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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 20549

FORM 10-KSB

**x******Annual
  report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
  
  for the fiscal year ended February 29, 2004

** ̈******Transition
  report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
  [No fee required] 
  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 incorporation or
      organization) | (I.R.S. Employer I.D. No.)

**800 Clanton Road, Suite U, Charlotte, North Carolina
  28217 Telephone: (704) 522-7999**
  (Address, zip code, and telephone number of principal executive offices)

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 (1) has 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. ** ̈******

State issuer's revenues for its most recent fiscal year: US$474,817.

As of June 30, 2004, the aggregate market value of the voting
  common equity held by non- affiliates of the registrant was US$800,431, 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 30, 2004, the Registrant's outstanding common stock
  consisted of 13,340,522 shares.

DOCUMENTS INCORPORATED BY REFERENCE: N/A

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                                                                                                     | 2 
| |      |          |                                                                                                                             |   
| |      | 2        | Description of Property                                                                                                     | 8 
| |      |          |                                                                                                                             |   
| |      | 3        | Legal Proceedings                                                                                                           | 9 
| |      |          |                                                                                                                             |   
| |      | 4        | Submission of Matters to a
      Vote of Security Holders                                                                   | 9 
| |      |          |                                                                                                                             |   
| | II   | 5        | Market for Common Equity and
      Related Stockholder Matters                                                              | 9 
| |      |          |                                                                                                                             |   
| |      | 6        | Management's Discussion and
      Analysis or Plan of Operation                                                             | 11
| |      |          |                                                                                                                             |   
| |      | 7        | Financial Statements                                                                                                        | 12
| |      |          |                                                                                                                             |   
| |      | 8        | Changes in and Disagreements
      with Accountants on Accounting and Financial Disclosure                                  | 12
| |      |          |                                                                                                                             |   
| | III  | 9        | Directors, Executive Officers,
      Promoters and Control Persons; Compliance with Section 61(a) of the Exchange
      Act | 13
| |      |          |                                                                                                                             |   
| |      | 10       | Executive Compensation                                                                                                      | 15
| |      |          |                                                                                                                             |   
| |      | 11       | Security Ownership of Certain
      Beneficial Owners and Management                                                        | 16
| |      |          |                                                                                                                             |   
| |      | 12       | Certain Relationships and
      Related Transactions                                                                        | 17
| |      |          |                                                                                                                             |   
| |      | 13       | Exhibits and Reports on Form
      8-K                                                                                      | 17
| |      |          |                                                                                                                             |   
| |      | 14       | Controls and Procedures                                                                                                     | 18
| |      |          |                                                                                                                             |   
| |      | 15       | Principal Accountant Fees
      and Services                                                                                | 18
| |      |          |                                                                                                                             |   
| |      |          | Signatures                                                                                                                  | 19
| |      |          |                                                                                                                             |   
| |      |          | Financial Statements                                                                                                        |   

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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
  under section entitled Risk Factors and elsewhere herein. You should not place
  undue reliance on these forward-looking statements.

PART I.

Item 1. DESCRIPTION OF THE BUSINESS

Overview

We develop and market sensing devices for the automotive industry.
  Our core product is called the Guardian AlertTM Doppler Awareness
  System. The Guardian AlertTM Doppler Awareness System uses radar
  technology to warn vehicle drivers of the presence of people or obstacles in
  blind spots that exist behind their vehicles when backing up. Our business strategy
  is to utilize the skills and industry background of management and others in
  order to market the product to automobile and truck manufacturers and dealers,
  fleet operators, and other automotive industry participants. We will require
  additional financing in order to carry out our strategy. The Company began manufacturing
  the Guardian AlertTM Doppler Awareness System for the passenger car
  market during the first quarter of fiscal 2003. Marketing of the product began
  concurrently with production and has resulted in sales to several large car
  dealership groups, individual dealerships and aftermarket products distributors.
  We are presently expanding our marketing efforts to increase our presence in
  the fleet vehicle market, passenger car aftermarket and additional new channels.

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.

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Our administrative office is located at 2535 N. Carleton Avenue,
  Grand Island, Nebraska and our sales office is located at 725 N Hwy A-1-A, Suite
  C-106, Jupiter, Florida. We have vacated the office at 800 Clanton Road, Suite
  U, Charlotte, North Carolina, and are attempting to sublease it.

Industry Overview


We compete in the vehicle backing awareness 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. Almost
  all reversing vehicles have blind spots that limit the ability of the operator
  to see obstacles or people that are 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. The
  Company has also received testimonials from fleet customers that they have virtually
  eliminated damage to vehicles and property as a result of the system which support
  the benefits of our backing awareness product.

Various backing awareness products are currently
  being installed by automobile manufacturers and dealers as optional equipment
  on consumer and commercial vehicles.

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
  AlertTM 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 AlertTM 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 AlertTM 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

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person or obstacle come within the awareness zone as the vehicle
  is reversing. The Guardian AlertTM 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 AlertTM 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.

The Guardian AlertTM 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 AlertTMDoppler Awareness Systemproducts.
  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 AlertTMDoppler Awareness System

We outsource the manufacture of the components of our Guardian
  AlertTM Doppler Awareness System using an engineering consulting
  firm and two manufacturing companies. 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 locally. We believe that currently production of our products is more
  cost effectively achieved by outsourcing the manufacturing and assembly of the
  components.

4

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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.

During the fiscal years ending February 28, 2001 and 2002,
  we did not incur any material costs for the development of our Guardian AlertTM
  Doppler Awareness System products.

Market and Marketing of our Guardian AlertTMDoppler Awareness System

The end user of our Guardian AlertTM 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 AlertTM
  Doppler Awareness Systemproduct can be identified as follows:

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


North American automotive manufacturers currently produce
  between 16 million and 17 million new cars and trucks each year based on actual
  2000 and 2001 counts. This market consists of approximately 55% mini vans, sport
  utility vehicles, and light trucks. This segment has been growing consistently
  for the last several years beginning with the emergence of the mini van 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 the initial broad scale commercialization of our
  products. Our primary efforts will initially be focused on the mid to higher
  end of this market that is 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
  AlertTM 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

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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 AlertTM
  Doppler Awareness Systempurchasers 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 AlertTM 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 AlertTM 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. 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 begun to emerge 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

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characteristic between the Guardian AlertTM 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 Patents, Trademarks & Licenses


Patents & Trademarks

The following countries have granted patent rights respecting
  the Guardian AlertTM 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 AlertTMDoppler
  Awareness System is a registered trademark.

Licenses & Royalties


We hold worldwide rights to develop, manufacture, market and
  license the Guardian AlertTMDoppler 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.

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.

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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 and 2004, the Company
  did not pay its minimum royalty payment.

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 AlertTM 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 AlertTM
  Doppler Awareness System sold that was designed pursuant to the agreement, up
  to a maximum of 200,000 units.

Governmental Approval


Because the 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 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 are being processed for Sense by Tim Goldsbury
  and Associates, Inc., at Alhambra Plaza, 725 N. Hwy A-1-A, Jupiter, FL 33477.
  Administration is handled from offices

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located at 2535 N Carleton Avenue, Grand Island, Nebraska.
  We have vacated 800 Clanton Road, Suite U, Charlotte, North Carolina, and are
  attempting to sublease that space.

Item 3. LEGAL PROCEEDINGS

We have not received notice of any current legal proceedings
  involving our Company. We are aware of two product manufacturers that we believe
  are infringing our patents and will evaluate whether to pursue litigation as
  resources permit.

Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None.

PART II.

Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
  MATTERS

Market for Common Stock and Shareholder Matters

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  | Low  
|----------------- | ----- | -----
|February 29, 2004 | $0.25 | $0.11
|November 30, 2003 | $0.39 | $0.06
|August 31, 2003   | $0.38 | $0.11
|May 31, 2003      | $0.37 | $0.11
|February 28, 2003 | $0.44 | $0.17
|November 30, 2002 | $0.55 | $0.17
|August 31, 2002   | $1.39 | $0.27
|May 31, 2002      | $2.75 | $0.07

The Company has not declared any cash dividends for the last
  two fiscal years. There are no dividend restrictions in the Company.

Recent Sales of Unregistered Securities


On July 25, 2003, we issued 5,000 common shares to one (1)
  accredited investor under Rule 506 of Regulation D, valued for accounting purposes
  at US$0.25, in settlement of debt in the amount of US$5,150. The price per share
  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.
  The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities
  Act of 1933.

9

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On July 25, 2003, one (1) accredited investor under Rule 506
  of Regulation D, subscribed for 50,000 common shares at a price of US$1.03 per
  share for total proceeds to the Company of US$51,500. The shares are restricted
  pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On July 25, 2003, three (3) accredited investors under Rule
  506 of Regulation D, subscribed for an aggregate of 266,664 common shares at
  a price of US$0.15 per share for total proceeds to the Company of US$39,999.60.
  The price per share 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. The shares are restricted pursuant to Rule 144 promulgated under
  the U.S. Securities Act of 1933.

On July 25, 2003, we issued 10,000 common shares to one (1)
  accredited investor under Rule 506 of Regulation D, valued for accounting purposes
  at US$0.25, in settlement of debt in the amount of US$10,000. The shares are
  restricted pursuant to Rule 144 promulgated under the U.S.Securities Act
  of 1933.

On July 25, 2003, we issued 10,000 common shares to one (1)
  accredited investor under Rule 506 of Regulation D, valued for accounting purposes
  at US$0.25, in settlement of debt in the amount of US$10,500. The shares are
  restricted pursuant to Rule 144 promulgated under the U.S.Securities Act
  of 1933.

On July 25, 2003, we issued 4,950 common shares to one (1)
  accredited investor under Rule 506 of Regulation D at a deemed price of US$1.00
  per share to settle debt in the amount of US$4,950. The price per share 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.
  The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities
  Act of 1933.

