulgated under the U.S. Securities Act
of 1933.

On February 14, 2006, one investor under Rule 506 of Regulation
D, subscribed for an aggregate of 50,000 common shares at US$0.20 per share for
total proceeds to the Company of US$10,000. The shares are restricted pursuant
to Rule 144 promulgated under the U.S. Securities Act of 1933.

On February 24, 2006, one investor under Rule 506 of Regulation
D, subscribed for an aggregate of 200,000 common shares at US$0.20 per share for
total proceeds to the Company of US$40,000. The shares are restricted pursuant
to Rule 144 promulgated under the U.S. Securities Act of 1933.

In the year ended February 28, 2006, we issued a total of
3,710,000 shares pursuant to the exercise of previously issued common share
purchase warrants. The warrants were exercised at $0.15 per share for aggregate
proceeds to the Company of $556,500. The warrants were issued under Rule 506 of
Regulation D and the shares are restricted pursuant to Rule 144 promulgated
under the U.S. Securities Act of 1933.

Securities Authorized for Issuance Under Equity Compensation
Plans

The following table sets forth information respecting our
compensation plans as at February 28, 2006, under which shares of our common
stock are authorized to be issued.

10

---

Plan Category
      Number of securities
      to be issued upon exercise of outstanding
      options, warrants and rights (a)
      Weighted-average
      exercise price of outstanding options,
      warrants and rights (b)
      Number of securities remaining
      available for future issuance under equity
      compensation plans (excluding securities reflected
      in column (a)) (c)Equity compensation plans approved by security
      holders
    350,000
    $1.12
    1,650,000Equity compensation plans not approved by security
      holders
    Nil
    N/A
    N/ATotal
    350,000
    $1.12
    1,650,000


Item 6. Managements Discussion and Analysis or Plan of
Operation

The following discussion and analysis should be read in
conjunction with our audited Financial Statements and Notes thereto for the
period ended February 28, 2006 and February 28, 2005.

Overview of Operations

Sense holds a 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 an exclusive license to manufacture, distribute, market and
sublicense world-wide, 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. The Company has established relationships
with large dealership groups and aftermarket product distributors.

The Company plans to increase sales through continued
development of new marketing relationships.

Results of Operations

For the period ended February 28, 2006 as compared to the
period ended February 28, 2005.

Sales for the period ended February 28, 2006 were $74,903, a 59
percent increase over the period ended February 28, 2005. This difference is
mainly due to some increasing demand for the Guardian Alert® product.

Direct costs were $808,460, a 266 percent increase over the
period ended February 28, 2005. They Company realized a positive gross margin
contribution of $60,122 on sales less cost of sales and manufacturing expenses.
Research and Development costs of $58,301 and minimum royalties on ScopeOut®
products of $60,000 have also been charged in Direct Costs. Additionally, as
required by the Company's outside auditors, $675,378 of Guardian Alert®
inventory products and components have been written off due to slow sales. As
future sales of such products occur, they will be without components costs being
charged, as such costs have now all been expensed.

General and administrative expenses were $761,355 for the
period ended February 28, 2006 as compared to $360,930 for the period ended
February 28, 2005. The increase was primarily attributable to increased costs
necessary to test market and launch the ScopeOut® product lines.

Liquidity and Capital Resources

At February 28, 2006, the Company had cash and cash equivalents
on hand of $9,220 compared with $131,313 at February 28, 2005. During the period
ended February 28, 2006, the Company funded operations using existing cash
balances, cash flow from operations, and by raising money through the issuance
of Common Stock.

11

---

At February 28, 2006, we had a working capital deficit of
$1,376,041 compared to a working capital deficit of $997,332 at February 28,
2005. The reduction of working capital is largely due to the write off of
Guardian Alert® inventory products and components as required by the Company's
auditors.

We have not invested in derivative securities or any other
financial instruments that involve a high level of complexity or risk.

Critical Accounting Policies:

The Companys discussion and analysis of its financial
condition and results of operations, including the discussion on liquidity and
capital resources, are based upon the Companys financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an ongoing basis, management re-evaluates its
estimates and judgments, particularly those related to the determination of the
estimated recoverable amounts of trade accounts receivable and deferred tax
assets. The Company believes the following critical accounting policies require
its more significant judgment and estimates used in the preparation of the
consolidated financial statements.

The Company maintains an allowance for doubtful accounts for
estimated losses that may arise if any of its customers are unable to make
required payments. Management specifically analyzes the age of customer
balances, historical bad debt experience, customer credit-worthiness, and
changes in customer payment terms when making estimates of the uncollectability
of the Companys trade accounts receivable balances. If the Company determines
that the financial conditions of any of its customers deteriorated, whether due
to customer specific or general economic issues, increases in the allowance may
be made.

The Company reviews its intangible assets on an annual basis
for impairment. The intangible assets are primarily comprised of license
agreements. Management specifically reviews the number of contracts on hand and
if there will be significant future cash flows to be generated from these
contracts. If the Company determines that there is an impairment, then a
write-down will be made.

The Company maintains an allowance for inventory obsolescence.
Management reviews the inventory on a quarterly basis by directly testing for
obsolete inventory. If management determines that obsolete inventory has
increased, then an increase in the allowance will be made.

Income taxes are accounted for under the asset and liability
method. Under this method, to the extent that it is not more likely than not
that a deferred tax asset will be recovered, a valuation allowance is provided.
In making this determination, the Company considers estimated future taxable
income and taxable timing differences expected to reverse in the future. Actual
results may differ from those estimates.

RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the FASB issued SFAS No. 123R, Share-Based
Payment (SFAS 123R), a revision of SFAS No. 123, Accounting for Stock-Based
Compensation, requiring that the compensation cost relating to share-based
payment transactions, including grants of employee stock options, be measured
and recognized in the financial statements using the fair value of the
compensation awards. The provisions of SFAS 123R are effective for the Company
for the first interim or annual period that begins after December 15, 2005.
Adoption of the expensing requirements will reduce the Companys reported
earnings. Management is currently evaluating the two methods of adoption allowed
by SFAS 123R; the modified-prospective transition method and the
modified-retrospective transition method.

In November 2004, the FASB issued SFAS No. 151, Inventory
Costs, an amendment of ARB No. 43, Chapter 4 (SFAS 151). SFAS 151 clarifies
that abnormal inventory costs such as costs of idle facilities, excess freight
and handling costs, and wasted materials (spoilage) are required to be
recognized as current period charges. The provisions of SFAS 151 are effective
for fiscal years beginning after June 15, 2005. The adoption of SFAS 151 is not
expected to have a significant impact on the Companys consolidated financial
position or results of operations.

12

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**Item 7. Financial Statements**

The Companys audited financial statements for the fiscal year
ended February 28, 2006 are attached to this report following the signature page
and Certifications.

Item 8. Changes In and Disagreements with Accountants and
Financial Disclosure

None

Item 8A. Controls and Procedures

The Companys management, with the participation of the
Companys Chief Executive Officer, who is also acting in the capacity as
principal accounting officer, has evaluated the effectiveness of the Companys
disclosure controls and procedures as of a time within 60 days prior to February
28, 2006. Based on this evaluation, the Companys Chief Executive Officer
concluded that the Companys disclosure controls and procedures are effective
for gathering, analyzing and disclosing the information the Company is required
to disclose in the reports it files under the Securities Exchange Act of 1934,
within the time periods specified in the SECs rules and forms. Such evaluation
did not identify any change in the Companys internal control over financial
reporting that occurred during the year ended February 28, 20065 that has
materially affected or is reasonably likely to materially affect the Companys
internal control over financial reporting.

The Company maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed in its reports
filed pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
promulgated under such Act, and that such information is accumulated and
communicated to management, including its President and principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.

In connection with this annual report, management carried out
an evaluation, under the supervision and with the participation of the
management, including the President and principal accounting officer, of the
effectiveness of the design and operation of the Companys disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon the foregoing,
the President and principal accounting officer concluded that the Companys
disclosure controls and procedures are effective in connection with the filing
of this Annual Report on Form 10-KSB for the year ended February 28, 2006.

