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


                                   Form 10-KSB

(Mark One)

[x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2004

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

                  For the transition period from _____ to _____


                        Commission file number: 333-87293


                              SENSE HOLDINGS, INC.
                          -----------------------------
                 (Name of Small Business Issuer in Its Charter)


                 FLORIDA                                   82-0326560
                 -------                                   ----------
      (State or Other Jurisdiction of                   (I.R.S. Employer
      Incorporation or Organization)                   Identification No.)


             4503 NW 103RD AVENUE, SUITE 200, SUNRISE, FLORIDA 33351
             -------------------------------------------------------
               (Address of Principal Executive Offices)(Zip Code)


Issuer's Telephone Number, Including Area Code:   (954) 726-1422

Securities registered under Section 12(b) of the Exchange Act:

      Title of each class        Name of each exchange on which registered

      _______NONE________        __________________NONE___________________

Securities registered under Section 12(g) of the Exchange Act:

      ________________________________NONE________________________________
                                (Title of class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X] No []

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
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. [X]

         State issuer's revenues for its most recent fiscal year. $139,321 for
the 12 months ended December 31, 2004.

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked prices of such common
equity, as of a specified date within the past 60 days. $6,487,179 as of April
11, 2005

         State the number of shares outstanding of each of the issuer's class of
common equity, as of the latest practicable date. As of April 13 2005,
33,322,858 shares of common stock are issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").

Transitional Small Business Disclosure Form (check one):  Yes ___   No _X_

<PAGE>

                                TABLE OF CONTENTS
                                                                            Page
PART I

Item 1.  Description of Business............................................  1

Item 2.  Description of Properties...........................................17

Item 3.  Legal Proceedings...................................................17

Item 4.  Submission of Matters to a Vote of Security Holders.................17


PART II

Item 5.  Market for Common Equity and Related Shareholder Matters............17

Item 6.  Management's Discussion and Analysis or Plan of Operation...........18

Item 7.  Financial Statements................................................F-1

Item 8.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure Statements.....................................24

Item 8A. Controls And Procedures.............................................24

Item 8B. Other Information...................................................25

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act...................25

Item 10. Executive Compensation..............................................28

Item 11. Security Ownership of Certain Beneficial Owners and Management......31

Item 12. Certain Relationships and Related Transactions......................32

Item 13. Exhibits............................................................33

Item 14. Principal Accountant Fees And Services..............................34

Signatures ..................................................................35


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           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

         Certain statements in this annual report contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to implement our strategic
initiatives, economic, political and market conditions and fluctuations,
government and industry regulation, interest rate risk, U.S. and global
competition, and other factors. Most of these factors are difficult to predict
accurately and are generally beyond our control. You should consider the areas
of risk described in connection with any forward-looking statements that may be
made herein. Readers are cautioned not to place undue reliance on these
forward-looking statements and readers should carefully review this annual
report in its entirety, including the risks described in "Risk Factors." Except
for our ongoing obligations to disclose material information under the Federal
securities laws, we undertake no obligation to release publicly any revisions to
any forward-looking statements, to report events or to report the occurrence of
unanticipated events. These forward-looking statements speak only as of the date
of this annual report, and you should not rely on these statements without also
considering the risks and uncertainties associated with these statements and our
business.

         When used in this annual report, the terms the "Company," "we," "us,"
"ours," and similar terms refers to Sense Holdings, Inc., a Florida corporation,
and our subsidiary.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

BACKGROUND

We design, develop, manufacture and sell fingerprint-based identification
products and systems that incorporate state-of-the-art biometric technology to
verify a person's identity. We have developed two turnkey integrated
applications that incorporate our proprietary BioClock(R) hardware platform:

o        Our "CheckPrint(R) T/A" systems are designed primarily for use by
         employers who desire to verify the presence of employees at the
         workplace, and to monitor their time and attendance at work; and,

o        Our "CheckPrint(R) A/C" systems are designed to permit access to locked
         buildings, offices or other secured areas only to selected individuals,
         whose identities can be verified using our fingerprint identification
         software.

We also own, license or have optioned for purchase the following additional
security-related technologies:

o        Micro Electro Mechanical Sensors, or MEMS, technology for use in the
         field of explosive detection. We believe that this technology will
         enable us to develop products for governmental use, as well as for
         security-related applications including airport security. No products
         have yet been developed incorporating these technologies, however we
         plan on funding final development stage at Oak Ridge National
         Laboratories during the second quarter of 2005 and we are targeting a
         completion date of September 2006 to launch products to the
         marketplace.

o        We acquired (subject to payment obligations) to purchase patented
         technology that provides "keyless" access and operation of a motor
         vehicle. "Keyless" access and operation is accomplished through use of
         a biometric identification system. During the term of the option
         agreement we have been designated as the exclusive sales, marketing and
         representation agent for the patented technology. (See Option to
         Purchase Keyless Operation Of Vehicle Patent below)

Our modest revenue-generation to date has been derived primarily from our sales
of our biometric BioClock(R) and CheckPrint(R) products. These sales have taken
place for the most part to a few major customers. As such we are dependent upon
the few major customers and any disruption in that business will significantly
decrease our sale revenues if other business is not secured. Our negative
financial results have been due, in substantial part, to a lack of capital
necessary to commence aggressive marketing programs. While we have funded our
growth to date through the sale of our debt and equity securities, we require
operating revenues or alternative financing in order to fully implement our
business plan and achieve profitability.

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<PAGE>

BIOMETRICS INDUSTRY

The use of unique physical traits to verify a person's identity is known as
biometric identification. Biometric identification includes fingerprinting, hand
geometry, iris scanning, retinal scanning, voice recognition, face recognition
and signature analysis. Biometric technology has been used for decades in
government and law enforcement applications. Until recently, these systems were
too expensive to manufacture to make retail marketing realistic. However, with
the introduction of more powerful computers and the development of more advanced
software applications, biometric identification techniques can be adapted for
commercial purposes on an economically feasible basis. In addition, there is
currently a much greater awareness of biometrics as it relates to security
applications.