During the year ended February 29, 2004, we issued Series
  "B" 10% convertible secured promissory notes (the "Secured Notes") in the aggregate
  principal amount of US$560,000, in exchange for an equal principal amount of
  our outstanding Series "A" 10% convertible secured promissory notes to nine
  (9) accredited investors, under Rule 506 of Regulation D. The Secured Notes
  will become due on demand made on or after August 30, 2005 and will be convertible
  into our common shares at the rate of US$0.29 per share. The Secured Notes may
  be redeemed in whole or in part at the election of Sense upon 10 days of notice
  being sent to the holder, at any time after August 30, 2005 at a redemption
  price equal to the principal amount being redeemed, plus accrued but unpaid
  interest thereon. The offer to redeem the Note will be made pro-rata to all
  note holders. The conversion price per share 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. The shares are restricted pursuant to Rule
  144 promulgated under the U.S. Securities Act of 1933.

During the year ended February 29, 2004, we received subscriptions
  for Class "A" Preferred Shares (the "Class A Shares") in the principal amount
  of US$1,276,000 plus accrued interest of US$317,025, in exchange for our outstanding
  Convertible Unsecured Promissory Notes (the "Unsecured Notes") to twenty (20)
  accredited and two (2) non-accredited investors, under Rule 506 of Regulation
  D. The Class A Shares will be issued at a deemed price of US$1.00 and be convertible
  into common shares at the rate of US$0.29. The holders of the Class A Shares
  will be entitled to receive quarterly dividends calculated at the rate of US$0.10
  per annum per Class A Share. If dividends are not paid in any quarter, then
  they shall cumulate and be payable in a subsequent quarter. The Class A Shares
  may be redeemed pro-rata at the option of the Company at any time after August
  30, 2005 at the rate of US$1.00 per share plus all outstanding dividends thereon.
  The conversion price per share 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. The shares are restricted pursuant to Rule 144 promulgated
  under the U.S. Securities Act of 1933.

During the year ended February 29, 2004, we granted stock
  options to purchase up to 50,000 common shares of the Company at an exercise
  price of US$1.00 to one (1) accredited investor,

10

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under Rule 506 of Regulation D. The exercise price per share
  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.
  The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities
  Act of 1933.

The following table sets forth information respecting our
  compensation plans as at February 29, 2004, under which shares of our common
  stock are authorized to be issued.

|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     | 1,215,000                                                                                                        | $1.31                                                                                           | 785,000                                                                                                                                                                 
|Equity compensation   plans not approved by 
       security holders | Nil                                                                                                              | N/A                                                                                             | N/A                                                                                                                                                                     
|Total                                                                | 1,215,000                                                                                                        | $1.31                                                                                           | 785,000                                                                                                                                                                 

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 29, 2004 and February 28, 2003.

Overview of Operations


Sense holds an exclusive license to manufacture, distribute,
  market and sublicense world-wide, a patented technology which is used to produce
  the Guardian Alert  backing awareness system for motor vehicles utilizing
  microwave radar technology. The Company manufactures the product in Charlotte,
  NC through an outsourced vendor with extensive experience producing products
  for auto dealerships and OEMs. The Company has established relationships with
  multiple large dealership groups and aftermarket product distributors.

The Company plans to complete development of its next-generation
  product and continue to increase sales through continued development of new
  marketing relationships.

Results of Operations


For the period ended February 29, 2004 as compared to the
  period ended February 28, 2003.

Sales for the period ended February 29, 2004 were $474,817,
  a 63 percent increase over the period ended February 28, 2003. This difference
  is due increasing volume from the Company's existing customer base.

Direct costs were $400,263, a 98 percent increase over the
  period ended February 28, 2003. This amount includes a $30,000 development cost
  expenses in the current year. The Company realized a positive gross margin contribution
  of $74,554.

General and administrative expenses were $772,632 for the
  period ended February 29, 2004 as compared to $1,224,550 for the period ended
  February 28, 2003. The decrease was partially

11

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attributable to a reduction in wages and benefits, interest,
  professional fees, rent, advertising and travel costs

Included in other items in the current year was a charge for
  license fees in the amount of $280,380, an increase of $109,590 or 64% from
  $170,790 charged in 2003. In accordance with the Company's license agreement,
  the Company must achieve production milestones in each calendar year to maintain
  its exclusivity with respect to the product. These license fee charges reflect
  the royalty owed on a minimum sales requirement of a cumulative 110,000 units
  up to December 31, 2003. Also, the company incurred an intangible asset impairment
  writedown of $135,010 in the current year, compared to -0- in the prior year.

Liquidity and Capital Resources

At February 29, 2004, the Company had cash and cash equivalents
  on hand of $1,800 compared with $4,976 at February 28, 2003. During the period
  ended February 29, 2004, the Company funded operations using existing cash balances,
  cash flow from operations, and by raising money through the issuance of Common
  Stock.

At February 29, 2004, we had a working capital deficit of
  $307,101 compared to a working capital deficit of $1,498,882 at February 28,
  2003. The reduction of the working capital deficit is largely due to restructuring
  certain unsecured promissory notes into preferred stock.

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

Item 7. FINANCIAL STATEMENTS


The Company's audited financial statements for the fiscal
  year ended February 29, 2004 are attached to this Report following the signature
  page.

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
  ACCOUNTING AND FINANCIAL DISCLOSURE

The Company has had no changes in or disagreements with it's
  accountants during it's two most recent fiscal years.

12

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PART III.

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
  PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The following table contains information regarding the members
  of the Board of Directors and the Executive of Sense as of the date of this
  Form 10-KSB:

|Name                 | Age | Position                                       
|-------------------- | --- | -----------------------------------------------
|Bruce E. Schreiner   | 49  | President, Chief Executive Officer and Director
|David Hansing        | 54  | Director                                       
|James R. Iman        | 59  | Director                                       
|Cynthia L. Schroeder | 44  | Director                                       
|James N. Morton      | 58  | Corporate Secretary                            




Biographical information for each of the above-noted Directors
  is set forth below:

BRUCE E. SCHREINER, CPA. Mr. Schreiner has been a Director
  of Sense since August 10, 1993 and the President and Chief Executive Officer
  of Sense since March 4, 2004. Mr. Schreiner is responsible for all financial
  matters customarily related to Sense's operations and serves as the general
  manager of Sense. Mr. Schreiner received a Bachelor of Arts Degree, from Hastings
  College in 1975, graduating magna cum laude, with majors in Economics and Business
  Administration with an emphasis in accounting. Mr. Schreiner has been a certified
  public accountant since November 1976, to the present. Mr. Schreiner is presently
  a partner in Schroeder & Schreiner, P.C., a certified public accounting
  firm. Mr. Schreiner has experience in the wholesale automotive parts industry,
  electronic parts manufacturing and national-level retail marketing. Mr. Schreiner
  is also an expert in tax law and accounting.

DAVID HANSING.Mr. Hansing is currently the General
  Manager of Terry Labonte Chevrolet in Greensboro, North Carolina since 1998.
  Previously he was employed with Saturn of Raleigh, North Carolina. He has also
  worked closely with Hendrick MotorSports since its inception in 1981. Hendrick
  MortorSports. owns seven racing teams in the NASCAE Winston Cup, Busch Grand
  National and Craftsman Truck Series. Mr. Hansing obtained his Bachelors degree
  in Finance at Valparaiso University in 1972.

JAMES R. IMAN. Mr. Iman is currently associated with
  Corporate Finance Consulting Services of Fort Worth, Texas. He studied Business
  and Economics at Midwestern State University in Wichita Falls Texas. He has
  extensive experience in business, and has had past associations with First DFW
  Bankers Investment Banking Group, HRM (Division of Halliburton), and NCR, among
  others.

CYNTHIA L. SCHROEDER, CPA. Ms. Schroeder was re-appointed
  as Director of Sense on June 18, 2004 and previously served as a Director of
  Sense from June 8, 2000 to August 27, 2003. Ms. Schroeder from 1987 to the present
  has been the Senior Vice President and Chief Financial Officer of Bethphage
  located in Omaha, Nebraska. In her current position as a Certified Public Accountant,
  Ms. Schroeder is responsible for the financial analysis of a number of corporations.
  She is responsible for reviewing the financial condition of each organization
  with the respective CEO and to serve as staff liaison to each Board and related
  Finance and Audit Committees. From 1982 to 1987, Ms. Schroeder worked with Larsen,
  Schroeder & Associates, P.C. where she was a staff accountant and Manager
  for auditing, accounting and tax engagements. Ms. Schroeder received a Bachelor
  of Science Degree in Accounting from the University of Nebraska and passed the
  Certified Public Accountant exam in 1982. Ms. Schroeder

13

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is a member of the American Institute of Certified Public
  Accountants and Nebraska Society of Certified Public Accountants.

JAMES N. MORTON. Mr. Morton was appointed Corporate
  Secretary of Sense on June 18, 2004. Mr. Morton is the founding and senior partner
  of Morton & Company, a British Columbia Canada law firm which, since 1980,
  has restricted its practice to corporate and securities law. Mr. Morton's practice
  includes TSX Venture Exchange and Toronto Stock Exchange listed companies, OTCBB
  companies and private companies with businesses in industrial, technology, mineral
  and oil & gas exploration. Mr. Morton has extensive experience with public
  and private financings, initial public offerings, takeovers, property acquisitions,
  dispositions and joint ventures, corporate restructurings and re-organizations,
  take-over bids, shareholder meetings, continuous disclosure issues and corporate
  governance. Mr. Morton is currently a Director of Pathfinder Resources Ltd.,
  a publicly traded company listed on the TSX Venture Exchange, and President
  and Director of Blackcomb Capital Corp., a private investment company. Mr. Morton
  is a member of the Law Society of British Columbia.

RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS

There are no family relationships among any of the existing Directors or Executive Officers of Sense.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

During the fiscal year ended February 29, 2004 the Board of
  Directors held three Directors Meetings. All other matters which required Board
  approval were consented to in writing by all of the Company's Directors.