There were no significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any significant deficiencies or material
weaknesses of internal controls that would require corrective action.

Item 8B. Other Information

None.

PART III

Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act

The names, ages, and business experience for at least the past
five years and positions of the directors and executive officers of the Company
as of June 30, 2006, are as follows. The Companys board of directors consists
of three directors. All directors serve until the next annual meeting of the
Companys stockholders or until their successors are elected and qualified.
Executive officers of the Company are appointed by the board of directors.

Name
      Age
      Position
      Position Held SinceBruce E. Schreiner
    51
    Director, President &CEO
    August 10, 1993Cynthia L. Schroeder
    46
    Director
    From June 8, 2000 to August 27, 2003; and
      from June 18, 2004James R. Iman
    61
    Director
    June 21, 2004


13

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*Biographical Information Concerning Directors and
Executive Officers*

BRUCE E. SCHREINER, Director, President and CEO.Mr.
Schreiner has been the President and Chief Executive Officer of Sense since
March 4, 2004. Mr. Schreiner has been a partner in Schroeder & Schreiner,
P.C., a certified public accounting firm since 1991.

CYNTHIA L. SCHROEDER, Director. Ms. Schroeder from 1987
to the present has been the Senior Vice President and Chief Financial Officer of
Mosaic located in Omaha, Nebraska.

JAMES R. IMAN, Director. Mr. Iman is currently
associated with Corporate Finance Consulting Services of Fort Worth, Texas.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires Sense's Directors, executive officers and persons who own more
than 10% of a registered class of Sense's securities to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of Sense. Directors, executive officers and greater
than 10% stockholders are required by SEC regulation to furnish Sense with
copies of all Section 16(a) reports they file.

To Sense's knowledge, based solely on a review of the copies of
Forms 3 and 4, as amended furnished to it during its most recent fiscal year,
and Form 5, as amended, furnished to it with respect to such year, Sense
believes that during the year ended February 28, 2006, its Directors, executive
officers and greater than 10% stockholders complied with all Section 16(a)
filing requirements of the Securities Exchange Act of 1934.

Code of Ethics

The Company has not adopted a code of ethics, however, it
intends to do so in connection with any expansion of its management.

Item 10. Executive Compensation

SUMMARY COMPENSATION TABLE

The following table sets forth all compensation paid or earned
for services rendered to us in all capacities during the fiscal years ended
February 28, 2004, February 29, 2005 and February 28, 2006 by Senses President
and Chief Executive Officer (CEO) and each executive officer who earned over
$100,000 in total salary and bonus during the three most recently completed
financial years, for services rendered to the Company.

Name and
      Principal Position (a)
      Annual Compensation
      Long Term CompensationYear (b)
      Salary
      ($) (c)
      Bonus
      ($) (d)
      Other
      AnnualCompensation ($) (e)
      Awards
      PayoutsSecurities Under
      **Options/SARs**Granted (#)
      (f)
      Restricted Shares Or
      **Restricted**Share Units($)
      (g)
      LTIP**Payouts**($) (h)
      All other
      **Compensat** ion ($)
      (i)Bruce E. Schreiner President
      & CEO
    2006
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil2005
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilJames H. Cotter[1]President & CEO
    2006
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil2005
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil2004
    Nil
    Nil
    $150,000
    950,000
    Nil
    Nil
    Nil


|[1] | James H. Cotter resigned as President and CEO of the
      Company on March 4, 2004 and Bruce E. Schreiner was appointed in his
      stead.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED
FINANCIAL YEAR

There were no stock options granted during the Companys fiscal
year ended February 28, 2006.

14

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AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY
COMPLETEDFINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES

There were no stock options exercised during the Companys
fiscal year ended February 28, 2006.

TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND
EMPLOYMENT CONTRACTS

There are currently no employment contracts in place with the
Directors and Officers of Sense other than the standard employment agreements
used for all employees.

COMPENSATION OF DIRECTORS

There are no standard arrangements pursuant to which directors
of Sense are compensated for services provided as a Director or members of
committees of the Board of Directors. The Directors of Sense did not receive any
compensation for the year ended February 28, 2006 for services provided as a
Director or member of a committee of the Board of Directors.

Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters

On June 28, 2006 there were 45,525,811 shares of our common
stock (the "Common Stock"), issued and outstanding, each share carrying the
right to one vote, and 343,050 Class A Preferred Shares. Only holders of
Common Stock as at the close of business on June 20, 2006 will be entitled to
vote in person or by proxy at the Meeting or any adjournment thereof. The Class
A Preferred Shares are non-voting.

The following table sets forth certain information regarding
the beneficial ownership of the Companys Common Stock as of June 28, 2006, by

|(i)   | each person or entity known by Sense to beneficially own
      more than 5% of the Common Stock;
|----- | ------------------------------------------------------------------------------------------------
|(ii)  | each Director of Sense;                                                                         
|(iii) | each of the named Executive Officers of Sense;
  and                                            
|(iv)  | all Directors and Executive Officers as a
  group.                                              

Except as noted in the following table, Sense believes that the
beneficial owners of the Common Stock listed below have sole voting and
investment power with respect to such shares.

Name and Address of 
        Beneficial Owner
      Amount of Beneficial 
        Ownership[1]
      Percent of Class [2]Steve Sommers[3]21018
      Buckskin Trail Elkhorn, NE 68022
    3,796,187 [3]
    8.92%First Americans Insurance Service Inc.
      2621 West Highway 30 Grand Island, NE 68803
    2,700,000
    6.35%Bruce E. Schreiner, Director 3535
      Grassridge Drive Grand Island, Nebraska 68803
    1,184,838
    2.79%Cynthia L. Schroeder, Director 15409
      Garfield Omaha, Nebraska 68144
    49,722
    1.2%All directors and officers as a group (4
      persons)
    1,384,560
    3.26%


[1]
    Based upon information furnished to Sense by either the
      Directors, Executive Officers or beneficial holders, or obtained from the
      stock transfer agent of Sense, or obtained from insider reports.[2]
    Based upon a total of 42,525,811 shares of common stock
      currently issued and outstanding, and includes in each case any stock
      underlying immediately exerciseable stock options granted to each person
      listed.[3]
    Includes 3,302,617 shares held by SFS Resources Inc., an
      entity in which Steve Sommers is a controlling shareholder; and 100,000
      shares held by Steven Sommers II Investments
LLC.


15

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Item 12. Certain Relationships and Related
Transactions

Transactions with management and others

The following is in addition to disclosure contained elsewhere
herein respecting transactions involving management.

Bruce E. Schreiner, President & CEO of the Company,
acquired Series B promissory notes, in the aggregate principal amount of
$77,343, bearing interest at 10% per annum and 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 demand for
payment. The notes were converted to common shares at the rate of $0.25 per
common share on February 28, 2005. Accrued interest was also converted to common
shares at the rate of $0.25 per common share.

Bruce E. Schreiner, President & CEO of the Company,
acquired a promissory note in the amount of $30,000 bearing no interest and due
on demand on October 2, 2005. The note may be converted into common shares of
the Company at any time prior to the demand for payment. The note was converted
to common shares at the rate of $0.25 per common share on February 28, 2005.

Cynthia Schroeder, a Director of the Company, acquired a
promissory note in the amount of $5,388.36 bearing interest at 10% per annum and
payable on demand, along with accrued interest thereon, on or after August 30,
2005. The note plus accrued interest may be redeemed at any time after August
30, 2005. The note plus accrued interest may be redeemed at any time after
August 30, 2005. The note may be converted into common shares of the Company at
any time prior to demand for payment. The note was converted to common shares at
the rate of $0.25 per common share on February 28, 2005. Accrued interest was
also converted to common shares at the rate of $0.25 per common share.

Transactions with Promoters

We have not entered into any transactions with promoters.