There are many alternatives in the biometric industry that include, but are not
limited to, fingerprint recognition, facial recognition, voice recognition and
palm recognition,iris scanning and retinal scanning. Many providers have used
the different methods in different applications. To date, applications include
time and attendance, access control, crowd scanning and computer access. The
industry is in its infancy regarding applications however the technology
regarding biometric detection is a rapidly maturing science. Presently, there
are many companies entering the biometric detection and application industry
while many other companies have failed at trying to create a marketable product.
There are few companies that have been in the industry for multiple years and
continue to use their experience to market biometric detection devices and
applications.

We believe that fingerprint identification is far more effective in
authenticating employees' actual attendance at work than traditional time clock
verification. By authenticating a person's identity, biometric identification
can substantially reduce incidents of employee fraud inherent in the use of
other forms of employee identification and attendance verification, such as
punch clocks. We also believe that fingerprint verification is less intrusive,
more widely accepted and more cost effective than other available forms of
biometric identification. Also, the use of biometrics for access control is
becoming widely accepted in the marketplace. This is especially true for access
to sensitive workspaces like an airport tarmac.

Many factors, including recent world events, have created increased demand for
new biometric applications to secure access, not only to physical areas, but
also sensitive data. Among the applications that are being developed are the use
of biometrics to validate the identities of individuals at security checkpoints
before boarding a plane, entering a building, crossing a border, and accessing a
computer.

PRODUCTS AND SYSTEMS

BIOCLOCK(R)

Our biometric systems are designed and built around our proprietary hardware
platform known as BioClock(R), a stand-alone platform, or completely network
enabled system, that replaces a traditional wall-mounted or freestanding swipe
or punch-card time clock. Identity verification is accomplished by comparing an
individual's scanned and digitized fingerprint to the fingerprint profile stored
in a computer database. The user's fingerprint is scanned by means of a
silicon-based reader with sensors that capture the fingerprint image. The image
is then converted into data that is stored in the system's computer database,
and saved as a reference for comparison to the fingerprint offered for
identification.

BioClock(R) replaces traditional identification devices such as: swipe cards;
punch cards; PIN numbers; or, passwords that can be stolen or voluntarily
provided by the owner to another person. Alternatively, BioClock(R) can be used
in conjunction with traditional identification devices for added security. We
have made our systems modular so the user can choose which parts of the
technology they wish to use. In addition, we have designed our systems to be
compatible with many existing technologies so that they can be integrated into
an existing system in a seamless fashion. As a result, we believe BioClock(R)
reduces incidents of fraud associated with traditional identification systems
that do not effectively preclude individuals from using another person's means
of identification while keeping integration hurdles and costs down.

We have also developed two integrated hardware and software applications that
incorporate BioClock(R) in an "off the shelf" configuration for performing time
and attendance and access control.

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<PAGE>

CheckPrint(R) T/A

Our time and attendance systems, which are marketed under the name,
CheckPrint(R) T/A:

   o  Use fingerprint verification to authenticate the identity of employees
      when they arrive at and leave work;

   o  Gather data, including the time each employee attends work and what areas
      were accessed by an employee;

   o  Perform payroll functions and other record keeping calculations using the
      data that is gathered;

   o  Provide electronic export capability to over 150 independent third-party
      payroll service providers to facilitate the use of automated payroll
      checks between Sense customers and their payroll service provider;

   o  Generate logs and reports, including 60 standard reports; and

   o  Perform other functions including employee scheduling, job cost analysis,
      editing time punches, electronic calculations and related record keeping.

Our standard CheckPrint(R) T/A systems include a 100 person user base. We are
currently developing data base management capabilities for larger numbers of
employees, while maintaining system accuracy. These developments include the use
of a PIN number in conjunction with biometrics, that make the number of users
only limited by the data storage capacity of the system, without adverse effects
on accuracy.

CheckPrint(R) A/C

Our access control systems, which are marketed under the name CheckPrint(R) A/C,
are security systems that permit access to locked buildings, offices or other
secured areas only to those whose identities can be verified, using our
proprietary fingerprint identification software. Our CheckPrint(R) A/C systems,
which can be used with or without Smart Card technology, can be programmed for
different levels of security, permitting access only to recognized individuals
who have the requisite level of security clearance. Our current version of
CheckPrint(R) A/C system incorporates access control capability for single door
access. We are developing software application infrastructure that will enable a
single CheckPrint(R) A/C system to control access to multiple locations. We
market CheckPrint(R) A/C at a higher price than CheckPrint(R) T/A, to reflect
the increased level of technology and functionality provided by CheckPrint(R)
A/C.

CheckPrint(R) ATAC

Our access control systems and time and attendance systems have been combined
into one product offering both capabilities. We market this combined product
under the name CheckPrint(R) ATAC. The combined system can be used with or
without Smart Card technology. The system incorporates time and attendance and
access control capability for multiple doors at multiple locations. We market
CheckPrint(R) ATAC at a higher price than CheckPrint(R) A/C, to reflect the
increased level of technology and functionality.

BDS

We have developed software into a Biometric Distribution Server. We market this
software in combination with our other systems under the name CheckPrint(R) BDS.
The software allows our systems to operate in a multi-unit configuration. Thus
many remote sites can be managed from a central database. We believe the
CheckPrint(R) BDS application is a significant enhancement to our core product
offering and the field of biometrics.We have applied for patent protection with
the United States Patent and Trademark office and are currently protected by
Patent Pending.

We have also developed and are marketing:

      o  CheckPrint(R) SDK, a software development kit for biometrics that
         enables purchasers and licensees to create custom applications for our
         software and hardware. The SDK was developed to work in conjunction
         with our hardware and assists developers in the creation of robust
         biometric fingerprint applications. The SDK is separated into 3
         categories - imaging, algorithm, and database. We believe that a
         successful deployment of an SDK application by a purchaser or licensee
         may lead to increased sales of our hardware products.

      o  CheckPrint(R) DTU, provides users with the ability to secure a computer
         terminal, and files and folders, via fingerprint identification. The
         hardware is a stand-alone peripheral that can be connected to a port on
         an existing computer to permit fingerprint identification.

                                        3
<PAGE>

      o  CheckPrint(R) SDTU, provides users the ability to secure a computer
         terminal with fingerprint biometric technology and a smart card. The
         hardware is a stand-alone peripheral that can be connected to a port on
         an existing computer to permit fingerprint identification. There are
         many applications that can be written around the secure data storage
         capability of a smart card that is unlocked by a fingerprint biometric
         signature. For example, in a university setting information such as
         meal plan credits can be stored on the smart card and deducted as used
         by the biometrically identified user.