The Board of Directors has established an Audit Committee
  and a Compensation Committee. The Board of Directors has no standing nominating
  committee. Each of the Audit and Compensation Committees is responsible to the
  full Board of Directors. The functions performed by these committees are summarized
  below:

Audit Committee. The Audit Committee considers the
  selection and retention of independent auditors and reviews the scope and results
  of the audit. In addition, it reviews the adequacy of internal accounting, financial
  and operating controls and reviews Sense's financial reporting compliance procedures.
  The members of the Audit Committee are Cynthia Schroeder, James R. Iman and
  David Hansing

Compensation Committee. The Compensation Committee
  reviews and approves the compensation of Sense's officers, reviews and administers
  Sense's stock option plans for employees and makes recommendations to the Board
  of Directors regarding such matters. The members of the Compensation Committee
  are Cynthia Schroeder, James R. Iman and David Hansing.

DIRECTORS COMPENSATION

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 29, 2004 for services provided as a Director or
  member of a committee of the Board of Directors.

14

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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, 2002, 2003 and 2004 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.

SUMMARY COMPENSATION TABLE

|Name and Principal  Position 
      (a)                | Annual Compensation                                                 | Long Term Compensation     
|------------------------------------------------------ | ------------------------------------------------------------------- | ---------------------------
|Year 
      (b)                                        | Salary 
      ($) 
      (c)                                        | Bonus 
      ($) 
      (d)
|Securities Under Options/SARs  Granted  (#) 
      (f) | Restricted Shares Or 
      Restricted  Share Units  ($) 
      (g) | LTIP  Payouts  ($)  (h)    
|James H. Cotter [1]
      President & CEO              | 2004                                                                | Nil                        
|2003                                                   | Nil                                                                 | Nil                        
|Mark Johnson[2]   President
      & CEO                | 2002                                                                | Nil                        
|Gerald R. McIlhargey[3] President & CEO                | 2002                                                                | Nil                        
|Bruce E. Schreiner   Director                          | 2002                                                                | Nil                        

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

[2]            Mark
  Johnson resigned as President, CEO and a Director of the Company on March 20,
  2002 and James H. Cotter was appointed in his stead.

[3]            Gerald
  McIlhargey resigned as President, CEO and a Director of the Company on November
  26, 2001 and Mark Johnson 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 29, 2004.

AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY
  
  COMPLETED FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SARVALUES

There were no stock options exercised during the Company's fiscal year ended February 29, 2004.

Sense does not have a defined benefit or actuarial plan in place.

15

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Employment Contracts and Termination of Employment Arrangementsand Change-in-Control

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 Committee Interlocks and Insider Participation

The members of the Compensation Committee are Bruce E. Schreiner,
  James Iman and David Hansing All of the members of the Committee are Directors
  of Sense.

Board Compensation Committee Report on Executive Compensation

The Board has not prepared a report on executive compensation
  at this time.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
  AND MANANGEMENT

The following table sets forth certain information regarding
  the beneficial ownership of the Company's Common Stock as of June 30, 2004 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 below, Sense believes that the beneficial
  owners of the Common Stock listed below, based on information furnished by such
  owners, have sole voting and investment power with respect to such shares.

|Title of Class | Name and Address of  
      Beneficial Owner                                                           | Amount of Beneficial  
      Ownership [1] | Percent of Class [2]
|-------------- | ------------------------------------------------------------------------------------------------------ | ------------------------------------------ | --------------------
|Common Stock   | Steve Sommers[3]  
       21018 Buckskin Trail      Elkhorn, NE 68022                                  | 3,796,187                                  | 28.456%             
|Common Stock   | Bruce E. Schreiner, Director 
          3535 Grassridge Drive      Grand Island,
      Nebraska 68803  | 532,534                                    | 3.992%              
|Common Stock   | Cynthia L. Schroeder, Secretary 
          15409 Garfield      Omaha, Nebraska
      68144             | 101,770                                    | .763%               
|Common Stock   | David Hansing, Director  
         10 Clubview Court      Greensboro, NC 27410                         | 50,000                                     | .375%               
|Common Stock   | James R. Iman    
       6329 Malvery      Fort Worth, Texas 76116                                     | 100,000                                    | .750%               
|Common Stock   | James N. Morton    
       #1200-750 West Pender Street      Vancouver, B.C.
      Canada      V6C 2T8 | nil                                        | nil                 
|Common Stock   | All directors and officers as a 
          group (4 persons)                                           | 784,304                                    | 5.879%              

[1]           Based upon
  information furnished to Sense by either the Directors and Executive Officers
  or obtained from the stock transfer agent of Sense.

16

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[2]          Based
  upon a total of 13,340,622 shares of common stock currently issued and outstanding,
  and includes in each case any stock underlying 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.

[4]]           These
  amounts include beneficial ownership of securities not currently outstanding
  but which are reserved for immediate issuance on exercise of options. In particular,
  these amounts include, respectively for each director or officer, shares issuable
  upon exercise of options as follows: 200,000 shares issuable to Bruce E. Schreiner;
  and 50,000 shares issuable to each of Cynthia L. Schroeder and David Hansing.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Management and Others


No transactions with management or other parties occurred
  during the year that would otherwise be reported under this section.

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)Exhibits:

|Exhibit No. | Description of Exhibit                                                                                                                                                                                           | Manner of Filing                                                                                                                                                          
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         | 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-KSB                                                                                                   
|3.3         | 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-KSB                                                                                                  
|10.2        | 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-KSB                                                                                                  
|10.3        | Stock Option Agreement dated December 18, 2001
      between Ambassador Mark Erwin and the Company.                                                                                                              | Incorporated by reference as Exhibit
      10.3 to the  2002 Form 10-KSB                                                                                                  
|10.4        | Stock Option Agreement dated December 18, 2001
      between J. Rick Hendrick III and the Company.                                                                                                               | Incorporated by reference as Exhibit
      10.4 to the  2002 Form 10-KSB                                                                                                  
|10.7        | Private Placement Subscription Agreement dated
      January 23, 2002 between Cynthia L. Schroeder and the Company.                                                                                              | Incorporated by reference as Exhibit
      10.7 to the  2002 Form 10-KSB                                                                                                  
|10.8        | Private Placement Subscription Agreement dated
      January 24, 2002 between Bruce E. Schreiner and the Company.                                                                                                | Incorporated by reference as Exhibit
      10.8 to the  2002 Form 10-KSB                                                                                                  
|10.11       | 2002 Stock Option Plan                                                                                                                                                                                           | Incorporated by reference as Appendix
      B to the  Schedule 14A                                                                                                        
|10.12       | Convertible Promissory Note issued on January
      16, 2003 to Bruce E. Schreiner, Ancillary Trustee of the Schroeder and Schreiner,
      P.C., 401(k) Profit Sharing Plan and Trust, in the amount of $20,000 | Incorporated by reference as Exhibit
      10.12 to the Company's Form 10-KSB, filed with the SEC on  June 13,
      2003 ("2003 Form 10-KSB")                            
|10.13       | Convertible Promissory Note issued on July 10,
      2002 to Bruce E. Schreiner, Ancillary Trustee of the Schroeder and Schreiner,
      P.C., 401(k) Profit Sharing Plan and Trust, in the amount of $50,000    | Incorporated by reference as Exhibit
      10.13 to the  2003 Form 10-KSB                                                                                                 
|10.14       | Convertible Promissory Note issued on December
      11, 2002 to Cynthia Schroeder in the amount of $5,000                                                                                                       | Incorporated by reference as Exhibit
      10.14 to the  2003 Form 10-KSB                                                                                                 
|31.1        | Rule 13a-14(a)/15d-14(a)
      Certification                                                                                                                                                                     | Filed herewith                                                                                                                                                            
|32.1        | Section 1350 Certifications                                                                                                                                                                                      | Filed herewith                                                                                                                                                            

17

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(b) Reports on Form 8-K

Sense did not file any Form 8-K's during its fiscal year ended
  February 29, 2004.

Item 14. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed
  to ensure that information required to be disclosed in our reports filed pursuant
  to the Securities Exchange Act of 1934 are 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 Chief Executive Officer, of the effectiveness
  of the design and operation of our disclosure controls and procedures pursuant
  to Exchange Act Rule 13a-14. Based upon the foregoing, the Chief Executive Officer
  concluded that our disclosure controls and procedures are effective in connection
  with the filing of this Annual Report on Form 10-KSB for the year ended February
  29, 2004.

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 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees


The aggregate fees billed by the Company's principal accountant
  in connection with the review and preparation of the Company's audited financial
  statements for its fiscal years ended February 29, 2004 and February 28, 2003
  were US$14,000 and US$16,850, respectively.

Audit-Related Fees


The aggregate fees billed by the Company's principal accountant
  in connection with the review of the Company's interim quarterly reports during
  its fiscal years ended February 29, 2004 and February 28, 2003 were US$17,625
  and US$12,250, respectively.

Approval of Principal Accountant


Prior to engagement, the appointment of the principal accountant
  is approved by the audit committee following each annual meeting of shareholders
  of the Company. The engagement of the principal accountant is limited to audit
  and review services.

18

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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 15, 2004.

| | 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 15, 2004
|Bruce E. Schreiner       |  | Director and Principal Accounting Officer |              
|                         |  |                                           |              
|                         |  |                                           |              
|/s/ David Hansing        |  | Director                                  | July 15, 2004
|David Hansing            |  |                                           |              
|                         |  |                                           |              
|                         |  |                                           |              
|/s/ James R. Iman        |  | Director                                  | July 15, 2004
|James R. Iman            |  |                                           |              
|                         |  |                                           |              
|                         |  |                                           |              
|/s/ Cynthia L. Schroeder |  | Director                                  | July 15, 2004
|Cynthia L. Schroeder     |  |                                           |              

19

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SENSE TECHNOLOGIES INC.