Item 14. Principal Accountant Fees and Services

The fees for services provided by Amisano Hanson, Chartered
Accountants, to us in each of the fiscal years ended February 29, 2005 and
February 28, 2006 were as follows:

Fees
      2005
      2006Audit fees
    $14,050
    $22,800Audit related fees
    $15,664
    $18,425Tax fees
    Nil
    NilAll other fees
    Nil
    Nil


The Company maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed in its reports
filed pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
promulgated under such Act, and that such information is accumulated and
communicated to management, including its Chief Executive Officer, as
appropriate, to allow timely decisions regarding required disclosure.

Within 90 days prior to the date of this report, management
carried out an evaluation, under the supervision and with the participation of
the management, including the President and principal accounting officer, of the
effectiveness of the design and operation of the Companys disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon the foregoing,
the President and principal accounting officer concluded that the Companys
disclosure controls and procedures are effective in connection with the filing
of this Annual Report on Form 10-KSB for the year ended February 28, 2006.

There were no significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any significant deficiencies or material
weaknesses of internal controls that would require corrective action.

16

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Exhibit No.
      Description of Exhibit
      
      Manner of Filing3.1
      The Articles of Continuance
      
      Incorporated by reference as
          Exhibit 3.1 to the Companys Form 10-KSB, filed with the SEC on
          May 24, 2002 (2002 Form 10-KSB)3.2
      By-Laws
      
      Incorporated by reference as
          Exhibit 3.2 to the 2002 Form 10- KSB3.3
      Articles of Amendment
      
      Incorporated by reference to
          as Appendix A to the Companys Schedule 14A  Definitive Proxy
          Statement, filed with the SEC on June 17, 2002 (Schedule 14A)10.1
      Amended Stock Option Agreement
          dated October 2, 2001 between Bruce E. Schreiner and the Company.
      
      Incorporated by reference as
          Exhibit 10.1 to the 2002 Form 10-KSB10.2
      Two (2) Amended Stock Option
          Agreements both dated October 2, 2001 between Cynthia L. Schroeder and
          the Company.
      
      Incorporated by reference as
          Exhibit 10.2 to the 2002 Form 10-KSB10.3
      2002 Stock Option Plan
      
      Incorporated by reference as
          Appendix B to the 2002 Schedule 14A10.4
      License
          agreement with Palowmar Industries, LLC and Lowell Martinson, inventor
          respecting the ScopeOut® product.
      
      Filed
          herewith31.1
      Rule
          13a-14(a)/15d-14(a) Certification
      
      Filed
          herewith32.1
      Section 1350 Certifications
      
      Filed herewith


17

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Signatures

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on July 13, 2006.

| | SENSE TECHNOLOGIES INC.
| | -----------------------
| |                        
| | By:                    
| |                        
| |                        

In accordance with the requirements of the Exchange Act, this
report has been signed by the following persons on behalf of the registrant and
in the capacities indicated.

|By:                            |  | Title:                                          | Date:        
|------------------------------ |  | ----------------------------------------------- | -------------
|                               |  |                                                 |              
|                               |  |                                                 |              
|/s/ Bruce E.
      Schreiner   |  | Chief Executive Officer,
      President        | July 13, 2006
|Bruce E. Schreiner             |  | Director and Principal Accounting
      Officer |              
|                               |  |                                                 |              
|                               |  |                                                 |              
|/s/ James R. Iman              |  | Director                                        | July 13, 2006
|James R. Iman                  |  |                                                 |              
|                               |  |                                                 |              
|                               |  |                                                 |              
|/s/ Cynthia L.
      Schroeder |  | Director                                        | July 13, 2006
|Cynthia L. Schroeder           |  |                                                 |              

18

---



SENSE TECHNOLOGIES INC.

REPORT AND FINANCIAL STATEMENTS

February 28, 2006 and 2005

(Stated in US Dollars)





---

|A PARTNERSHIPOFINCORPORATEDPROFESSIONALS | AMISANO HANSON      
|---------------------------------------- | --------------------
|                                         | CHARTEREDACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders, 
  Sense Technologies Inc.

We have audited the accompanying balance sheets of Sense Technologies
  Inc. as of February 28, 2006 and 2005 and the related statements of operations,
  cash flows and stockholders deficiency for the years ended February 28,
  2006 and 2005. These financial statements are the responsibility of the Company's
  management. Our responsibility is to express an opinion on these financial statements
  based on our audits.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States of America). Those
  standards require that we plan and perform an audit to obtain reasonable assurance
  about whether the financial statements are free of material misstatement. An
  audit includes examining, on a test basis, evidence supporting the amounts and
  disclosures in the financial statements. An audit also includes assessing the
  accounting principles used and significant estimates made by management, as
  well as evaluating the overall financial statement presentation. We believe
  that our audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in
  all material respects, the financial position of Sense Technologies Inc. as
  of February 28, 2006 and 2005 and the results of its operations and its cash
  flows for the years ended February 28, 2006 and 2005, in conformity with accounting
  principles generally accepted in the United States of America.

The accompanying financial statements referred to above have
  been prepared assuming that the Company will continue as a going concern. As
  discussed in Note 1 to the financial statements, conditions exist which raise
  substantial doubt about the Companys ability to continue as a going concern
  unless it is able to generate sufficient cash flows to meet its obligations
  and sustain its operations. Managements plan in this regard to these matters
  are also described in Note 1. The financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

|Vancouver, Canada | AMISANO HANSON     
|----------------- | ---------------------
|June 9, 2006      | Chartered Accountants



750 WEST PENDER STREET, SUITE 604
      TELEPHONE:
      604-689-0188VANCOUVER CANADA
      FACSIMILE:
      604-689-9773V6C 2T7
      E-MAIL:
      amishan@telus.net


---

SENSE TECHNOLOGIES INC.BALANCE SHEETS 
  February 28, 2006 and 2005 
  (Stated in US Dollars)

|                                                                                    |   | 2006        |   |   | 2005        |  
|----------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|**ASSETS**                                                                          |  
|Current                                                                             |   |             |   |   |             |  
|Cash                                                                                | $ | 9,220       |   | $ | 131,313     |  
|Accounts receivable                                                                 |   | 7,449       |   |   | 18,347      |  
|Inventory  Note 2                                                                  |   | 130,687     |   |   | 577,285     |  
|Prepaids                                                                            |   | 17,526      |   |   | 13,392      |  
|                                                                                    |   |             |   |   |             |  
|                                                                                    |   | 164,882     |   |   | 740,337     |  
|                                                                                    |   |             |   |   |             |  
|Deposit                                                                             |   | 15,699      |   |   | -           |  
|Equipment  Note 3                                                                  |   | 54,899      |   |   | 55,027      |  
|Intangible assets  Note 4                                                          |   | 163,636     |   |   | 158,350     |  
|                                                                                    |   |             |   |   |             |  
|                                                                                    | $ | 399,116     |   | $ | 953,714     |  
|                                                                                    |   |             |   |   |             |  
|LIABILITIES                                                                         |  
|Current                                                                             |   |             |   |   |             |  
|Accounts payable  Notes 5 and 10                                                   | $ | 810,610     |   | $ | 774,551     |  
|Advances payable                                                                    |   | 30,875      |   |   | 49,100      |  
|Dividends payable  Note 8                                                          |   | 114,991     |   |   | 229,571     |  
|License fee payable                                                                 |   | -           |   |   | 60,000      |  
|Convertible promissory notes payable 
      Note 6                                 |   | 584,447     |   |   | 584,447     |  
|Promissory note payable
       Note 7                                              |   | -           |   |   | 40,000      |  
|                                                                                    |   |             |   |   |             |  
|                                                                                    |   | 1,540,923   |   |   | 1,737,669   |  
|License fee payable                                                                 |   | -           |   |   | 2,500       |  
|                                                                                    |   |             |   |   |             |  
|                                                                                    |   | 1,540,923   |   |   | 1,740,169   |  
|                                                                                    |   |             |   |   |             |  
|STOCKHOLDERS' DEFICIENCY                                                            |  
|                                                                                    |   |             |   |   |             |  
|Class A preferred stock, without par value, redeemable at the
      option of the   |   |             |   |   |             |  
|Company at $1 per share, convertible into common
      stock at $0.29 for each      |   |             |   |   |             |  
|preferred share, cumulative dividends payable at the annual
      rate of $0.10 per |   |             |   |   |             |  
|share, 20,000,000 shares authorized, 343,050
      shares issued at February 28,    |   |             |   |   |             |  
|2006 (2005: 1,593,023)                                                              |   | 343,048     |   |   | 1,593,025   |  
|Common stock, without par value, 100,000,000
      shares authorized, 42,225,811    |   |             |   |   |             |  
|issued at February 28, 2006 (2005: 22,875,158)  Notes
      8 and 14               |   | 11,580,664  |   |   | 8,228,246   |  
|Additional paid-in capital                                                          |   | 62,529      |   |   | 62,529      |  
|Common stock subscribed  Note 8                                                    |   | 76,000      |   |   | 232,200     |  
|Common stock subscriptions receivable                                               |   | (772,332    | ) |   | -           |  
|Promissory note receivable  Note 9                                                 |   | (585,000    | ) |   | (585,000    | )
|Deficit                                                                             |   | (11,846,716 | ) |   | (10,317,455 | )
|                                                                                    |   |             |   |   |             |  
|                                                                                    |   | (1,141,807  | ) |   | (786,455    | )
|                                                                                    |   |             |   |   |             |  
|                                                                                    | $ | 399,116     |   | $ | 953,714     |  
|                                                                                    |   |             |   |   |             |  
|Nature and Continuance of Operations 
      Note 1                                 |   |             |   |   |             |  
|Commitments  Notes 4, 5, 6, 8 and 12                                               |   |             |   |   |             |  
|Subsequent Events  Notes 8 and 14                                                  |   |             |   |   |             |  