The Bill of Materials and all associated design advantages for BioClock(R) are
kept strictly confidential and protected by trade secret laws of the United
States and Florida. In addition, all of the CheckPrint(R) software required to
run the hardware platform in Sense's configuration enjoys protection under the
copyright laws of the United States.

PRODUCT DEVELOPMENT, MANUFACTURING AND ASSEMBLY

CheckPrint(R) T/A is configured, as a stand alone unit comprised of a TFT Flat
Panel display, internal computer, keypad, and silicon fingerprint reader.
CheckPrint(R) T/A automatically authenticates the employee's identity; tracks
total hours, and calculates the correct pay rates. Sense offers CheckPrint(R)
T/A models to support any size employee base.

We design, develop, manufacture, and sell the CheckPrint(R) T/A security
solution. We have developed time and attendance, access control and security
system software applications, as well as a complete hardware system solution
based on a Pentium(R) PC processor backbone. Our products work in a network
environment and we can connect to any existing network infrastructure or we can
setup the network at the customer's request. Data is transmitted through TCP/IP
protocol and we can link unlimited CheckPrint(R) T/A units together in any
environment or facility. Sense also can remotely communicate with other
CheckPrint(R) T/A units using a modem which transmits required data over the
standard telephone lines. The CheckPrint(R) T/A systems are unsupervised
security and clock-in stations replacing the standard wall mounted time clock or
swipe systems. An employee or another authorized user uses his or her
fingerprint to replace a password, PIN or swipe card.

CheckPrint(R) T/A systems and CheckPrint(R) A/C systems are driven by our
proprietary software. We believe that the software components for our biometric
identification systems are proprietary because the software was developed by our
technical staff, and all rights to the creation of these software applications
have been assigned to the company. The source code for the software is our
proprietary property. All employees are under a contractual obligation, and /or
the work for hire doctrine, to assign their intellectual property rights to
Sense. This software enables our systems to gather, filter and sort data,
generate reports from the data and compute payroll information for export to
third party payroll services.

Most of the hardware components for our biometric systems are off-the shelf, and
we are not dependent on any one vendor for these components. However, certain
hardware components have been designed by our in-house engineering staff or
designed to our specifications as works for hire by independent contractors. We
have entered into an agreement with Test Systems Engineering, under which Test
Systems Engineering has designed, engineered and configured some of our hardware
components for CheckPrint(R) T/A and CheckPrint(R) A/C systems. They are a
valuable outsource for many engineering tasks and have a state of the art design
and manufacturing facility. All product testing and assembly is performed
"in-house" in order to maintain quality control. Our agreement with Test Systems
Engineering terminates on December 31, 2005, and may be automatically renewed
for consecutive one-year terms. For its services, Test Systems Engineering
receives a fee payable at the rate of $75 per hour. We are not dependent on Test
Systems Engineering for its services.

Our biometric systems currently incorporate a silicon-based fingerprint scanner
with sensors to capture a user's fingerprint. Related software then compares the
user's fingerprint to the digitized reference sample stored in the system's
database, and verifies the user's identity. The silicon-based technology is used
in conjunction with our own software that interfaces between the silicon product
and our biometric systems. We currently purchase the silicon-based technology
from an independent supplier. We believe that this supplier is able to provide
us with our foreseeable requirements for these components. We are not dependent
on the supplier for our sensor needs.

                                        4
<PAGE>

On September 9, 1999, we entered into an agreement with Integrated Design, Inc.
under which Integrated Design developed a software program to enable the payroll
data produced by CheckPrint(R) T/A to be exported to over 150 third party
payroll services such as ADP and Paychex. We have licensed the software from
Integrated Design and are required to pay license fees on a per user basis. This
fee is incorporated into the cost of our overall product. Integrated Design was
paid a $10,000 software development fee to customize their software to our
application. The software development agreement is for a term of five years, the
agreement automatically renews on the five year anniversaries unless either
party notifies the other before the end of the then current term, but may be
canceled by either party on 90 days written notice. The agreement also provides
us access to the software and allows us to continue to use Integrated Design's
software in the event of such company's dissolution, bankruptcy or similar
events. If our agreement with Integrated Design terminates, we will incur time
and expense to develop alternative software links for data export. Delays in the
successful development of alternative software links could adversely affect us.

ACQUISITION OF MICRO SENSOR TECHNOLOGIES, INC. AND THE MEMS TECHNOLOGY

On May 31, 2001, we acquired all of the outstanding shares of Micro Sensor
Technologies, Inc., a Florida corporation ("Micro Sensor"). The shares were
acquired from UTEK Corporation and UT-Battelle LLC, the shareholders of Micro
Sensor, in a stock-for-stock exchange, for total consideration of 2,000,000
shares of our common stock. Following the acquisition, Micro Sensor became our
wholly-owned subsidiary, and we indirectly acquired the rights and obligations
of Micro Sensor under various agreements to which it is a party, including a
Patent License Agreement with UT-Battelle LLC, a presently expired Consulting
Agreement with Dr. Thomas Thundat and a presently expired Work for Others
Agreement with UT-Battelle LLC. UT-Battelle LLC is the technology transfer
management company created at Oak Ridge National Laboratory. Pursuant to the
stock-for stock transfer, UTEK received 1,850,000 common shares of Sense and
UT-Battelle received 150,000 common shares of Sense.

Under the Patent License Agreement, Micro Sensor became the exclusive licensee
of UT-Battelle with respect to certain patented technology owned by UT-Battelle
relating to the use, sale or offer for sale of intellectual property
incorporating MEMS sensors for the detection of explosives. Micro Electro
Mechanical Sensors, or MEMS, are comprised of micro cantilevers that molecules
of explosive material attach to, thus causing the cantilevers to diffract or
bend. When diffraction is detected, the sensors are alerted to the presence of
an explosive molecule. This technology thus assists in the detection of
unexploded ordinance including bombs, grenades, shells, rockets, and other
explosive devices either placed as mines or fallen as projectiles whether buried
or camouflaged.

The exclusive license from UT-Battelle does not include explosive detection for
security applications, including airport security. However, Micro Sensor has
been granted a non-exclusive license to use the technology for security-related
applications. UT-Battelle acquired the licensed rights under a contract with the
United States Department of Energy, pursuant to which the technology was
developed at the Oak Ridge National Laboratory in Oak Ridge, Tennessee.