REPORT AND FINANCIAL STATEMENTS

February 29, 2004 and February 28, 2003

(Stated in U.S. Dollars)

---

|TERRY AMISANO LTD. | AMISANO
      HANSON 
|------------------ | ---------------------
|                   |                      
|KEVIN HANSON, CA   | CHARTERED ACCOUNTANTS



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 29, 2004 and February 28, 2003 and the related statements
  of loss, deficit, shareholders' equity and cash flows for each of the years
  in the three year period ended February 29, 2004. 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 audit provides a reasonable basis for our opinion.

In our opinion, these financial statements present fairly,
  in all material respects, the financial position of the Company as of February
  29, 2004 and February 28, 2003 and the results of its operations and its cash
  flows for each of the years in the three year period ended February 29, 2004,
  in conformity with accounting principles generally accepted in the United States
  of America.

The accompanying consolidated 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 21, 2004             | Chartered Accountants | 
|                                  |                           |                       | 
|                                  |                           |                       | 
|                                  |                           |                       | 
|                                  |                           |                       | 
|750 WEST PENDER STREET, SUITE 604 | TELEPHONE: 604-689-0188  
|VANCOUVER CANADA                  | FACSIMILE: 604-689-9773  
|V6C 2T7                           | E-MAIL: amishan@telus.net

---

SENSE TECHNOLOGIES INC.
  BALANCE SHEETS 
  February 29, 2004 and February 28, 2003
  (Stated in U.S. Dollars)

|                                                                              |   |            |   |   | (Restated  |  
|----------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                              |   |            |   |   |  Note 2)  |  
|                                                                              |   | 2004       |   |   | 2003       |  
|ASSETS                                                                        |  
|Current                                                                       |   |            |   |   |            |  
|Cash                                                                          | $ | 1,800      |   | $ | 4,976      |  
|Accounts receivable
       Note 10                                           |   | 8,733      |   |   | 64,575     |  
|Inventory  Note
      3                                                      |   | 747,506    |   |   | 1,041,837  |  
|Prepaids                                                                      |   | 17,253     |   |   | 30,652     |  
|                                                                              |   |            |   |   |            |  
|                                                                              |   | 775,292    |   |   | 1,142,040  |  
|Capital assets  Note 4                                                       |   | 30,420     |   |   | 61,532     |  
|Intangible assets  Note 5                                                    |   | 8,300      |   |   | 142,822    |  
|                                                                              |   |            |   |   |            |  
|                                                                              | $ | 814,012    |   | $ | 1,346,394  |  
|                                                                              |   |            |   |   |            |  
|LIABILITIES                                                                   |  
|Current                                                                       |   |            |   |   |            |  
|Accounts payable 
      Notes 6 and 10                                       | $ | 885,925    |   | $ | 757,922    |  
|Advances payable                                                              |   | 76,200     |   |   | 22,000     |  
|Dividends payable                                                             |   | 70,268     |   |   | -          |  
|Current portion
      of convertible promissory notes payable  Notes 7 and 8 |   | 50,000     |   |   | 1,861,000  |  
|                                                                              |   |            |   |   |            |  
|                                                                              |   | 1,082,393  |   |   | 2,640,922  |  
|Convertible promissory notes payable  Notes 7
      and 8                    |   | 668,974    |   |   | 25,000     |  
|                                                                              |   |            |   |   |            |  
|                                                                              |   | 1,751,367  |   |   | 2,665,922  |  
|                                                                              |   |            |   |   |            |  
|STOCKHOLDERS' DEFICIENCY                                                      |  
|Common stock  Note 8                                                         |   | 7,599,828  |   |   | 7,497,128  |  
|Additional paid-in capital                                                    |   | 62,529     |   |   | 57,279     |  
|Promissory note receivable  Note 9                                           |   | (585,000   | ) |   | (585,000   | )
|Common stock subscribed  Note 8                                              |   | 51,000     |   |   | 51,500     |  
|Preferred stock subscribed  Note 8                                           |   | 1,593,025  |   |   | -          |  
|Deficit                                                                       |   | (9,658,737 | ) |   | (8,340,435 | )
|                                                                              |   |            |   |   |            |  
|                                                                              |   | (937,355   | ) |   | (1,319,528 | )
|                                                                              |   |            |   |   |            |  
|                                                                              | $ | 814,012    |   | $ | 1,346,394  |  

Nature and Continuance of Operations  Note 1 
  Commitments  Notes 5, 8 and 12 
  Subsequent Event  Note 15

APPROVED BY THE DIRECTORS:



|"Bruce E. Schreiner" | , Director |  | "Cynthia Schroeder" | , Director
|-------------------- | ---------- |  | ------------------- | ----------

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.
  STATEMENTS OF LOSS 
  for the years ended February 29, 2004, February 28, 2003 and 2002 
  (Stated in U.S. Dollars)

|                                                          |   |            |   |   | (Restated  |   |   |            |  
|--------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                          |   |            |   |   |  Note 2)  |   |   |            |  
|                                                          |   | 2004       |   |   | 2003       |   |   | 2002       |  
|                                                          |   |            |   |   |            |   |   |            |  
|Sales  Note 10                                           | $ | 474,817    |   | $ | 290,703    |   | $ | 72,411     |  
|Direct costs  Schedule 1                                 |   | 400,263    |   |   | 202,823    |   |   | 156,055    |  
|                                                          |   |            |   |   |            |   |   |            |  
|Gross profit (loss)                                       |   | 74,554     |   |   | 87,880     |   |   | ( 83,644   | )
|                                                          |   |            |   |   |            |   |   |            |  
|Expenses                                                  |   |            |   |   |            |   |   |            |  
|Advertising and marketing
       Note 10                 |   | 6,399      |   |   | 132,844    |   |   | 117,820    |  
|Amortization                                              |   | 13,037     |   |   | 22,030     |   |   | 83,448     |  
|Automobile                                                |   | -          |   |   | -          |   |   | 19,913     |  
|Bad debts                                                 |   | 25,418     |   |   | 9,459      |   |   | -          |  
|Consulting fees 
      Note 10                           |   | 10,413     |   |   | 19,584     |   |   | 217,623    |  
|Filing fees                                               |   | 5,386      |   |   | 14,344     |   |   | 8,902      |  
|Insurance                                                 |   | 75,296     |   |   | 46,588     |   |   | 30,933     |  
|Interest and bank charges                                 |   | 3,745      |   |   | 4,242      |   |   | 765        |  
|Interest on long-term
      debt  Note 10                |   | 145,428    |   |   | 176,401    |   |   | 159,498    |  
|Investor relations                                        |   | -          |   |   | -          |   |   | 10,000     |  
|Legal and accounting
      fees                           |   | 153,598    |   |   | 281,371    |   |   | 104,666    |  
|Office and miscellaneous                                  |   | 15,396     |   |   | 32,159     |   |   | 35,239     |  
|Rent                                                      |   | 20,865     |   |   | 37,574     |   |   | 54,596     |  
|Repairs and maintenance                                   |   | 894        |   |   | 2,013      |   |   | -          |  
|Shareholder information
      and printing                |   | 12,114     |   |   | 19,474     |   |   | 8,600      |  
|Telephone and utilities                                   |   | 14,801     |   |   | 18,534     |   |   | 16,623     |  
|Transfer agent fees                                       |   | 6,204      |   |   | 11,990     |   |   | 6,949      |  
|Travel                                                    |   | 18,552     |   |   | 72,721     |   |   | 118,200    |  
|Wages and benefits
       Note 10                        |   | 245,086    |   |   | 323,222    |   |   | 306,358    |  
|                                                          |   |            |   |   |            |   |   |            |  
|                                                          |   | 772,632    |   |   | 1,224,550  |   |   | 1,300,133  |  
|                                                          |   |            |   |   |            |   |   |            |  
|Loss before other items                                   |   | (698,078   | ) |   | (1,136,670 | ) |   | (1,383,777 | )
|Other items:                                              |   |            |   |   |            |   |   |            |  
|Non-cash compensation
      charge                        |   | (5,250     | ) |   | (52,000    | ) |   | -          |  
|Write-off of inventory                                    |   | (114,371   | ) |   | (201,496   | ) |   | -          |  
|Loss on sale of capital
      assets                      |   | (20,524    | ) |   | -          |   |   | -          |  
|Provision for
      accrued interest receivable  Note 10 |   | (52,650    | ) |   | (52,650    | ) |   | (212,981   | )
|Gain on settlement
      of accounts payable              |   | 7,851      |   |   | -          |   |   | -          |  
|Other income                                              |   | 2,207      |   |   | 31,700     |   |   | 21,439     |  
|License fees 
      Notes 5 and 10                       |   | (280,380   | ) |   | (170,790   | ) |   | (126,199   | )
|Write-down of license
      fee                           |   | (135,010   | ) |   | -          |   |   | -          |  
|Interest income 
      Note 10                           |   | 52,650     |   |   | 52,665     |   |   | 59,912     |  
|Foreign exchange gain
      (loss)                        |   | (4,479     | ) |   | (738       | ) |   | 10,714     |  
|                                                          |   |            |   |   |            |   |   |            |  
|Net loss for the year                                     | $ | (1,248,034 | ) |   | (1,529,979 | ) | $ | 1,630,892  | )
|                                                          |   |            |   |   |            |   |   |            |  
|Basic and diluted loss per share                          | $ | (0.17      | ) |   | (0.22      | ) | $ | (0.27      | )
|                                                          |   |            |   |   |            |   |   |            |  
|Weighted average number of shares outstanding             |   | 7,208,389  |   |   | 7,021,718  |   |   | 6,002,242  |  
|                                                          |   |            |   |   |            |   |   |            |  