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.STATEMENTS OF OPERATIONS 
  for the years ended February 28, 2006 and 2005 
  (Stated in US Dollars)

|                                                                    |   | 2006       |   |   | 2005      |  
|------------------------------------------------------------------- | - | ---------- | - | - | --------- | -
|                                                                    |   |            |   |   |           |  
|Sales                                                               | $ | 74,903     |   | $ | 47,177    |  
|Direct costs  Schedule 1                                           |   | 808,460    |   |   | 220,863   |  
|                                                                    |   |            |   |   |           |  
|                                                                    |   | (733,557   | ) |   | (173,686  | )
|                                                                    |   |            |   |   |           |  
|Expenses                                                            |   |            |   |   |           |  
|Advertising and marketing                                           |   | 129,650    |   |   | 21,462    |  
|Amortization                                                        |   | 11,090     |   |   | 6,392     |  
|Bad debts (recovered)                                               |   | (5,199     | ) |   | 22,100    |  
|Consulting fees  Note 10                                           |   | 197,548    |   |   | 36,809    |  
|Filing fees                                                         |   | 8,176      |   |   | 2,524     |  
|Insurance                                                           |   | 53,755     |   |   | 60,036    |  
|Interest and bank charges                                           |   | 14,921     |   |   | 4,207     |  
|Interest on long-term debt  Note
      10                          |   | 60,249     |   |   | 69,913    |  
|Legal, accounting and audit
      fees  Note 10                    |   | 167,806    |   |   | 81,913    |  
|Loan fee                                                            |   | 4,000      |   |   | -         |  
|Office and miscellaneous                                            |   | 50,670     |   |   | 13,480    |  
|Rent                                                                |   | 24,643     |   |   | 592       |  
|Repairs and maintenance                                             |   | 520        |   |   | -         |  
|Shareholder information and printing                                |   | 11,071     |   |   | 13,838    |  
|Telephone and utilities                                             |   | 3,201      |   |   | 4,108     |  
|Transfer agent fees                                                 |   | 4,722      |   |   | 5,766     |  
|Travel and automotive                                               |   | 24,532     |   |   | 14,328    |  
|Wages and benefits  Note 10                                        |   | -          |   |   | 3,462     |  
|                                                                    |   |            |   |   |           |  
|                                                                    |   | 761,355    |   |   | 360,930   |  
|                                                                    |   |            |   |   |           |  
|Loss before other items                                             |   | (1,494,912 | ) |   | (534,616  | )
|                                                                    |   |            |   |   |           |  
|Other items:                                                        |   |            |   |   |           |  
|Premium on conversion of
      convertible promissory notes payable |   | -          |   |   | (32,723   | )
|Loss on sale of equipment                                           |   | -          |   |   | (3,455    | )
|Other income                                                        |   | 5,093      |   |   | 71,379    |  
|                                                                    |   |            |   |   |           |  
|Net loss for the year                                               | $ | (1,489,819 | ) | $ | (499,415  | )
|                                                                    |   |            |   |   |           |  
|Basic and diluted loss per share                                    | $ | (0.06      | ) | $ | (0.06     | )
|                                                                    |   |            |   |   |           |  
|Weighted average number of shares outstanding                       |   | 27,337,373 |   |   | 8,178,606 |  

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.STATEMENTS OF CASH FLOWS 
  for the years ended February 28, 2006 and 2005 
  (Stated in U.S. Dollars)

|                                                                          |   | 2006       |   |   | 2005     |  
|------------------------------------------------------------------------- | - | ---------- | - | - | -------- | -
|                                                                          |   |            |   |   |          |  
|Operating Activities                                                      |   |            |   |   |          |  
|Net loss for the year                                                     | $ | (1,489,819 | ) | $ | (499,415 | )
|Add (deduct) items not
      involving cash:                              |   |            |   |   |          |  
|Common shares issued
      for legal and consulting services              |   | 180,000    |   |   | -        |  
|Common
      shares issued for a loan fee                                 |   | 4,000      |   |   | -        |  
|Premium on conversion
      of convertible promissory notes payable       |   | -          |   |   | 32,723   |  
|Write-off
      of inventory                                              |   | 675,378    |   |   | 184,584  |  
|Loss on sale of equipment                                                 |   | -          |   |   | 3,455    |  
|Gain
      on write-off of accounts payable                               |   | -          |   |   | (67,912  | )
|Amortization                                                              |   | 11,090     |   |   | 6,392    |  
|Changes in non-cash working
      capital balances related to operations: |   |            |   |   |          |  
|Accounts receivable                                                       |   | 10,898     |   |   | (9,615   | )
|Inventory                                                                 |   | (228,780   | ) |   | (14,363  | )
|Prepaids                                                                  |   | (19,833    | ) |   | 3,861    |  
|Accounts
      payable                                                    |   | 36,059     |   |   | (29,294  | )
|Advances payable                                                          |   | (18,225    | ) |   | (27,100  | )
|Dividends
      payable                                                   |   | 39,441     |   |   | 159,303  |  
|                                                                          |   |            |   |   |          |  
|Cash used in operating activities                                         |   | (799,791   | ) |   | (257,381 | )
|                                                                          |   |            |   |   |          |  
|Financing Activities                                                      |   |            |   |   |          |  
|Proceeds from issuance of common stock                                    |   | 780,888    |   |   | 397,000  |  
|Dividends                                                                 |   | (39,442    | ) |   | (159,303 | )
|Increase (decrease) in note payable                                       |   | (40,000    | ) |   | 40,000   |  
|License fee payable                                                       |   | (62,500    | ) |   | -        |  
|Proceeds from common share subscriptions                                  |   | 55,000     |   |   | 181,200  |  
|                                                                          |   |            |   |   |          |  
|Cash provided by financing activities                                     |   | 693,946    |   |   | 458,897  |  
|                                                                          |   |            |   |   |          |  
|Investing Activities                                                      |   |            |   |   |          |  
|Proceeds from the sale
      of equipment                                 |   | -          |   |   | 7,000    |  
|Acquisition of equipment                                                  |   | (10,962    | ) |   | (41,454  | )
|Acquisition of license
      fee                                          |   | -          |   |   | (37,500  | )
|Acquisition of intangible assets                                          |   | (5,286     | ) |   | (49      | )
|                                                                          |   |            |   |   |          |  
|Cash used in investing activities                                         |   | (16,248    | ) |   | (72,003  | )

/Contd.