Under the License Agreement, Micro Sensor is obligated to pay UT-Battelle an
amount equal to 2.5% of net sales of products incorporating the licensed
technology, subject to minimum annual royalties ranging from $5,000 during the
third year of the license term to $25,000 for the seventh year of the term and
thereafter. The anniversary of the third year of the license agreement began on
March 26th, 2004. However, UT-Battelle has granted a three-month extension of
the required minimum royalty. On July 26th, 2004 Sense paid a minimum royalty
payment of $6,125 to UT-Battelle. Subsequent payments are due on the anniversary
of the July 26th payment as follows: year 4 $10,000; year 5 $15,000; year 6
$20,000; and, year 7 and each remaining year thereafter $25,000. If the
technology is sublicensed to third parties, a sublicense royalty fee equal to
50% of the sublicenses received by Micro Sensor must be paid to UT-Battelle. The
term of the license agreement expires upon termination of the last-to-expire of
the proprietary rights granted under the agreement, subject to earlier
termination in the event of an uncured breach of the agreement by either party.
No products have yet been developed from the technology, and we do not know if
the acquired technology can be successfully incorporated into commercially
feasible products or whether any such products can be successfully marketed.

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<PAGE>

Oak Ridge National Laboratory continues its research and development efforts
toward a commercially viable Micro Sensor to be incorporated into our product
line of sensors. We are engineering systems and hardware to incorporate the
sensor, as envisioned, into handheld explosive detection devices. Dr. Panos
Datskos, a research scientist at UT-Battelle, serves as our liaison and as a
member of Executive Advisory Board. As of this date, Sense Holdings, Inc. is
contemplating entering into a "CRADA" Collaborative Research and Development
Agreement with Oak Ridge National Laboratory and UT Battelle under which all
future development funded by Sense Holdings, Inc in conjunction with the newly
formed CRADA agreement will be the property of Sense Holdings. Sense Holdings is
also in negotiation with UT Battelle and Oak Ridge National Laboratory to expand
current license rights and expanded fields of use for explosive detection
technologies as well as Chemical and Biological weaponry and Narcotics
detection.

OPTION TO PURCHASE KEYLESS OPERATION OF VEHICLE PATENT

Effective March 1, 2004, we acquired a nine-month option (subject to payment
obligations) to purchase patented technology that provides "keyless" access and
operation of a motor vehicle. "Keyless" access and operation is accomplished
through use of a biometric identification system. During the term of the option
agreement we have been designated as the exclusive sales, marketing and
representation agent for the patented technology.

The patented technology verifies a user's identity using any form of biometrics.
Once identity is verified, the user gains access to the vehicle and is able to
operate it. The technology is also capable of controlling critical functions of
the vehicle, such as ignition, fuel injection and transmission engagement.
Potential uses for the patented technology extend to automobiles, boats, planes,
trucks and buses. The inventor has fully prosecuted his patent in the United
States Patent and Trademark Office and has received a Notice of Allowance dated
January 14, 2004. The inventor has paid the allowance fee, and has received
patent number 6,727,800B1 on April 27, 2004 from the United States Patent and
Trademark Office.

The patent owner has also been engaged as a consultant to Sense during the
option exercise period in consideration for the payment of consulting fees in
the amount of $10,000 per month for the first six months. Other details
regarding the consulting fees are explained in the agreement between the parties
filed as an exhibit to our Current Report on Form 8-K, dated March 24, 2004. We
are evaluating various alternatives for commercializing the rights granted to
us, including marketing the technology for sale or license by a third party or
seeking third-party financing. All efforts are being conducted to allow us to
pay the $1,500,000 option exercise price for the patent and all continuations
that may be granted based on the patent. There is no assurance that we will be
successful in commercializing the rights granted to us by the patent owner. On
September 13, 2004, Sense Holdings and the inventor amended their current
contract and consulting agreement in which the inventor will be paid $5,000 per
month in cash for a period of 6 months with two option periods. Each option
period is for 3 months and continues thru September 13, 2005. Sense has the
right to not exercise its option at any time during the course of the agreement.

On November 11, 2004, we entered into a Letter of Understanding with Intier
Automotive Closures for the evaluation of the granted biometric patent, and to
begin the initial due diligence phases for integration of biometric technology
for automotive use. Intier will evaluate and test prototypes provided by Sense
Holdings and will keep the company informed on all developments and
requirements. Intier Automotive Closures is a leading Tier one supplier to GM,
Ford, Daimler-Chrysler and Honda.

RESEARCH AND DEVELOPMENT COSTS

From the inception of our current activities in July 1998 through December 31,
2004, we have spent approximately $1,500,000 on research and development
activities. For the years ended December 31, 2004 and 2003, research and
development, consisting mainly of salaries, amounted to $163,492 and $203,546,
respectively.

SALES, MARKETING AND PRICING

Many of our goods and services are customized to individual customer needs.
However, our core products, which we market under the marks BioClock(R) and
CheckPrint(R) as systems, range from $2,500 to the hundreds of thousands of
dollars, depending on the number of users, sites and functionality of the
system. We also offer software updates and on-site service contracts for
additional fees. We also sell other goods and services, such as a desk top
finger sensor, a desk top finger sensor with a smart card reader built into the
desk top unit, software developer's kits and database management tools, at
suggested retail prices.

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We market our systems to manufacturers, retailers and other businesses with at
least 15 to 100 employees, to whom we market our smaller turnkey solution. We
also market to larger businesses, including Fortune 500 Companies that require
full custom integration solutions. We sell our systems through an in-house sales
force as well as original equipment manufacturers ("OEMS") and independent sales
representatives. We engage in direct marketing programs, trade show
participation, and local, regional and national advertising campaigns to
generate sales. Moreover, we have offered consulting and design services to
specialized biometric development and deployment projects. By offering our
expertise in the design and deployment of biometric systems we may gain
additional revenues and create another marketing avenue.