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.
  STATEMENTS OF DEFICIT 
  for the years ended February 29, 2004 and February 28, 2003 
  (Stated in U.S. Dollars)

|                                                   |   |            |   |   | (Restated  |  
|-------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                   |   |            |   |   |  Note 2)  |  
|                                                   |   | 2004       |   |   | 2003       |  
|                                                   |   |            |   |   |            |  
|Deficit, beginning of year, as previously reported | $ | (8,461,992 | ) | $ | 6,810,456  | )
|                                                   |   |            |   |   |            |  
|Prior period restatement  Note 2                  |   | 121,557    |   |   | -          |  
|                                                   |   |            |   |   |            |  
|Deficit, beginning of the year, as restated        |   | (8,340,435 | ) |   | (6,810,456 | )
|                                                   |   |            |   |   |            |  
|Net loss for the year                              |   | (1,248,034 | ) |   | (1,529,979 | )
|                                                   |   |            |   |   |            |  
|Dividends                                          |   | (70,268    | ) |   | -          |  
|                                                   |   |            |   |   |            |  
|Deficit, end of year                               | $ | (9,658,737 | ) | $ | (8,340,435 | )

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.
  STATEMENTS OF CASH FLOWS 
  for the years ended February 29, 2004, February 28, 2003 and 2002 
  (Stated in U.S. Dollars)

|                                                |   |            |   |   | (Restated  |   |   |            |  
|----------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                |   |            |   |   |  Note 2)  |   |   |            |  
|                                                |   | 2004       |   |   | 2003       |   |   | 2002       |  
|Operating Activities                            |   |            |   |   |            |   |   |            |  
|Net loss for the year                           | $ | (1,248,034 | ) | $ | (1,529,979 | ) | $ | (1,630,892 | )
|Add (deduct) items not involving cash:          |   |            |   |   |            |   |   |            |  
|Common shares issued
      for advertising and  |   |            |   |   |            |   |   |            |  
|consulting services                             |   | 3,750      |   |   | -          |   |   | -          |  
|Non-cash compensation charge                    |   | 5,250      |   |   | 52,000     |   |   | -          |  
|Write-off of inventory                          |   | 114,371    |   |   | 201,496    |   |   | -          |  
|Loss on sale of capital
      assets            |   | 20,524     |   |   | -          |   |   | -          |  
|Write-down of license fee                       |   | 135,010    |   |   | -          |   |   | -          |  
|Gain on settlement of accounts
      payable    |   | (7,851     | ) |   | -          |   |   | -          |  
|Amortization                                    |   | 13,037     |   |   | 22,030     |   |   | 83,448     |  
|Amortization of license
      fees              |   | -          |   |   | -          |   |   | 90,508     |  
|Changes in non-cash working capital balances    |   |            |   |   |            |   |   |            |  
|related to operations:                          |   |            |   |   |            |   |   |            |  
|Accounts receivable                             |   | 55,842     |   |   | (62,880    | ) |   | 106,809    |  
|Accrued interest receivable                     |   | -          |   |   | -          |   |   | 160,330    |  
|Advance receivable                              |   | -          |   |   | -          |   |   | 25,000     |  
|Inventory                                       |   | 179,960    |   |   | (137,839   | ) |   | (7,895     | )
|Prepaids                                        |   | 13,399     |   |   | (8,376     | ) |   | 500        |  
|Accounts payable                                |   | 519,353    |   |   | 577,503    |   |   | 87,127     |  
|Advances payable                                |   | 54,200     |   |   | -          |   |   | -          |  
|Dividends payable                               |   | 70,268     |   |   | -          |   |   | -          |  
|                                                |   |            |   |   |            |   |   |            |  
|Cash used in operating activities               |   | (70,921    | ) |   | (886,045   | ) |   | (1,085,065 | )
|                                                |   |            |   |   |            |   |   |            |  
|Financing Activities                            |   |            |   |   |            |   |   |            |  
|Proceeds from issuance of common stock          |   | 40,000     |   |   | -          |   |   | 1,096,950  |  
|Dividends                                       |   | (70,268    | ) |   | -          |   |   | -          |  
|Proceeds from issuance of (redemption
      of) |   |            |   |   |            |   |   |            |  
|convertible promissory
      notes payable      |   | 45,000     |   |   | 582,000    |   |   | (200,000   | )
|Proceeds from common share subscriptions        |   | 51,000     |   |   | 51,500     |   |   | -          |  
|                                                |   |            |   |   |            |   |   |            |  
|Cash provided by financing activities           |   | 65,732     |   |   | 633,500    |   |   | 896,950    |  
|                                                |   |            |   |   |            |   |   |            |  
|Investing Activities                            |   |            |   |   |            |   |   |            |  
|Proceeds from the sale of capital assets        |   | 2,500      |   |   | -          |   |   | -          |  
|Acquisition of capital assets                   |   | -          |   |   | (8,906     | ) |   | (64,274    | )
|Acquisition of intangible assets                |   | (487       | ) |   | (1,912     | ) |   | (2,753     | )
|                                                |   |            |   |   |            |   |   |            |  
|Cash provided by (used in) investing activities |   | 2,013      |   |   | (10,818    | ) |   | (67,027    | )
|                                                |   |            |   |   |            |   |   |            |  

/Cont'd.

SEE ACCOMPANYING NOTES

---

| | SENSE TECHNOLOGIES INC.                              | Continued
| | ---------------------------------------------------- | ---------
| | STATEMENTS OF CASH FLOWS                             |          
| | for the years ended February 29, 2004, 2002 and 2001 |          
| | (Stated in U.S. Dollars)                             |          

|                                     |   |        |   |   | (Restated |   |   |          |  
|------------------------------------ | - | ------ | - | - | --------- | - | - | -------- | -
|                                     |   |        |   |   |  Note 2) |   |   |          |  
|                                     |   | 2004   |   |   | 2003      |   |   | 2002     |  
|                                     |   |        |   |   |           |   |   |          |  
|Decrease in cash during the year     |   | (3,176 | ) |   | (263,363  | ) |   | (255,142 | )
|                                     |   |        |   |   |           |   |   |          |  
|Cash, beginning of year              |   | 4,976  |   |   | 268,339   |   |   | 523,481  |  
|                                     |   |        |   |   |           |   |   |          |  
|Cash, end of year                    | $ | 1,800  |   | $ | 4,976     |   | $ | 268,339  |  
|                                     |   |        |   |   |           |   |   |          |  
|Supplementary cash flow information: |   |        |   |   |           |   |   |          |  
|Cash paid for                        |   |        |   |   |           |   |   |          |  
|Interest                             | $ | -      |   | $ | 17,045    |   | $ | 77,398   |  
|                                     |   |        |   |   |           |   |   |          |  
|Taxes                                | $ | -      |   | $ | -         |   | $ | -        |  
|                                     |   |        |   |   |           |   |   |          |  
|Non-cash Transactions  Note 13      |   |        |   |   |           |   |   |          |  

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.
  STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) 
  for the years ended February 29, 2004, February 28, 2003 and 2002
  (Stated in U.S. Dollars)

|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   | (Restated   |   |   |            |  
|-------------------------------------------------------------------------- | ------------ |  | - | --------- |  | - | ---------- |  | - | ---------- | - | - | ---------- |  | - | ---------- |  | - | ----------- | - | - | ---------- | -
|                                                                           | Common Stock |  |   |           |  |   | Promissory |  |   | Common     |   |   | Preferred  |  |   |  Note 2)  |  |   |             |  
|                                                                           | Issued       |  |   |           |  |   | Paid-in    |  |   | Note       |   |   | Stock      |  |   | Stock      |  |   | Accumulated |   |   |            |  
|                                                                           | Shares       |  |   | Amount    |  |   | Capital    |  |   | Receivable |   |   | Subscribed |  |   | Subscribed |  |   | Deficit     |   |   | Total      |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Balance, February 28, 2001                                                 | 11,859,502   |  | $ | 6,149,678 |  | $ | 5,279      |  | $ | (585,000   | ) | $ | -          |  | $ | -          |  | $ | (5,179,564  | ) | $ | 390,393    |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Issue of shares pursuant to agreements to settle debt
      - at $4.04     | 59,406       |  |   | 240,000   |  |   | -          |  |   | -          |   |   | -          |  |   | -          |  |   | -           |   |   | 240,000    |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Issue of shares for cash pursuant to the exercise of
options - at $1.03    | 200,000      |  |   | 206,000   |  |   | -          |  |   | -          |   |   | -          |  |   | -          |  |   | -           |   |   | 206,000    |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Issue of shares for cash pursuant to a private  placement - at
      $1.03 | 865,000      |  |   | 890,950   |  |   | -          |  |   | -          |   |   | -          |  |   | -          |  |   | -           |   |   | 890,950    |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Net loss for the year ended February 28, 2002                              | -            |  |   | -         |  |   | -          |  |   | -          |   |   | -          |  |   | -          |  |   | (1,630,892  | ) |   | (1,630,892 | )
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Balance, February 28, 2002                                                 | 12,983,908   |  |   | 7,486,628 |  |   | 5,279      |  |   | (585,000   | ) |   | -          |  |   | -          |  |   | (6,810,456  | ) |   | 96,451     |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Issue of  shares pursuant to an agreement to  settle
 debt - at $1.05      | 10,000       |  |   | 10,500    |  |   | -          |  |   | -          |   |   | -          |  |   | -          |  |   | -           |   |   | 10,500     |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Common stock subscribed                                                    | -            |  |   | -         |  |   | -          |  |   | -          |   |   | 51,500     |  |   | -          |  |   | -           |   |   | 51,500     |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Non-cash compensation charge                                               | -            |  |   | -         |  |   | 52,000     |  |   | -          |   |   | -          |  |   | -          |  |   | -           |   |   | 52,000     |  
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Net loss for the year ended February 28, 2003                              | -            |  |   | -         |  |   | -          |  |   | -          |   |   | -          |  |   | -          |  |   | (1,529,979  | ) |   | (1,529,979 | )
|                                                                           |              |  |   |           |  |   |            |  |   |            |   |   |            |  |   |            |  |   |             |   |   |            |  
|Balance, February 28, 2003                                                 | 12,993,908   |  |   | 7,497,128 |  |   | 57,279     |  |   | (585,000   | ) |   | 51,500     |  |   | -          |  |   | (8,340,435  | ) |   | (1,319,528 | )

/Cont'd.