SEE ACCOMPANYING NOTES

---

| | SENSE TECHNOLOGIES INC.                        | Continued
| | ---------------------------------------------- | ---------
| | STATEMENTS OF CASH FLOWS                       |          
| | for the years ended February 28, 2006 and 2005 |          
| | (Stated in US Dollars)                         |          

|                                            |   | 2006     |   |   | 2005    | 
|------------------------------------------- | - | -------- | - | - | ------- | 
|                                            |   |          |   |   |         | 
|Increase (decrease) in cash during the year |   | (122,093 | ) |   | 129,513 | 
|                                            |   |          |   |   |         | 
|Cash, beginning of year                     |   | 131,313  |   |   | 1,800   | 
|                                            |   |          |   |   |         | 
|Cash, end of year                           | $ | 9,220    |   | $ | 131,313 | 
|                                            |   |          |   |   |         | 
|Supplementary cash flow information:        |   |          |   |   |         | 
|Cash paid for                               |   |          |   |   |         | 
|Interest                                    | $ | 117,139  |   | $ | -       | 
|                                            |   |          |   |   |         | 
|Taxes                                       | $ | -        |   | $ | -       | 
|                                            |   |          |   |   |         | 
|Non-cash Transactions  Note 13             |   |          |   |   |         | 

SEE ACCOMPANYING NOTES

---

SENSETECHNOLOGIESINC.STATEMENT OF STOCKHOLDERS DEFICIENCY 
  for the years ended February 28, 2006 and 2005 
  (Stated in US Dollars)

CommonCommon
        Stock
      
      
      Preferred
        Stock
      
      
      
      
      
      Common
      
      
      Stock
      
      
      Promissory
      
      
      PreferredIssued
      
      
      
      
      
      Issued
      
      
      
      
      
      Paid-in
      
      
      Stock
      
      
      Subscriptions
      
      
      Note
      
      
      Stock
      
      
      AccumulatedShares
      
      
      Amount
      
      
      Shares
      
      
      Amount
      
      
      Capital
      
      
      Subscribed
      
      
      Receivable
      
      
      Receivable
      
      
      Subscribed
      
      
      Deficit
      
      
      TotalBalance, February 29, 2004
      
      13,340,522
      
      $
      7,599,828
      
      
      -
      
      $
      -
      
      $
      62,529
      
      $
      51,000
      
      $
      -
      
      $
      (585,000
      )
      $
      1,593,025
      
      $
      (9,658,737
      )
      $
      (937,355
      )Issuance of common stock ursuantto a private placement - at $0.05
      
      7,940,000
      
      
      397,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      397,000Pursuant to an agreement to cquirethe license fee for the Scope Outmirror - at $0.05
      
      1,000,000
      
      
      50,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      50,000Pursuant to agreements to settlepromissory notes and accruedinterest thereon with commonshares
      
      594,636
      
      
      148,695
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      148,695Premium on conversion ofconvertible promissory note
      
      -
      
      
      32,723
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      32,723Common share subscriptions
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      181,200
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      181,200Preferred share subscriptionsutilized
      
      -
      
      
      -
      
      
      1,593,027
      
      
      1,593,025
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (1,593,025
      )
      
      -
      
      
      -Dividends
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (159,303
      )
      
      (159,303
      )Net loss for the year ended ebruary28, 2005
      
      -
      
      
      
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (499,415
      )
      
      (499,415
      )Balance, February 28, 2005
      
      22,875,158
      
      
      8,228,246
      
      
      1,593,027
      
      
      1,593,025
      
      
      62,529
      
      
      232,200
      
      
      -
      
      
      (585,000
      )
      
      -
      
      
      (10,317,455
      )
      
      (786,455
      )


/contd

SEE ACCOMPANYING NOTES

---

|Continued                                     
|----------------------------------------------
|SENSE TECHNOLOGIES INC.                       
|STATEMENT OF STOCKHOLDERS DEFICIENCY         
|for the years ended February 28, 2006 and 2005
|(Stated in US Dollars)                        

CommonCommon
        Stock
      
      
      Preferred
        Stock
      
      
      
      
      
      Common
      
      
      Stock
      
      
      Promissory
      
      
      PreferredIssued
      
      
      
      
      
      Issued
      
      
      
      
      
      Paid-in
      
      
      Note
      
      
      Stock
      
      
      Subscriptions
      
      
      Stock
      
      
      AccumulatedShares
      
      
      Amount
      
      
      Shares
      
      
      Amount
      
      
      Capital
      
      
      Receivable
      
      
      Subscribed
      
      
      Receivable
      
      
      Subscribed
      
      
      Deficit
      
      
      TotalBalance, February 28, 2005
      
      22,875,158
      
      
      8,228,246
      
      
      1,593,027
      
      
      1,593,025
      
      
      62,529
      
      
      (585,000
      )
      
      232,200
      
      
      -
      
      
      -
      
      
      (10,317,455
      )
      
      (786,455
      )Pursuant to agreements to convertpreferred shares into commonshares - at $0.29
      
      4,310,085
      
      
      1,249,977
      
      
      (1,249,977
      )
      
      (1,249,977
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -Pursuant to the conversion ofpreferred share dividends- at $0.13
      
      1,184,767
      
      
      154,021
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      154,021Pursuant to the exercise of warrants- at $0.15
      
      3,710,000
      
      
      556,500
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (7,500
      )
      
      -
      
      
      -
      
      
      549,000Pursuant to an agreement to issueshares for a loan fee - at $0.05
      
      80,000
      
      
      4,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      4,000Pursuant to consulting services- at $0.20
      
      25,000
      
      
      5,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      5,000- at $0.33
      
      500,000
      
      
      165,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      165,000Pursuant to legal services - at $0.20
      
      50,000
      
      
      10,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      10,000Pursuant to a private placement- at $0.05
      
      5,304,000
      
      
      265,200
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (211,200
      )
      
      (30,000
      )
      
      -
      
      
      -
      
      
      24,000Less: issue costs
      
      -
      
      
      (7,112
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (7,112
      )- at $0.15
      
      200,001
      
      
      30,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      30,000- at $0.20
      
      925,000
      
      
      185,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      185,000-at $0.24
      
      3,061,800
      
      
      734,832
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (734,832
      )
      
      -
      
      
      -
      
      
      -Dividends
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (39,442
      )
      
      (39,442
      )Common share subscriptions
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      55,000
      
      
      -
      
      
      -
      
      
      -
      
      
      55,000Net loss for the year
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (1,489,819
      )
      
      (1,489,819
      )Balance, February 28, 2006
      
      42,225,811
      
      $
      11,580,664
      
      
      343,050
      
      $
      343,048
      
      $
      62,529
      
      $
      (585,000
      )
      $
      76,000
      
      $
      (772,332
      )
      $
      -
      
      $
      (11,846,716
      )
      $
      (1,141,807
      )


SEE ACCOMPANYING NOTES

---

| | SENSE TECHNOLOGIES INC.                        | Schedule 1
| | ---------------------------------------------- | ----------
| | SCHEDULE OF DIRECT COSTS                       |           
| | for the years ended February 28, 2006 and 2005 |           
| | (Stated in US Dollars)                         |           

|                                   |   | 2006    |  |   | 2005    | 
|---------------------------------- | - | ------- |  | - | ------- | 
|                                   |   |         |  |   |         | 
|Direct costs                       |   |         |  |   |         | 
|Cost of sales                      | $ | 7,290   |  | $ | 25,819  | 
|Manufacturing expenses             |   | 7,491   |  |   | 2,460   | 
|Research and development  Note 10 |   | 58,301  |  |   | 8,000   | 
|Royalties  Note 4                 |   | 60,000  |  |   | -       | 
|Write-off of inventory             |   | 675,378 |  |   | 184,584 | 
|                                   |   |         |  |   |         | 
|                                   | $ | 808,460 |  | $ | 220,863 | 