Our network of independent sales representatives, through which we presently
derive less than ten (10%) percent of our revenues, currently serve markets
throughout the United States, South America and the Pacific rim. We intend to
engage sales representatives and consultants to cover additional territories
over the next 12 months. Specifically, we have engaged a consultant to gain
entry into the Asian markets, initially targeting China. Our consultant is an
Asian company and their marketing efforts include, but are not limited to,
strategic alliances, joint ventures, product outsourcing, introductions to Asian
sales representatives and investigation of potential mergers and acquisitions
between Sense and other Asian companies. Domestically, or through international
representative, consultants or strategic partners, we intend to seek penetration
of the automotive, retail merchandise, home and business security, food
processing facilities, textile manufacturing and trucking and transport
distribution markets through the services of these representatives. A commission
based upon the sales prices of systems sold by them generally compensates sales
representatives.

We intend to license and sell our systems to third party OEMs, integrators and
software developers, for incorporation in their products. License fees and
royalty fees will be negotiated on a case by case basis, and take into
consideration various factors including competitive pricing, the nature of the
installation, the number of users to be tracked, and the extent of enhancements,
modifications and customization required by the customer. Basic, extended and
enhanced maintenance services will also be made available for an annual fee.

DEPENDENCE ON A FEW MAJOR CUSTOMERS

Significant portions of our sales to date have been, and will continue to be,
made through a small number of significant customers. Specifically, four
customers accounted for approximately eighty-seven percent (87%) of our revenues
for the fiscal year ended December 31, 2003. Specifically, American Airlines
accounted for 33%, Federal Express accounted for 26.8%, Just for Kids accounted
for 14.7% and Pearson Education accounted for 13.4%. These same four customers
account for eighty percent (80%) of the accounts receivable at year ending
December 31, 2003. Just for Kids accounted for 26.5%, Federal Express accounted
for 22.4%, American Airlines accounted for 18.5% and Pearson Education accounted
for 12.8%. For the year ended December 31, 2004, 72% or our revenues were
derived from three customers; American Airlines, Federal Express, and Pearson
Education. Specifically, American Airlines accounted for 35.6%, Federal Express
accounted for 20.8%, and Pearson Education accounted for 15.4%. These three
customers accounted for 57% of the outstanding accounts receivable at December
31, 2004. Any disruption in our relationships with one or more of these
customers, or any significant variance in the magnitude or the timing of orders
from any one of these customers, may result in decreases in our results of
operations, liquidity and cash flows. Any such adverse operating results will
likely decrease the market price of our common stock.

INTELLECTUAL PROPERTY

Patents

We currently have on file with the United States Patent and Trademark Office, a
utility patent that was converted from a provisional patent covering the
proprietary use of our technology and the proprietary hardware used in our
application. In addition, we have on file a provisional patent regarding our
CheckPrint(R) BDS, a biometric middleware utility, and a utility patent
regarding a handheld explosive detection unit. Our goods and services are
clearly marked as patent pending. Several other products and methods are being
identified as potential patent subject matter, and once the analysis is complete
applications will be sought. There is no guarantee that our patent applications
will mature into registrations for patents. We have retained patent counsel to
review the projects and advise where subject matter applicable for patent
protection exists, and to prepare applications for the same. All of our
employees are under an obligation to assign inventive material to Sense
Holdings, Inc.

Please see above Sections titled: ACQUISITION OF MICRO SENSOR TECHNOLOGIES, INC.
AND THE MEMS TECHNOLOGY; and, OPTION TO PURCHASE KEYLESS OPERATION OF VEHICLE
PATENT, for information regarding licensed and optioned patent rights.

                                        7
<PAGE>

Trademarks

We maintain common law rights to our trademarks. The common law rights protect
the use of marks used to identify our goods and services since the time of their
first use in commerce. We have a registration for our flagship software product
CheckPrint(R) and our flagship hardware product BioClock(R). In addition, we
have registered Sense(R) as our corporate identity, meCard(R) used to identify
identification cards used in conjunction with our biometric systems and
"Security Solutions at a Touch of a Finger" (R). Several other marks are being
identified as strong product and service identifiers and trademark search and
applications are underway. There is no guarantee that our trademark applications
will mature into registration of trademarks.

Copyrights

We currently have on file several copyright applications covering our source
code. We maintain common law rights to our proprietary copyrights. The common
law rights protect the actual programming code, the look and feel of its display
screens and material contained in our user manuals since the time of the
copyrightable works creation. In addition, we have an application on file with
the United States Copyright Office covering our proprietary source code, the
look and feel of our display screens and user manuals. There is no guarantee
that our application will mature into a registration for copyright.

Whether or not we obtain formal protection for our products and/or systems, we
intend to vigorously protect our ownership rights. However, protection of our
rights will not prevent others from developing similar technology on their own
or developing other products that may be used for purposes similar to ours. If
these events occur, others may become our competitors, which could have a
material adverse effect on our business, financial condition and results of
operations.

COMPETITION

We face competition from companies engaged in the time and attendance industry,
as well as in the security and access control industry. Competition may come
from companies using biometric fingerprint technology, as well as from companies
using other biometric identification methods. Competitors also include companies
marketing traditional forms of employee verification and attendance products,
including time clocks, ID badges, passwords and PIN numbers. Many of our
competitors may have longer operating histories and greater financial and other
resources than we have. Our ability to compete successfully will depend on many
factors, including our ability to adapt to changing technologies and meet the
needs of the marketplace on a price competitive and timely basis.

Competition in time and attendance services exists from various software
developers and product manufacturers, the largest of which is Kronos, a publicly
traded company (NASDAQ National Market System: KRON) providing software
applications based on a swipe card identifier. Other competitors in time and
attendance application development include Simplex, Stromberg, TimeAmerica, Time
Systems and ADP. Principal competition in fingerprint biometrics includes
Identix, Crossmatch, Secugen Fujitsu, and Cogent Systems. Other biometric
technology providers include Recognition Systems (hand geometry), LG Electronics
( LG Iris) (iris identification) and Visage ( Facial recognition ). Many of our
competitors have a substantially longer operating history than we do and have
substantially greater financial and other resources than we do. While we believe
that our ability to offer a total package of time and attendance and access
control software and innovative hardware gives us a competitive marketing
advantage, unless we are able to penetrate the marketplace and gain name
recognition for our products and technology, we may be unable to compete
effectively.