SEE ACCOMPANYING NOTES

---

| | SENSE TECHNOLOGIES INC.                              | Continued
| | ---------------------------------------------------- | ---------
| | STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)       |          
| | for the years ended February 29, 2004, 2002 and 2001 |          
| | (Stated in U.S. Dollars)                             |          

|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   | (Restated   |   |   |            |  
|--------------------------------------------------------------------------------------------- | ------------ |  | - | --------- |  | - | ---------- |  | - | ---------- | - | - | ---------- | - | - | ---------- |  | - | ----------- | - | - | ---------- | -
|                                                                                              | Common Stock |  |   |           |  |   | Promissory |  |   | Common     |   |   | Preferred  |   |   |  Note 2)  |  |   |             |  
|                                                                                              | Issued       |  |   |           |  |   | Paid-in    |  |   | Note       |   |   | Stock      |   |   | Stock      |  |   | Accumulated |   |   |            |  
|                                                                                              | Shares       |  |   | Amount    |  |   | Capital    |  |   | Receivable |   |   | Subscribed |   |   | Subscribed |  |   | Deficit     |   |   | Total      |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Issue of shares for cash pursuant to an
       agreement to settle debt  at $0.25            | 10,000       |  |   | 2,500     |  |   | -          |  |   | -          |   |   | -          |   |   | -          |  |   | -           |   |   | 2,500      |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Issue of shares pursuant to private placements
   at $1.03                                   | 50,000       |  |   | 51,500    |  |   | -          |  |   | -          |   |   | -          |   |   | -          |  |   | -           |   |   | 51,500     |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
| at $0.15                                                                                    | 266,664      |  |   | 40,000    |  |   | -          |  |   | -          |   |   | -          |   |   | -          |  |   | -           |   |   | 40,000     |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Issue of shares pursuant to advertising and     consulting
      services provided  at $0.25 | 15,000       |  |   | 3,750     |  |   | -          |  |   | -          |   |   | -          |   |   | -          |  |   | -           |   |   | 3,750      |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Issue of shares pursuant to capital assets contributed
       at $1.00                       | 4,950        |  |   | 4,950     |  |   | -          |  |   | -          |   |   | -          |   |   | -          |  |   | -           |   |   | 4,950      |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Common stock subscribed                                                                       | -            |  |   | -         |  |   | -          |  |   | -          |   |   | 51,000     |   |   | -          |  |   | -           |   |   | 51,000     |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Common stock subscriptions utilized                                                           | -            |  |   | -         |  |   | -          |  |   | -          |   |   | (51,500    | ) |   | -          |  |   | -           |   |   | (51,500    | )
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Non-cash compensation charge                                                                  | -            |  |   | -         |  |   | 5,250      |  |   | -          |   |   | -          |   |   | -          |  |   | -           |   |   | 5,250      |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Preferred stock subscribed                                                                    | -            |  |   | -         |  |   | -          |  |   | -          |   |   | -          |   |   | 1,593,025  |  |   | -           |   |   | 1,593,025  |  
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Dividends                                                                                     | -            |  |   | -         |  |   | -          |  |   | -          |   |   | -          |   |   | -          |  |   | (70,268     | ) |   | (70,268    | )
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Net loss for the year ended                                                                   | -            |  |   | -         |  |   | -          |  |   | -          |   |   | -          |   |   | -          |  |   | (1,248,034  | ) |   | (1,248,034 | )
|                                                                                              |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|February 29, 2004                                                                             |              |  |   |           |  |   |            |  |   |            |   |   |            |   |   |            |  |   |             |   |   |            |  
|Balance, February 29, 2004                                                                    | 13,340,522   |  | $ | 7,599,828 |  | $ | 62,529     |  | $ | (585,000   | ) | $ | 51,000     |   | $ | 1,593,025  |  | $ | (9,658,737  | ) | $ | (937,355   | )

SEE ACCOMPANYING NOTES

---

| | SENSE TECHNOLOGIES INC.                              | Schedule 1
| | ---------------------------------------------------- | ----------
| | SCHEDULE OF DIRECT COSTS                             |           
| | for the years ended February 29, 2004, 2002 and 2001 |           
| | (Stated in U.S. Dollars)                             |           

|                                   |   |         |  |   | (Restated |  |   |         | 
|---------------------------------- | - | ------- |  | - | --------- |  | - | ------- | 
|                                   |   |         |  |   |  Note 2) |  |   |         | 
|                                   |   | 2004    |  |   | 2003      |  |   | 2002    | 
|Direct costs                       |   |         |  |   |           |  |   |         | 
|Amortization of license
      fees | $ | -       |  | $ | -         |  | $ | 90,508  | 
|Cost of sales                      |   | 244,735 |  |   | 131,977   |  |   | 32,986  | 
|Manufacturing expenses             |   | 105,908 |  |   | 61,636    |  |   | 29,381  | 
|Product testing                    |   | -       |  |   | -         |  |   | -       | 
|Research and development           |   | 30,000  |  |   | -         |  |   | -       | 
|Royalties  Notes
      5 and 10   |   | 19,620  |  |   | 9,210     |  |   | 3,180   | 
|                                   |   |         |  |   |           |  |   |         | 
|                                   | $ | 400,263 |  | $ | 202,823   |  | $ | 156,055 | 

SEE ACCOMPANYING NOTES

---

SENSE TECHNOLOGIES INC.
  NOTES TO THE FINANCIAL STATEMENTS 
  February 29, 2004 and February 28, 2003 and 2002 
  (Stated in U.S. Dollars)

|Note 1 | Nature and Continuance
        of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | The Company holds an 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 on a going concern basis. As at February 29, 2004,
        the Company has a working capital deficiency of $307,101 and has accumulated
        a deficit of $9,658,737 since inception. Its ability to continue as a
        going concern is dependent upon the ability of the Company to maintain
        its license, to generate profitable operations in the future and/or to
        obtain the necessary financing to meet its obligations and repay its liabilities
        arising from normal business operations when they come due. The Company
        plans to satisfy its capital needs through revenue generated from its
        business operations and through equity offerings.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | 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 | Restatement of Previously
        Issued Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | Subsequent to issuing the
        financial statements for the year ended February 28, 2003, the Company
        became aware of an error in inventory count procedures causing inventory
        to be understated as at February 28, 2003. As a result of this error,
        the prior years financial statements have been restated. Inventory has
        been increased by $121,557 and deficit and cost of sales has been decreased
        by the same amount.                                                                                                                                                                                                                                                                                    
|      
|Note 3 | 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 judgement. Actual results may vary from these estimates.                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | The financial statements
        have, in management's opinion, been properly prepared within reasonable
        limits of materiality and within the framework of the significant accounting
        policies summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| | a) | Cash and Cash Equivalents                                                                                                                                                           
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                     
| |    | The Company considers all highly liquid instruments
        with a maturity of three months or less at the time of purchase to be
        cash equivalents and are recorded at cost.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 2

|Note 3 | Significant Accounting Policies 
      (cont'd)
|------ | ------------------------------------------------
|       |                                                 
|       | b)                                              
|       |                                                 
|       |                                                 
|       |                                                 
|       |                                                 

| |  |                        |   |         |  |   | (Restated | 
| |  | ---------------------- | - | ------- |  | - | --------- | 
| |  |                        |   |         |  |   |  Note 2) | 
| |  |                        |   | 2004    |  |   | 2003      | 
| |  |                        |   |         |  |   |           | 
| |  | Component parts        | $ | 547,161 |  | $ | 882,623   | 
| |  | Finished goods         |   | 49,814  |  |   | 101,342   | 
| |  | Manufacturing supplies |   | 150,531 |  |   | 57,872    | 
| |  |                        |   |         |  |   |           | 
| |  |                        | $ | 747,506 |  | $ | 1,041,837 | 

| | c) | 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.
| |    |                                                                                                                                                                                                                                                                                                                                                              
| | d) | Capital Assets and Amortization                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                              
| |    | Capital assets are recorded at cost. Amortization
        is provided using the declining balance method at the following rates:                                                                                                                                                                                                                             



|Computer equipment      | 30%
|----------------------- | ---
|Furniture and fixtures  | 20%
|Manufacturing equipment | 30%

| |    | Capital asset additions during the year are amortized
        at one-half rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | e) | 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 re-assessing 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.                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | 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. No impairment losses have been recorded.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 3

|Note 3 | Significant Accounting Policies 
      (cont'd)
|------ | ------------------------------------------------
|       |                                                 
|       | e)                                              
|       |                                                 
|       |                                                 

| |  |                                       |   |            |   |   | (Restated  |   |   |            |  
| |  | ------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |  |                                       |   |            |   |   |  Note 2)  |   |   |            |  
| |  |                                       |   | 2004       |   |   | 2003       |   |   | 2002       |  
| |  |                                       |   |            |   |   |            |   |   |            |  
| |  | Net loss as reported                  | $ | (1,248,034 | ) | $ | (1,529,979 | ) | $ | (1,630,892 | )
| |  | Add back amortization of license fees |   | -          |   |   | -          |   |   | 90,508     |  
| |  |                                       |   |            |   |   |            |   |   |            |  
| |  | As adjusted                           | $ | (1,248,034 | ) | $ | (1,529,979 | ) | $ | (1,540,384 | )
| |  |                                       |   |            |   |   |            |   |   |            |  
| |  | Basic and diluted loss per share as   |   |            |   |   |            |   |   |            |  
| |  | reported                              | $ | (0.17      | ) | $ | (0.22      | ) | $ | (0.27      | )
| |  |                                       |   |            |   |   |            |   |   |            |  
| |  | As adjusted                           | $ | (0.17      | ) | $ | (0.22      | ) | $ | (0.26      | )

| | f) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    | The functional 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.                                                                                                                                                                                                          
|
| | g) | 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.
|
| | h) | 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.                                                                                                                                                                                                                                                                    