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.NOTES TO THE FINANCIAL STATEMENTS 
  February 28, 2006 and 2005 
  (Stated in U.S. Dollars)

|Note 1 | Nature and Continuance of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | The Company holds a non-exclusive
        license to manufacture, distribute, market and sublicense, on a world-wide
        basis, a patented technology which is used to produce a back- up obstacle
        detection/collision warning system utilizing microwave radar technology.
        The Company is using this technology to produce the Guardian Alert Back-up
        System for use on motor vehicles and intends to sell the units for use
        in the after market for existing motor vehicles and also, negotiate agreements
        with Original Equipment Manufacturers to license the use of the product
        on factory produced motor vehicles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | These financial statements have
        been prepared in accordance with generally accepted accounting principles
        applicable to a going concern, which assumes that the Company will be
        able to meet its obligations and continue its operations for its next
        fiscal year. 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.
        At February 28, 2006, the Company had not yet achieved profitable operations,
        has an accumulated deficit of $11,846,716 since its inception, has a working
        capital deficiency of $1,376,041 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 that the Company will be
        able to obtain additional funds by equity financing and/or related party
        advances, however there is no assurance of additional funding being available.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | The Company was incorporated
        pursuant to the British Columbia Companies Act on May 25, 1988 as Graham
        Gold Mining Corporation. On October 27, 1997, the Company changed its
        name to Sense Technologies Inc. and on December 14, 2001, the Company
        was continued in the Yukon Territory, Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | The Companys shares are
        publicly traded on the OTCBulletin Board under the symbol SNSG.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Note 2 | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | The financial statements of the
        Company have been prepared in accordance with accounting principles generally
        accepted in the United States of America and are stated in U.S. dollars.
        Because a precise determination of many assets and liabilities is dependent
        upon future events, the preparation of financial statements for a period
        necessarily involves the use of estimates which have been made using careful
        judgment. Actual results may vary from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 2

|Note 2 | Significant Accounting Policies (contd)                                                                                                                                   
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                             
|       | The financial statements have,
        in managements opinion, been properly prepared within the framework
        of the significant accounting policies summarized below:

| | a) | Inventory                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                 
| |    | The Companys inventory consists of component parts,
        finished goods and manufacturing supplies. If appropriate, the Companys
        inventory balances are adjusted to approximate the lower of manufacturing
        costs or market.
| |    |                                                                                                                                                                                                                                                 
| |    | Inventories are comprised of the following:                                                                                                                                                                                                     

| |                        |   | 2006    |  |   | 2005    | 
| | ---------------------- | - | ------- |  | - | ------- | 
| |                        |   |         |  |   |         | 
| | Component parts        | $ | -       |  | $ | 545,990 | 
| | Finished goods         |   | 130,687 |  |   | 17,009  | 
| | Manufacturing supplies |   | -       |  |   | 14,286  | 
| |                        |   |         |  |   |         | 
| |                        | $ | 130,687 |  | $ | 577,285 | 

| | b) | Promissory Note Receivable                                                                                                                                                                                                                                                                                                                                   
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                              
| |    | The promissory note receivable is carried at cost when
        there is no impairment in value. The note receivable, which is due from
        shareholders of the Company and bears no specific terms as to its collection,
        is accounted for as a separate component of stockholders equity
        as an effective dividend or capital withdrawal.
| |    |                                                                                                                                                                                                                                                                                                                                                              
| | c) | Equipment and Amortization                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                              
| |    | Equipment is recorded at cost. Amortization is provided
        using the following rates:                                                                                                                                                                                                                                                                   

Computer equipment
      30% declining balanceFurniture and equipment
      20% declining balanceProduct molds
      7 years straight-lineManufacturing equipment
      30% declining balance


| | d) | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | The Companys intangible assets are comprised of
        licenses fees and patent costs. On March 1, 2002, the Company adopted
        the provisions of SFAS No. 142 Goodwill and Other Intangible Assets.
        In reassessing the useful lives of its intangible assets, the Company
        determined these assets to have indefinite useful lives and accordingly,
        amortization of these assets ceased on that date.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 3

|Note 2 | Significant Accounting Policies (contd)
|------ | -----------------------------------------

| | d) | Intangible Assets (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | SFAS No. 142 requires that the Company annually perform
        an impairment analysis to assess the recoverability of the recorded balance
        of intangible assets. The provisions of the Statement indicate that the
        impairment test should be conducted more frequently if events occur or
        circumstances change that would more likely than not reduce the fair value
        of a reporting unit (as defined) below its carrying value. The Company
        performed an initial impairment analysis upon adoption of the standard.
        During the year ended February 29, 2004, the Company recorded an impairment
        loss of $135,010 (Note 5).                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | e) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The functional and reporting currency of the Company
        is the United States dollar. Monetary assets and liabilities denominated
        in currencies other than the U.S. dollar are translated into U.S. dollars
        at the fiscal year-end rate of exchange. Non-monetary assets and liabilities
        denominated in other currencies are translated at historic rates and revenues
        and expenses are translated at average exchange rates prevailing during
        the month of transaction.                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | f) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The Company uses the asset and liability method of accounting
        for income taxes pursuant to Statement of Financial Accounting Standards
        No. 109, Accounting for Income Taxes. Deferred tax assets
        and liabilities are recognized for future tax consequences attributable
        to differences between the financial statement carrying amounts of existing
        assets and liabilities and their respective tax bases. When necessary,
        a valuation allowance is recorded to reduce tax assets to an amount for
        which realization is more likely than not. The effect of changes in tax
        rates is recognized in the period in which the rate change occurs.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | g) | Basic Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The Company reports basic loss per share in accordance
        with Statement of Financial Accounting Standards No. 128 Earnings
        Per Share. Basic loss per share is computed by dividing the net
        loss by the weighted average number of shares outstanding for the period.
        Shares held in escrow are excluded from the determination of basic loss
        per share when the escrow release is performance based.                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | h) | Fair Market Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | The carrying value of cash, accounts receivable, accounts
        payable, advances payable, dividends payable, license fee payable and
        promissory notes payable approximate fair value. The carrying value of
        the promissory note receivable also approximates fair value. Unless otherwise
        noted, it is managements opinion that the Company is not exposed
        to significant interest, currency or credit risks arising from these financial
        instruments.                                                                                                                                                                                                              

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 4

|Note 2 | Significant Accounting Policies (contd)
|------ | -----------------------------------------

| | i) | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Revenue is recognized when persuasive evidence of a
        sale exists, delivery has occurred and collection is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | j) | Research and Development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Research and development costs are incurred in order
        to enhance the performance of the back-up obstacle detection/ collision
        warning system. These costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | k) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In December 2004, the Financial Accounting Standards
        Board (FASB) issued Statement of Financial Accounting Standards
        (SFAS) No. 123R, Share Based Payment, that addresses
        the accounting transactions in which a company exchanges its equity instruments
        for goods or services. SFAS No. 123R requires that such transactions be
        accounted for using a fair value based method. Adoption of SFAS No. 123R
        is effective for periods beginning after December 15, 2005. The Company
        will adopt this statement as required and management is currently assessing
        the effect SFAS No. 123R will have on the Companys results of operations.                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In December 2004, the FASB issued SFAS No. 151, Inventory
        Costs, an amendment of ARB No. 43, Chapter 4, which requires that
        abnormal amounts of idle facility expense, freight, handling costs and
        wasted material be recognized as current-period charges. SFAS No. 151
        is effective for fiscal years beginning after June 15, 2005. The Company
        will adopt this standard as required and management does not believe the
        adoption will have a material effect on the Companys results of
        operations or financial condition.                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In June 2005, FASB issued Statement of Financial Accounting
        Standards (SFAS) No. 154, Accounting Changes and Error Corrections,
        a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS 154
        applies to all voluntary changes in accounting principle and changes the
        requirements for accounting for and reporting of a change in accounting
        principle. SFAS No. 154 requires retrospective application to prior periods
        financial statements of a voluntary change in accounting principle unless
        it is impracticable. SFAS No. 154 is effective for accounting changes
        and corrections of errors made in fiscal years beginning after December
        15, 2005. The Company does not expect the adoption of SFAS No. 154 to
        have a material effect on the financial statements.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 5