We have initiated due diligence to begin development of our handheld MEMS
multi-substance detector. We plan to develop a handheld detector with the
capabilities of detecting explosives, chemical and biological substances and
narcotics. We will work in conjunction with Oak Ridge National Laboratory
utilizing our on-staff expertise. We will face competition in this sector of
business from industry participants such as GE Interlogix, OSI Rapiscan,
Scientex, Isonics to name a few, along with other methods of detection such as
K-9 units, infrared, We feel price and performance will guide this product as
the industry leader in this sector.

                                        8
<PAGE>

We believe that we can effectively compete in our industry because:

   o  Biometric identification is more reliable than traditional employment
      verification methods;

   o  Fingerprint identification is less costly and more recognized than other
      currently available forms of biometric identification;

   o  Our systems provide a total solution, turnkey approach to our customers;

   o  Our systems are network enabled and can be remotely accessed by a system
      administrator to get valuable real time information regarding the
      customer's work force and security at the workplace;

   o  Our systems offer an enterprise solution in that the systems are
      completely scalable for large numbers of employees and multiple access
      points and numerous locations;

   o  Our systems are modular and offer a variety of identification methods that
      can be added to the basic system;

   o  Our systems are software driven and the software is customizable to a
      customer's particular needs; and,

   o  Biometric identification does not use ID badges, passwords, PIN numbers or
      other devices that have historically been misused by employees to the
      detriment of employers.

We have not deployed technology in the explosive detection or keyless operation
of motor vehicle arenas as the products are still under development and do not
have an ability to describe our competitive advantages or disadvantages at this
time.

Our inability to compete successfully with any of our products could have a
material adverse effect on our business, financial condition and results of
operations.

EMPLOYEES

We currently employ 6 people, all of whom are full-time employees, in the
following capacities: three executive officers, one of which is the Chief
Executive Officer, one of which is the Chief Financial officer one of which is
the Chief software designer and programmer, one specializing in the field of
mechanical and electrical engineering one warehouse and assembly employee, and
one sales person dedicated to marketing all of our proprietary and licensed
products. Our employees are not subject to a collective bargaining agreement. We
believe that relations with our employees are good.

CORPORATE HISTORY

We were organized in Idaho, under the name Century Silver Mines, Inc., on
February 5, 1968. Originally, we developed mining properties, but by 1998 we had
ceased those operations.

Sense Technologies, Inc. was organized under the laws of the State of Florida on
July 13, 1998. Sense Technologies was formed for the purpose of engaging in
developing and marketing biometric devices for use in employee identification
and security-related products.

In January 1999, we acquired all of the outstanding shares of Sense Technologies
for a purchase price consisting of 4,026,700 of our shares, issued to the former
shareholders of Sense Technologies. We operated Sense Technologies, Inc. as our
wholly owned subsidiary. At the time of the acquisition, Century Silver Mines
had no operations and Sense Technologies was developing its proprietary
biometric security systems. Immediately following the acquisition, the former
shareholders of Sense Technologies owned approximately 93% of our outstanding
shares.

At the time of the acquisition, the principal owners of Sense Technologies were
Dore Scott Perler and Andrew Goldrich. Dore Perler was its president, Andrew
Goldrich was its secretary and treasurer, and Messrs. Perler and Goldrich were
the members of its board of directors. At the time of the acquisition, the
officers and directors of Century Silver Mines were John Branz, Kirk Scott and
Barbara Scott, the mother of Kirk Scott. There were 288,300 outstanding shares
of Century Silver Mines owned by approximately 750 holders, none of whom, to our
knowledge, owned in excess of 5% of the outstanding shares. However, we
understand that Kirk Scott, Barbara Scott and James Scott, her brother-in-law,
owned an aggregate of approximately 29% of the outstanding shares of Century
Silver Mines at the time of the acquisition.

                                        9
<PAGE>

In January 1999, we reduced the shares of our stock that were outstanding by
combining each 7.74 shares that were outstanding, into one share. All numbers of
shares in this annual report reflect the January 1999 share combination. In June
1999, we changed our corporate domicile from Idaho to Florida and, in connection
with the domicile change we changed our name to Sense Holdings, Inc. In May
2000, we increased the number of shares of common stock we are authorized to
issue to 20,000,000, in January 2002, we increased our authorized common stock
to 40,000,000 shares and in April 2004, we increased our authorized to
100,000,000 shares.

In May of 2001 we acquired all of the issued and outstanding capital stock of
Micro Sensor, a company specializing in explosive detection technology. Micro
Sensor is now a wholly owned subsidiary of Sense Holdings. In January 2002, in
an effort to unify our corporate identity we ceased operating under the name
Sense Technologies, Inc., and began operating only as Sense Holdings, Inc.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our Common Stock is ComputerShare Trust
Company, Inc., 350 Indiana Street, Suite 800, Golden, Colorado 80401 and its
telephone number is (303) 262-0600.

RISK FACTORS

Readers should carefully consider the following risk factors and all other
information contained in this Annual Report. Investing in our common stock
involves a high degree of risk. Any of the following risks could adversely
affect our business, financial condition and results of operations and could
result in a complete loss of your investment. No assurances can be given that
the risks and uncertainties described below are the only risks and uncertainties
that we face.

RISKS RELATED TO OUR BUSINESS

OUR WEAK FINANCIAL CONDITION HAS RAISED, AND WILL LIKELY CONTINUE TO RAISE,
SUBSTANTIAL DOUBT REGARDING OUR ABILITY TO CONTINUE AS A "GOING CONCERN," WE
HAVE EXPERIENCED HISTORICAL LOSSES WE MAY HAVE TO CEASE OPERATIONS IF WE DO NOT
GENERATE MEANINGFUL REVENUE AND ACHIEVE PROFITABILITY AND INVESTORS MAY LOSE
THEIR INVESTMENT. We have incurred substantial operating and net losses, as well
as negative operating cash flows, since our inception. For the fiscal years
ended December 31, 2004 and 2003, we experienced net losses of ($1,499,284) and
($1,409,675), respectively. At December 31, 2004, we had an accumulated deficit
of ($9,227,055). Our operating results for future periods will include
significant expenses, including product development expenses, sales and
marketing costs, programming and administrative expenses, for which we may not
have offsetting revenues or available capital. As a result, we may never
generate meaningful revenue and/or achieve profitability in the future.