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 4

|Note 3 | Significant Accounting Policies 
      (cont'd)
|------ | ------------------------------------------------
|       |                                                 
|       | i)                                              
|      
|       |                                                 
|      
|       | j)                                              
|      
|       |                                                 
|      
|       | k)                                              
|      
|       |                                                 
|       |                                                 
|       | 1)                                              
|       |                                                 
|       |                                                 
|       |                                                 
|       | m)                                              
|       |                                                 
|       |                                                 
|       |                                                 
|Note 4 | Capital Assets                                  

| |                         |   | 2004   |  |   | 2003         | 
| | ----------------------- | - | ------ |  | - | ------------ | 
| |                         |   |        |  |   | Accumulated  | 
| |                         |   | Cost   |  |   | Amortization | 
| |                         |   |        |  |   |              | 
| | Computer equipment      | $ | 38,297 |  | $ | 30,481       | 
| | Furniture and fixtures  |   | -      |  |   | 31,669       | 
| | Manufacturing equipment |   | 54,273 |  |   | -            | 
| |                         |   |        |  |   |              | 
| |                         | $ | 92,570 |  | $ | 62,150       | 

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 5

|Note 5 | Intangible Assets                                       |   |          |   |   |          |  
|------ | ------------------------------------------------------- | - | -------- | - | - | -------- | -
|       |                                                         |   |          |   |   |          |  
|       | Intangible assets are comprised as follows:             |   |          |   |   |          |  
|       |                                                         |   |          |   |   |          |  
|       | License Fees                                            |   |          |   |   |          |  
|       |                                                         |   |          |   |   |          |  
|       | Acquisition Consideration:                              |   | 2004     |   |   | 2003     |  
|       |                                                         |   |          |   |   |          |  
|       | Issuance of 5,220,190 escrow shares 
      at CDN$0.01 | $ | 36,088   |   | $ | 36,088   |  
|       | Issuance of 66,628 common shares on conversion of       |   |          |   |   |          |  
|       | promissory note payable                                 |   | 416,365  |   |   | 416,365  |  
|       |                                                         |   | 452,453  |   |   | 452,453  |  
|       | Less: accumulated amortization                          |   | (317,442 | ) |   | (317,442 | )
|       | Less: impairment write-down                             |   | (135,010 | ) |   | -        |  
|       |                                                         |   | 1        |   |   | 135,011  |  
|       | Patent costs                                            |   | 8,299    |   |   | 7,811    |  
|       |                                                         | $ | 8,300    |   | $ | 142,822  |  

| | License FeesBy 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 has been assigned the right, title, interest
        and obligations in a Licence Agreement dated January 16, 1992 to manufacture,
        market and distribute a microwave radar collision avoidance device for
        motor vehicles in consideration for the following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i)   | The payment of $416,365 for a licensing fee (issued
        a promissory note, which was converted to 66,628 common shares at $6.25
        per share);                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | ii)  | The issuance of 2,500,000 performance escrow shares
        (issued);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | iii) | The issuance of 2,880,000 performance escrow shares
        (2,720,190 issued) in consideration for residual marketing rights not
        granted in the original agreement. These performance escrow shares will
        not be earned out until after the aforementioned 2,500,000 performance
        escrow shares have been earned out;                                                                                                                                                                                                                                                                                
|
| | iv)  | A minimum payment of $65,000 per year for 5 years
        commencing October 24, 1998 and a further minimum payment of $48,000 for
        the 6 th year in a patent defence fund (total payments $373,000). In addition,
        the Company and the licensor agree to contribute equally to the patent
        defence fund in the amount of $1.00 per unit until the total in the patent
        defence funds equals $1,000,000. The payments of $65,000 due October 24,
        1998, 1999, 2000, 2001 and 2002 were not remitted and the licensor has
        agreed to waive the payments to the patent defence fund;

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 6

|Note 5 | Intangible Assets (cont'd)
|------ | ---------------------------
|       |                            
|       | License Fees  (cont'd)    

| | v)    | Various royalty payments to the licensors:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | Should the Company
        obtain a royalty agreement with an original equipment manufacturer, whereby
        the manufacturer produces the product for its own equipment, the royalty
        shall be shared as to one-third to the Company and two-thirds to the licensors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | vi)   | The Company must
        manufacture and sell a minimum number of units as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | In the event that
        the Company defaults on the minimum quantities of units to be manufactured
        and sold, it shall have a period of sixty days to cure same from the date
        of receipt of a written notice of the default is delivered by the Licensors.
        At the option of the Company, the Company may maintain the license in
        good standing by paying to the Licensors the royalty payment that would
        normally have been paid if the Company had met its minimum quantities
        of units to be manufactured and sold. In the event that the minimum quantities
        are not manufactured and sold or the royalties are not paid in lieu as
        agreed to therein, the Company will lose any exclusivity it holds. As
        at February 29, 2004, the Company accrued a minimum royalty charge of
        $480,000;
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | vii)  | Deliver to the
        licensors, at no cost to the licensors, a total of 200 units from the
        first production run (delivered);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | viii) | Grant to the licensors
        the right to purchase units at cost plus 10% from any manufacturing facility
        controlled by the Company in order to address the markets excluded from
        the license.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 7

|Note 6 | Accounts Payable Note 10
|------ | -------------------------

|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2004     |   |   | 2003        |  
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | - | - | ----------- | -
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       | Trade payables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ | 219,345  |   | $ | 244,050     |  
|       | Accrued
      fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 68,351   |   |   | 25,220      |  
|       | Accrued payroll                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 64,843   |   |   | 19,695      |  
|       | Accrued
      interest payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 34,364   |   |   | 269,935     |  
|       | Accrued royalty payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 480,000  |   |   | 180,000     |  
|       | Accrued
      taxes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 19,022   |   |   | 19,022      |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $ | 885,925  |   | $ | 757,922     |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|Note 7 | Convertible Promissory Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |          |   |   |             |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2004     |   |   | 2003        |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       | Promissory notes payable due to a director
        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 at the rate of one common share for each $0.29 of principal
        balance.                                                                                                                                                                                                                             | $ | 30,000   |   | $ | -           |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       | Series B secured promissory notes payable
        bearing interest at 10% per annum and are payable on demand, along with
        accrued interest thereon, on or after August 30, 2005. These notes plus
        accrued interest, may be redeemed at any time after August 30, 2005. These
        notes, secured by a charge over the Company's inventory, may be converted
        into common shares of the Company at any time prior to demand for payment
        at the rate of one common share for each $0.29 of principal balance. |   | 638,974  |   |   | -           |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       | Unsecured promissory notes bearing interest
        at 10% per annum. These notes have matured and the holders thereof have
        received default judgements against the Company. On September 22, 2003,
        the holders of notes totalling $1,276,000 agreed to convert their notes
        to Class A preferred shares of the Company (Note 8).                                                                                                                                                                                      |   | 50,000   |   |   | 1,326,000   |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       | Series A secured promissory notes bearing
        interest at 10% per annum and maturing on various dates up to January
        16, 2004. These notes were convertible into common shares of the Company
        at the rate of one common share for each $1.00 of principal held. During
        the year ended February 29, 2004, the holders of these notes converted
        these notes into Series B convertible promissory notes.                                                                                                      |   | -        |   |   | 560,000     |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 718,974  |   |   | 1,886,000   |  
|       | Less: current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | ( 50,000 | ) |   | ( 1,861,000 | )
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |   |   |             |  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $ | 668,974  |   | $ | 25,000      |  

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 8

|Note 8 | Common Stock
|------ | ------------
|       |             
|       | a)          
|      
|       |             
|      
|       | b)          
|      
|       |             
|      
|       | c)          
|      
|       |             
|      
|       |             

| |  |                                                           | February 29, 2004
| |  | --------------------------------------------------------- | -----------------
| |  |                                                           |                  
| |  |                                                           |                  
| |  |                                                           |                  
| |  |                                                           | Shares           
| |  |                                                           |                  
| |  | Outstanding and exercisable at beginning
      of period  | 2,280,000        
| |  | Previously granted options vesting during the period      | 100,000          
| |  | Granted                                                   | 50,000           
| |  | Expired                                                   | (10,000          
| |  | Less: Share purchase options not vested                   | (25,000          
| |  | Cancelled                                                 | (1,405,000       
| |  | Previously granted options cancelled and
      not vested | 225,000          
| |  |                                                           |                  
| |  | Outstanding and exercisable at end of the
      period    | 1,215,000        



---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 9

|Note 8 | Common Stock  (cont'd)
|------ | -----------------------
|       |                        
|       | c)                     
|      
|       |                        

| |  |                                                          | February 28, 2003
| |  | -------------------------------------------------------- | -----------------
| |  |                                                          |                  
| |  |                                                          |                  
| |  |                                                          |                  
| |  |                                                          | Shares           
| |  |                                                          |                  
| |  | Outstanding and exercisable at beginning
      of period | 1,385,000        
| |  | Granted                                                  | 1,800,000        
| |  | Less: Share purchase options not vested                  | (325,000         
| |  | Cancelled                                                | (580,000         
| |  |                                                          |                  
| |  | Outstanding and exercisable at end of the period         | 2,280,000        
| |  |                                                          |                  
| |  |                                                          |                  
| |  |                                                          | February 28, 2002
| |  |                                                          |                  
| |  |                                                          |                  
| |  |                                                          |                  
| |  |                                                          | Shares           
| |  |                                                          |                  
| |  | Outstanding and exercisable at beginning
      of period | 960,000          
| |  | Granted                                                  | 1,570,000        
| |  | Exercised                                                | 200,000          
| |  | Cancelled                                                | (945,000         
| |  |                                                          |                  
| |  | Outstanding and exercisable at end of the period         | 1,385,000        

| |  | 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.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 10

|Note 8 | Common Stock  (cont'd)
|------ | -----------------------
|       |                        
|       | c)                     
|      
|       |                        
|      
|       |                        