|Note 3 | Equipment
|------ | ---------

| |                         |   |         |  |   | 2006         |  |   |        | 
| | ----------------------- | - | ------- |  | - | ------------ |  | - | ------ | 
| |                         |   |         |  |   | Accumulated  |  |   |        | 
| |                         |   | Cost    |  |   | Amortization |  |   | Net    | 
| |                         |   |         |  |   |              |  |   |        | 
| | Computer equipment      | $ | 38,297  |  | $ | 34,467       |  | $ | 3,830  | 
| | Furniture and equipment |   | 10,962  |  |   | 1,096        |  |   | 9,866  | 
| | Product molds           |   | 41,454  |  |   | 5,922        |  |   | 35,532 | 
| | Manufacturing equipment |   | 27,136  |  |   | 21,465       |  |   | 5,671  | 
| |                         |   |         |  |   |              |  |   |        | 
| |                         | $ | 117,849 |  | $ | 62,950       |  | $ | 54,899 | 

| |                         |   |         |  |   | 2005         |  |   |        | 
| | ----------------------- | - | ------- |  | - | ------------ |  | - | ------ | 
| |                         |   |         |  |   | Accumulated  |  |   |        | 
| |                         |   | Cost    |  |   | Amortization |  |   | Net    | 
| |                         |   |         |  |   |              |  |   |        | 
| | Computer equipment      | $ | 38,297  |  | $ | 32,826       |  | $ | 5,471  | 
| | Product molds           |   | 41,454  |  |   | -            |  |   | 41,454 | 
| | Manufacturing equipment |   | 27,136  |  |   | 19,034       |  |   | 8,102  | 
| |                         |   |         |  |   |              |  |   |        | 
| |                         | $ | 106,887 |  | $ | 51,860       |  | $ | 55,027 | 

|Note 4 | Intangible Assets                                
|------ | -------------------------------------------------
|       |                                                  
|       | Intangible assets are comprised of the following:

| |                                                                            |   | 2006    |  |   | 2005    | 
| | -------------------------------------------------------------------------- | - | ------- |  | - | ------- | 
| |                                                                            |   |         |  |   |         | 
| | Guardian Alert License Fee                                                 |   |         |  |   |         | 
| |                                                                            |   |         |  |   |         | 
| | Cost, net of write-down                                                    | $ | 1       |  | $ | 1       | 
| |                                                                            |   |         |  |   |         | 
| | Scope Out Mirror License                                                   |   |         |  |   |         | 
| |                                                                            |   |         |  |   |         | 
| | Cash                                                                       |   | 100,000 |  |   | 37,500  | 
| | Issuance of 1,000,000 units                             
        at $0.05 |   | 50,000  |  |   | 50,000  | 
| | Promissory note payable                                                    |   | -       |  |   | 62,500  | 
| |                                                                            |   |         |  |   |         | 
| |                                                                            |   | 150,000 |  |   | 150,000 | 
| | Patent costs                                                               |   | 13,636  |  |   | 8,349   | 
| |                                                                            |   |         |  |   |         | 
| |                                                                            |   | 163,635 |  |   | 158,349 | 
| |                                                                            |   |         |  |   |         | 
| |                                                                            | $ | 163,636 |  | $ | 158,350 | 

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 6

|Note 4 | Intangible Assets (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | Guardian Alert License                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | By an Assignment Agreement dated
        April 30, 1992 and amendments thereto dated May 27, 1992, July 14, 1992,
        April 5, 1993, August 13, 1993, March 10, 1997, May 29, 1997 and February
        25, 1999, the Company was assigned the right, title, interest and obligations
        in a Licence Agreement to manufacture, market and distribute a microwave
        radar collision avoidance device for motor vehicles. During the year ended
        February 28, 2005, the Company did not manufacture the minimum quantities
        required by the License Agreement and the Company lost the exclusivity
        it previously held. During the year ended February 29, 2004, the license
        was written down by $135,010 to its net realizable value of $1.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | Scope Out Mirror License                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | During the year ended February
        28, 2005, the Company acquired a license to manufacture, sell, deliver
        and install the Lateral-View Mirror (Scope Out Mirror). As consideration,
        the Company paid a license fee of $150,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | The Company is obligated to pay
        a royalty of 10% of the wholesale price for each Scope Out Mirror sold
        which, in any event, shall not be less than $2.00 per unit in the following
        minimum quantities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | A. 30,000 units per year beginning
        in years 1 and 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | B. 60,000 units per year in years
        3 and 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | C. 100,000 units per year in
        year 5 and thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | During the year ended February
        28, 2006, the Company accrued $60,000 in respect of the royalty owed at
        the end of the first year of the Scope Out Mirror License agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Note 5 | Accounts Payable Note 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |                          |   | 2006    |  |   | 2005    | 
| | ------------------------ | - | ------- |  | - | ------- | 
| |                          |   |         |  |   |         | 
| | Trade payables           | $ | 144,342 |  | $ | 116,726 | 
| | Accrued fees             |   | 20,000  |  |   | 15,000  | 
| | Accrued payroll          |   | 53,695  |  |   | 53,695  | 
| | Accrued interest payable |   | 33,218  |  |   | 90,108  | 
| | Accrued royalty payable  |   | 540,000 |  |   | 480,000 | 
| | Accrued taxes payable    |   | 19,355  |  |   | 19,022  | 
| |                          |   |         |  |   |         | 
| |                          | $ | 810,610 |  | $ | 774,551 | 

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 7

|Note 6 | Convertible Promissory Notes Payable
|------ | ------------------------------------

| |                                                                 |   | 2006     |   |   | 2005     |  
| | --------------------------------------------------------------- | - | -------- | - | - | -------- | -
| |                                                                 |   |          |   |   |          |  
| | 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 August 30, 2005.
      These notes |   |          |   |   |          |  
| | may be converted into common shares of the
      Company at     |   |          |   |   |          |  
| | the rate of one common share for each $0.29
      of principal  |   |          |   |   |          |  
| | balance. As at February 28, 2006, these notes
      were in     |   |          |   |   |          |  
| | arrears and past due.                                           | $ | 534,447  |   | $ | 534,447  |  
| |                                                                 |   |          |   |   |          |  
| | Unsecured promissory notes bearing interest
      at 10% per    |   |          |   |   |          |  
| | annum. These notes have matured and the holders
      thereof   |   |          |   |   |          |  
| | have received default judgements against
      the Company.     |   | 50,000   |   |   | 50,000   |  
| |                                                                 |   |          |   |   |          |  
| |                                                                 |   | 584,447  |   |   | 584,447  |  
| |                                                                 |   |          |   |   |          |  
| | Less: current portion                                           |   | (584,447 | ) |   | (584,447 | )
| |                                                                 |   |          |   |   |          |  
| |                                                                 | $ | -        |   | $ | -        |  

|Note 7 | Promissory Note Payable
|------ | -----------------------

| |                                                                   |   | 2006 |  |   | 2005   | 
| | ----------------------------------------------------------------- | - | ---- |  | - | ------ | 
| |                                                                   |   |      |  |   |        | 
| | The promissory note payable is unsecured,
      bears interest at |   |      |  |   |        | 
| | 10% per annum and is repayable in 12 monthly                      |   |      |  |   |        | 
| | instalments of $3,527 commencing March 1,
      2005.             | $ | -    |  | $ | 40,000 | 

|Note 8 | Common Stock Note 14
|------ | ---------------------

| | a) | Escrow:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | At February 28, 2006, 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.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 8

|Note 8 | Common Stock Note 14  (contd)
|------ | --------------------------------

| | b) | Commitments:                                                                                                                                                                                                                       
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                    
| |    | Stock-based Compensation Plan                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                    
| |    | The Company has granted employees and 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.