Our current significant working capital deficit at December 31, 2004, among
other factors, resulted in our independent certified public accountants
modifying their audit report on our consolidated financial statements for the
fiscal years ended December 31, 2004 and 2003 to express substantial doubt as to
our ability to continue as a going concern. We remain in need of substantial
additional investment capital to fund our longer-term operating needs, including
the servicing of our remaining debt obligations and the conducting of those
marketing activities we believe necessary to achieve meaningful sales growth.

OUR BUSINESS IS CAPITAL INTENSIVE AND ADDITIONAL FINANCING MAY NOT BE AVAILABLE,
AS SUCH, ESPECIALLY IN LIGHT OF OUR HISTORICAL LOSSES, WE MAY HAVE TO CEASE
OPERATIONS AND INVESTORS MAY LOSE THEIR INVESTMENT. Our operations are capital
intensive and our growth and ongoing operations will consume a substantial
portion of our available working capital. We have engaged in numerous financing
activities over the past few years but have been unable to utilize the funds
raised to achieve positive financial results. Furthermore, we will require
additional capital in order to fund our operations, and we do not have any
commitments for additional financing. Additional funding, if required, may not
be available, or if available, may not be available upon favorable terms.
Insufficient funds will prevent, or delay, us from implementing our business
strategy. Due to our small revenue base, low level of working capital and the
inability to conclude development agreements with major manufacturing companies,
we have been unable aggressively pursue our product development strategy to
date. We will require significant additional financing and/or a strategic
alliance with a well-funded development partner to undertake our business plan.
Failure to receive additional funding or enter into a strategic alliance could
limit our growth, limit our likelihood of profitability and worsen our financial
condition and may correspondingly decrease the market price of our common stock,
or may cause us to cease operations all together.

                                       10
<PAGE>

OUR CONTINUED SALE OF EQUITY SECURITIES WILL DILUTE EXISTING SHAREHOLDERS AND
MAY DECREASE THE MARKET PRICE FOR OUR COMMON STOCK. Given our limited revenues
and prospect for revenues for the 2005 fiscal year, we will require additional
financing which will require the issuance of additional equity securities. We
expect to continue our efforts to acquire further financing in the future to
fund additional marketing efforts, product development expenses, programming and
administrative expenses, which will result in future dilution to existing
outstanding shareholders.

BECAUSE WE ARE DEPENDENT UPON A FEW MAJOR CUSTOMERS FOR SUBSTANTIALLY ALL OF OUR
CURRENT SALES, THE LOSS OF ANY ONE OF THEM WOULD REDUCE OUR REVENUES, LIQUIDITY
AND HINDER OUR ABILITY TO BECOME PROFITABLE, AS SUCH, WE MAY HAVE TO CEASE
OPERATIONS AND INVESTORS MAY LOSE THEIR INVESTMENT. Significant portions of our
sales to date have been, and will continue to be, made through a small number of
significant customers. Specifically, four customers accounted for approximately
eighty-seven percent (87%) of our revenues for the fiscal year ended December
31, 2003. Specifically, American Airlines accounted for 33%, Federal Express
accounted for 26.8%, Just for Kids accounted for 14.7% and Pearson Education
accounted for 13.4%. These same four customers account for eighty percent (80%)
of the accounts receivable at year ending December 31, 2003. Just for Kids
accounted for 26.5%, Federal Express accounted for 22.4%, American Airlines
accounted for 18.5% and Pearson Education accounted for 12.8%. Approximately 72%
of our sales for the year ended December 31, 2004, were derived from three
customers, American Airlines, Federal Express, and Pearson Education. These
three customers accounted for 57% of the outstanding gross accounts receivable
at December 31, 2004. Any disruption in our relationships with one or more of
these customers, or any significant variance in the magnitude or the timing of
orders from any one of these customers, may result in decreases in our results
of operations, liquidity and cash flows. Any such adverse operating results will
likely decrease the market price of our common stock.

WE DEPEND ON THE CONTINUED SERVICES OF OUR EXECUTIVE OFFICERS AND THE LOSS OF A
KEY EXECUTIVE COULD SEVERELY IMPACT OUR OPERATIONS, CAUSE DELAY AND ADD EXPENSE
TO OUR OPERATION. The execution of our present business plan depends on the
continued services of Dore Scott Perler, our Chief Executive Officer and
President, Andrew Goldrich, our Chief Financial Officer and Vice President, and
Shawn Tartaglia, our Chief Technical Officer. We do not currently maintain
key-man insurance on their lives. While we have entered into employment
agreements with each of them, the loss of any of their services would be
detrimental to our business, financial condition and results of operations. We
may not retain or replace the services of our key officers.

WE HAVE ELECTED NOT TO VOLUNTARILY ADOPT VARIOUS CORPORATE GOVERNANCE MEASURES,
WHICH MAY RESULT IN SHAREHOLDERS HAVING LIMITED PROTECTIONS AGAINST INTERESTED
DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS. Recent Federal
legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the
adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. We have not
yet adopted these corporate governance measures and, since our securities are
not yet listed on a national securities exchange or Nasdaq, we are not required
to do so. However, to the extent we seek to have our Common Stock listed on a
national securities exchange or Nasdaq, such requirements will require us to
make changes to our current corporate governance practices, which changes may be
costly and time consuming. Furthermore, the absence of such practices with
respect to our Company may leave our shareholders without protections against
interested director transactions, conflicts of interest and similar matters. As
an example of one Sarbanes-Oxley requirement, currently none of the members of
our board of directors are considered to be "independent" for purposes of
Sarbanes-Oxley. We may not be able to attract a sufficient number of directors
in the future to satisfy this requirement if it becomes applicable to us.

WE MAY BE EXPOSED TO POTENTIAL RISKS RELATING TO OUR INTERNAL CONTROLS OVER
FINANCIAL REPORTING AND OUR ABILITY TO HAVE THOSE CONTROLS ATTESTED TO BY OUR
INDEPENDENT AUDITORS. As directed by Section 404 of the Sarbanes-Oxley Act of
2002 ("SOX 404"), the Securities and Exchange Commission adopted rules requiring
public companies to include a report of management on the company's internal
controls over financial reporting in their annual reports, including Form
10-KSB. In addition, the independent registered public accounting firm auditing
a company's financial statements must also attest to and report on management's
assessment of the effectiveness of the company's internal controls over
financial reporting as well as the operating effectiveness of the company's
internal controls. We were not subject to these requirements for the fiscal year
ended December 31, 2004. We are evaluating our internal control systems in order
to allow our management to report on, and our independent auditors attest to,
our internal controls, as a required part of our Annual Report on Form 10-KSB
beginning with our report for the fiscal year ended December 31, 2006.