| |  |                                                                                                                                |   | 2004       |   |   | 2003       |   |   | 2002       |  
| |  | ------------------------------------------------------------------------------------------------------------------------------ | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |  |                                                                                                                                |   |            |   |   |            |   |   |            |  
| |  | Net loss                                                                                                                       | $ | (1,248,034 | ) | $ | (1,529,979 | ) | $ | (1,630,892 | )
| |  | Pro-forma adjustment for SFAS 123                                                                                              |   | -          |   |   | (764,000   | ) |   | (1,525,150 | )
| |  |                                                                                                                                |   |            |   |   |            |   |   |            |  
| |  | Pro-forma net loss                                                                                                             | $ | (1,248,034 | ) | $ | (2,293,979 | ) | $ | (3,156,042 | )
| |  |                                                                                                                                |   |            |   |   |            |   |   |            |  
| |  | Pro-forma net loss per share                                                                                                   | $ | (1.17      | ) | $ | (0.32      | ) | $ | (0.53      | )
| |  |                                                                                                                               
| |  | The fair value for these options was estimated
      at the date of the grant using the following weighted average assumption:

| |  |                                                                                                                                                                                                                                  | 2004 |  | 2003 |  | 2002 | 
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- |  | ---- | 
| |  |                                                                                                                                                                                                                                  |      |  |      |  |      | 
| |  | Volatility factor of expected market                                                                                                                                                                                             |      |  |      |  |      | 
| |  | price of company's shares                                                                                                                                                                                                        | -    |  | 173% |  | 118% | 
| |  | Dividend yield                                                                                                                                                                                                                   | -    |  | 0%   |  | 0%   | 
| |  | Weighted average expected life of                                                                                                                                                                                                |      |  |      |  |      | 
| |  | stock options                                                                                                                                                                                                                    | -    |  | 5yrs |  | 5yrs | 
| |  | Risk-free interest rate                                                                                                                                                                                                          | -    |  | 2%   |  | 6.5% | 
| |  |                                                                                                                                                                                                                                 
| |  | A non-cash compensation charge
        of $5,250, associated with the granting of options to a consultant, has
        been recognized in the financial statements for the year ended February
        29, 2004 (2003: $52,000).

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 11

|Note 8 | Common Stock  (cont'd)
|------ | -----------------------
|       |                        
|       | c)                     
|      
|       |                        
|      
|       |                        

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2004  | 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       | 
| |  | Volatility factor of expected market price
      of company's shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 157%  | 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       | 
| |  | Dividend yield                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 0%    | 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       | 
| |  | Weighted average expected life of stock
      options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 5yrs  | 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       | 
| |  | Risk-free interest rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 1.25% | 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | The Black-Scholes option valuation
        model was developed for use in estimating the fair value of traded options
        which have no vesting restrictions and are fully transferable. In addition,
        option valuation models require the input of highly subjective assumptions,
        including expected share price volatility. The Company's employee stock
        options have characteristics significantly different from those of traded
        options, and changes in the subjective input assumptions can materially
        affect fair value estimates.
      At February 29, 2004, the following employee and director
        common share purchase options were outstanding entitling the holders thereof
        the right to purchase one common share for each share purchase option
        held:

| |  | Number                                                                                                                                                                                                                                           |  | Exercise Price |  | Expiry Date        | 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- |  | ------------------ | 
| |  |                                                                                                                                                                                                                                                  |  |                |  |                    | 
| |  | 15,000                                                                                                                                                                                                                                           |  | $1.03          |  | June 25, 2004      | 
| |  | 25,000                                                                                                                                                                                                                                           |  | $1.03          |  | June 8, 2005       | 
| |  | 300,000                                                                                                                                                                                                                                          |  | $1.03          |  | August 4, 2005     | 
| |  | 25,000                                                                                                                                                                                                                                           |  | $1.03          |  | January 8, 2006    | 
| |  | 25,000                                                                                                                                                                                                                                           |  | $1.03          |  | March 22, 2006     | 
| |  | 450,000                                                                                                                                                                                                                                          |  | $2.30          |  | December 18, 2006  | 
| |  | 50,000                                                                                                                                                                                                                                           |  | $2.30          |  | January 10, 2007   | 
| |  | 100,000                                                                                                                                                                                                                                          |  | $0.75          |  | September 26, 2007 | 
| |  | 200,000                                                                                                                                                                                                                                          |  | $1.00          |  | February 1, 2008   | 
| |  | 25,000                                                                                                                                                                                                                                           |  | $1.00          |  | March 14, 2008     | 
| |  |                                                                                                                                                                                                                                                  |  |                |  |                    | 
| |  | 1,215,000                                                                                                                                                                                                                                        |  |                |  |                    | 
| |  |                                                                                                                                                                                                                                                 
| |  | Common Stock Subscribed
      As at February 29, 2004, the Company has received $51,000
        in respect of private placements of 340,000 common shares at $0.15 per
        share. As at February 29, 2004, these shares had not been issued.

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 12

|Note 8  | Common
        Stock  (cont'd)                                                                                                                                                                                                                                                                                                                                           
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                           
|        | c)                                                                                                                                                                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                           
|Note 9  | Promissory
        Note Receivable                                                                                                                                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                                                           
|        | The promissory
        note in the principal amount of $585,000 (2003: $585,000) is due from
        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 Notes 7 and 9                                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                           
|        | The Company
        incurred the following items with directors, shareholders and companies
        with common directors and shareholders:                                                                                                                                                                                                                               

| |                                |   | 2003    |   |   | 2002    |   |   | 2001    |  
| | ------------------------------ | - | ------- | - | - | ------- | - | - | ------- | -
| |                                |   |         |   |   |         |   |   |         |  
| | Advertising and marketing      | $ | -       |   | $ | 72,249  |   | $ | -       |  
| | Consulting fees                | $ | 1,250   |   | $ | 6,346   |   | $ | -       |  
| | Interest on long-term debt     | $ | 4,314   |   | $ | 3,675   |   | $ | -       |  
| | Interest income                | $ | (52,650 | ) | $ | (52,650 | ) | $ | (54,736 | )
| | Licence fees                   |   | 280,380 |   | $ | 170,790 |   | $ | 126,199 |  
| | Provision for accrued interest |   |         |   |   |         |   |   |         |  
| | receivable                     | $ | 52,650  |   | $ | 52,650  |   | $ | 212,981 |  
| | Royalty expense                | $ | 19,620  |   | $ | 9,210   |   | $ | 3,180   |  
| | Research and development       | $ | 30,000  |   | $ | -       |   | $ | -       |  
| | Sales                          | $ | -       |   | $ | (68,435 | ) | $ | (72,411 | )
| | Wages and benefits             | $ | 165,722 |   | $ | 153,228 |   | $ | -       |  

| | The above noted items were measured by the exchange
        amount which is the amount agreed upon by the transacting parties.
      As at February 29, 2004, included in accounts receivable
        is $3,518 (2003: $38,237) due from a company with a common shareholder.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 13

|Note 10 | Related Party Transactions Notes 7 and 9  (cont'd)                                                                                                                                                                                                                                                                                                                                                                                 
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | As at February 29, 2004,
        included in accounts payable is $60,900 (2003: $69,985) owing to directors,
        companies with common directors and a shareholder with respect to unpaid
        fees, purchases and expenses, $480,000 (2003: $180,000) owing to shareholders
        in respect of royalties payable and $64,843 (2003: $Nil) owing to the
        former president of the Company in respect of unpaid wages.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | As at February 29, 2004,
        included in convertible promissory notes payable is $74,000 (2003: $77,000)
        due to directors.                                                                                                                                                                                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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:                                                                                                                       

| | Deferred tax assets                               |   |            |  
| | ------------------------------------------------- | - | ---------- | -
| | Net operating
      loss carryforwards            | $ | 2,855,809  |  
| | Valuation
      allowance for deferred tax assets |   | (2,855,809 | )
| |                                                   |   |            |  
| | 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 29, 2004, the
        Company had net operating loss carryforwards of approximately $7,500,000
        for federal income tax purposes. These carryforwards, if not utilized
        to offset taxable income, begin to expire in 2005.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Note 12 | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | In accordance with the terms
        of a development and consulting agreement dated May 2, 1997, the Company
        has agreed to pay a royalty of $0.50 for each unit sold of the backup
        radar collision avoidance device up to a maximum of 200,000 units.                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Note 13 | Supplemental Cash Flow
        Disclosures                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | Non-cash Transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 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:                                                                                                                                                                                                                                                       

---

Sense Technologies Inc. 
  Notes to the Financial Statements 
  February 29, 2004 and February 28, 2003 and 2002
  (Stated in US Dollars)  Page 14

|Note 13 | Supplemental Cash
        Flow Disclosures  (cont'd)                                                
|------- | -----------------------------------------------------------------------------------------------------
|        |                                                                                                      
|        | Non-cash Transactions:
         (cont'd)
      During the year ended February 28, 2004, the Company:
|        |                                                                                                      
|        | i)                                                                                                   
|       
|        | ii)                                                                                                  
|       
|        | iii)                                                                                                 
|       
|        | iv)                                                                                                  

|        | During the year ended February
        29, 2003, the Company issued 10,000 common shares at $1.05 per share pursuant
        to an agreement to settle debt totalling $10,500.                                                                                                                                                                     
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                    
|        | During the year ended February
        28, 2002, the Company issued 59,406 common shares at $4.04 per share pursuant
        to agreements to settle debt totalling $240,000.                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                    
|Note 14 | Major Customer                                                                                                                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                    
|        | One customer of the Company
        accounted for approximately 63% of the sales for the year ended February
        29, 2004. (2003: 24%)                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                    
|Note 15 | Subsequent Event                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                    
|        | Subsequent to February 29,
        2004, the Company received subscription agreements for the issuance of
        1,010,000 units at $0.05 per unit. Each unit consists of one common share
        and one share purchase warrant entitling the holder thereof to purchase
        an additional common share for $0.15 for a period of 18 months.

---