| |                                                            | February 28, 2006 |  
| | ---------------------------------------------------------- | ----------------- | -
| |                                                            |                   |  
| |                                                            |                   |  
| |                                                            |                   |  
| |                                                            | Shares            |  
| |                                                            |                   |  
| | Outstanding and exercisable at beginning of
      the year | 1,200,000         |  
| | Cancelled                                                  | (500,000          | )
| | Expired                                                    | (350,000          | )
| |                                                            |                   |  
| | Outstanding and exercisable at end of the year             | 350,000           |  

| |                                                            | February 28, 2005 |  
| | ---------------------------------------------------------- | ----------------- | -
| |                                                            |                   |  
| |                                                            |                   |  
| |                                                            |                   |  
| |                                                            | Shares            |  
| |                                                            |                   |  
| | Outstanding and exercisable at beginning of
      the year | 1,215,000         |  
| | Expired                                                    | (15,000           | )
| |                                                            |                   |  
| | Outstanding and exercisable at end of the year             | 1,200,000         |  

The Company accounts for its stock-based
  compensation using the intrinsic value method in accordance with Accounting
  Principles Board Opinion No. 25 Accounting for Stock Issued to Employees
  and its related interpretations. Accordingly, no compensation expense has been
  recognized in the financial statements for employee stock arrangements.

At February 28, 2006, 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:

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 9

|Note 8 | Common Stock Note 14  (contd)
|------ | --------------------------------

| | b) | Commitments (contd)                   
| | -- | ----------------------------------------
| |    |                                         
| |    | Stock-based Compensation Plan  (contd)

| | Number  | Exercise Price | Expiry Date       
| | ------- | -------------- | ------------------
| |         |                |                   
| | 25,000  | $1.03          | March 22, 2006    
| | 50,000  | $2.30          | January 10, 2007  
| | 100,000 | $0.75          | September 26, 2007
| | 150,000 | $1.00          | February 1, 2008  
| | 25,000  | $1.00          | March 14, 2008    
| |         |                |                   
| | 350,000 |                |                   

Common Share Purchase Warrants

At February 28, 2006, the Company had
  7,250,000 share purchase warrants outstanding entitling the holders thereof
  the right to purchase one common share for each share purchase warrant held
  at $0.15 per warrant. These warrants are comprised as follows:

Number
      
      Expiry Date3,750,000
      
      July 24, 20063,500,000
      
      November 4, 20067,250,000


Common Stock Subscribed

As at February 28, 2006, the Company
  has received $40,000 in respect of a private placement of 200,000 common shares
  at $0.20 per share and $15,000 in respect of the purchase of 100,000 common
  shares at $0.15 pursuant to the exercise of share purchase warrants. Subsequent
  to February 28, 2006, 200,000 common shares at $0.20 per share were issued.

Preferred Stock

Dividends on preferred stock are payable
  annually on July 31 of each year. During the year ended February 28, 2006, the
  Company accrued dividends payable of $39,442 (2005: $159,303).

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 10

|Note 8 | Common Stock Note 14  (contd)
|------ | --------------------------------

| | b) | Commitments (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | Preferred Stock  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | During the year ended February 28, 2006, the Company
        converted 1,249,977 preferred shares valued at $1,249,977 into common
        shares of the Company at a rate of 3.448 common shares for each preferred
        share held for a total of 4,310,085 common shares. The Company also converted
        $154,021 of accrued preferred share dividends payable at a rate of 7.692
        common shares for each $1 of accrued dividends payable outstanding for
        a total of 1,184,767 common shares.

|Note 9  | Promissory Note Receivable                                                                                                                                                                                                                                                                                                                                                    
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                               
|        | The promissory note in the principal
        amount of $585,000 (2005: $585,000) is due from significant shareholders
        of the Company, is due on demand, secured by a pledge of shares of a company
        owned by shareholders of the Company and bears interest at 9% per annum.
        The Company does not expect to demand payment within the next fiscal year.
|        |                                                                                                                                                                                                                                                                                                                                                                               
|Note 10 | Related Party Transactions Note 9                                                                                                                                                                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                                                               
|        | The Company incurred the following
        items with directors and companies with common directors:                                                                                                                                                                                                                                                                          

| |                              |   | 2006   |  |   | 2005  | 
| | ---------------------------- | - | ------ |  | - | ----- | 
| |                              |   |        |  |   |       | 
| | Accounting fees              | $ | 29,385 |  | $ | 3,435 | 
| | Interest on long  term debt | $ | -      |  | $ | 8,273 | 
| | Research and development     | $ | 35,000 |  | $ | -     | 

As at February 28, 2006, included in
  accounts payable is $5,413 (2005: $3,330) owing to a director of the Company
  and an accounting firm in which a director of the Company is a partner with
  respect to unpaid fees and expenses, $480,000 (2005: $480,000) owing to shareholders
  of the Company in respect of royalties payable and $50,992 (2005: $50,992) owing
  to the former president of the Company in respect of unpaid wages.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 11

|Note 11 | Corporation Income Tax Loss Carry-Forwards                                                                                                                                                                                                                                                                    
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                               
|        | Deferred income taxes reflect
        the net tax effects of temporary differences between the carrying amounts
        of assets and liabilities for financial reporting purposes and the amounts
        used for income tax purposes. Significant components of deferred tax assets
        are as follows:

| |                                                   |   | 2006       |   |   | 2005       |  
| | ------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                   |   |            |   |   |            |  
| | Deferred tax assets                               |   |            |   |   |            |  
| | Net operating loss carryforwards                  | $ | 3,243,442  |   | $ | 2,717,499  |  
| | Valuation allowance
      for deferred tax assets |   | (3,243,442 | ) |   | (2,717,499 | )
| |                                                   |   |            |   |   |            |  
| | Net deferred tax assets                           | $ | -          |   | $ | -          |  

|        | Realization of deferred tax assets
        is dependent upon future earnings, if any, the timing and amount of which
        are uncertain. Accordingly, the net deferred tax assets have been fully
        offset by a valuation allowance. As of February 28, 2006, the Company
        has accumulated non-capital loss carryforwards of approximately $9,500,000
        for federal income tax purposes. These carryforwards, if not utilized
        to offset taxable income, begin to expire in 2018.
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Note 12 | Commitments Notes,
        4, 5, 6 and 8                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | The Company has entered into
        a lease agreement for office premises in Chandler, Arizona requiring a
        base monthly rent payment of $4,085 until September 2010.                                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Note 13 | Supplemental Cash Flow Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | Investing and financing activities
        that do not have a direct impact on current cash flows are excluded from
        the statements of cash flows. The following transactions were excluded
        from the statements of cash flows:                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | During the year ended February
        28, 2006, the Company:                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | i)  | issued 4,310,085 common shares pursuant to agreements
        to convert 1,249,977 preferred shares valued at $1,249,977 to common shares.                 
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                            
| | ii) | issued 1,184,767 common shares pursuant to agreements
        to convert a total of $154,021 of accrued preferred share dividends to
        common shares.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 28, 2006 and 2005 
  (Stated in US Dollars)  Page 12

|Note 13 | Supplemental Cash Flow Disclosures
      (contd)   
|------- | -----------------------------------------------------
|        |                                                      
|        | During the year ended February 28, 2005, the Company:

| | i)  | issued 1,000,000 units at $0.05 per unit as partial
        consideration for the acquisition of the Scope Out Mirror license fee.                                                                                                          
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                             
| | ii) | issued 594,636 common shares at $0.25 per share for
        a total of $181,418, including a conversion premium of $32,723, pursuant
        to conversions of convertible promissory notes and accrued interest of
        $14,168 thereon.

|Note 14 | Subsequent Events
        Note 8                    
|------- | -----------------------------------------------------
|        |                                                      
|        | Subsequent to February 28, 2006,
        the Company:
|        |                                                      
|        | -                                                    
|        |                                                      
|        | -                                                    

|Note 15 | Comparative Figures                                                                                                                                                          
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                              
|        | Certain of the comparative figures
        for the year ended February 28, 2006, have been reclassified to conform
        with the presentation adopted in the current year.

---