                                       11
<PAGE>

While we expect to expend significant resources in developing the necessary
documentation and testing procedures required by SOX 404, there is a risk that
we will not comply with all of the requirements imposed thereby. At present,
there is no precedent available with which to measure compliance adequacy.
Accordingly, there can be no positive assurance that we will receive a positive
attestation from our independent auditors.

In the event we identify significant deficiencies or material weaknesses in our
internal controls that we cannot remediate in a timely manner or we are unable
to receive a positive attestation from our independent auditors with respect to
our internal controls, investors and others may lose confidence in the
reliability of our financial statements and our ability to obtain equity or debt
financing could suffer.

FAILURE OF OUR INTERNAL SYSTEMS MAY CAUSE SYSTEM DISRUPTIONS, REDUCE LEVELS OF
CUSTOMER SERVICE, AND OTHERWISE DAMAGE OUR OPERATIONS WHICH COULD LEAD TO LOST
SALES AND MAY INCREASE OUR OVERHEAD WHICH WOULD ADD EXPENSE AND DELAY OUR
OPERATIONS. We use internally developed systems to operate our service and for
transaction processing, including billing and collections processing. We must
continually improve these systems in order to meet the level of use.
Furthermore, in the future, we may add features and functionality to our
products and services using internally developed or third party licensed
technologies. Our inability to:

         a) add software and hardware;

         b) develop and upgrade existing technology, transaction processing
            systems and network infrastructure to meet increased volume through
            our processing systems; or

         c) provide new features or functionality may cause system disruptions,
            slower response times, reductions in levels of customer service,
            decreased quality of the user's experience, and delays in reporting
            accurate financial information. Any such failure could result in a
            loss of business and worsen our financial condition and may
            correspondingly decrease the market price of our common stock.

RISKS RELATED TO OUR INTELLECTUAL PROPERTY

WE HAVE ACQUIRED LICENSE RIGHTS TO CERTAIN PATENTED INTELLECTUAL PROPERTY;
HOWEVER, WE MAY NOT BE SUCCESSFUL IN DEVELOPING OR MARKETING COMMERCIALLY VIABLE
PRODUCTS INCORPORATING THE INTELLECTUAL PROPERTY, WHICH COULD ADD EXPENSE AND
DELAY OPERATIONS. We acquired Micro Sensor and the MEMS technology but have not
yet commercially exploited such intellectual property through the development of
final products. Although we may never develop or market products incorporating
the intellectual property, we may still remain responsible for paying minimum
annual royalties to the licensor.

WE WILL BE REQUIRED TO PAY MINIMUM ANNUAL ROYALTIES FOR LICENSED INTELLECTUAL
PROPERTY EVEN IF WE ARE UNABLE TO GENERATE REVENUES FROM OUR USE OF THE
INTELLECTUAL PROPERTY, WHICH COULD ADD EXPENSE AND DELAY OPERATIONS. We have
agreed to pay UT-Battelle, the operator of the Department of Energy's Oak Ridge
National Laboratory, 2.5% of revenues we generate from sales of products
incorporating the technology we have licensed. Even if we are unsuccessful in
either developing or marketing products incorporating the licensed technology,
we have agreed to pay UT-Battelle minimum annual royalties during each year of
the license agreement. Minimum annual royalties of $6,125 paid on the new third
anniversary date of June 2004, $10,000 due on the fourth anniversary date,
$15,000 due on the fifth anniversary date, $20,000 due on the sixth anniversary
date and $25,000 for the seventh and succeeding anniversary years of the term.
The term ends June 2016. The payment of these minimum annual royalties absent
offsetting revenues from product sales may result in decreases in our results of
operations, liquidity and cash flows. Any such adverse operating results will
likely decrease the market price of our common stock.

THERE IS UNCERTAINTY OVER WHETHER INTELLECTUAL PROPERTY WE HAVE LICENSED,
OPTIONED OR OTHERWISE HAVE RIGHTS TO INFRINGE ON THE RIGHTS OF THIRD PARTIES,
WHICH COULD ADD EXPENSE AND DELAY OPERATIONS. We acquired Micro Sensor from its
shareholders, including UTEK Corporation. While UTEK has represented to us that,
to the best of their knowledge, Micro Sensor's licensed explosive detection
technology does not infringe on the rights of any third party, UTEK has also
advised us that they did not undertake a formal patent search or other
investigation as to whether the detection technology infringes on the rights of
any third party. In the event it is ultimately found that this technology does
infringe on the rights of a third party, we may be prohibited from developing or
marketing products incorporating the technology, we may remain responsible for
paying minimum annual royalties to the licensor and we may be liable for damages
to the third party upon whose technology we may have infringed.

                                       12
<PAGE>

We also acquired the right to purchase intellectual property rights related to
the keyless access and operation of a vehicle under a March 2004 option
agreement entered into with the patent inventor, as amended on September 13,
2004 (See OPTION TO PURCHASE KEYLESS OPERATION OF VEHICLE PATENT - Item 1).
While such inventor has represented to us that, to the best of his knowledge,
the invention does not infringe on the rights of any third party, in the event
it is ultimately found that this technology does infringe on the rights of a
third party, we may be prohibited from developing or marketing products
incorporating the technology, and we may be liable for damages to the third
party upon whose technology we may have infringed.

WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, THEREBY PERMITTING
COMPETITORS TO DEVELOP THE SAME OR SIMILAR PRODUCTS AND TECHNOLOGIES TO OURS,
WHICH COULD ADD EXPENSE AND DELAY OPERATIONS. Our future results and ability to
compete will be dependent, in large part, upon the marketing and sales of our
developed proprietary products and technologies, the development of future
proprietary products and technologies and the commercialization of licensed and
purchased patented technologies. We intend to rely primarily upon copyright,
trade secret and trademark laws to protect the proprietary components of our
systems. While we have filed U.S. patent applications covering certain of our
systems, the patent applications may not result in the issuance patent.
Additionally, if granted, any patent may be successfully challenged and will not
provided us with meaningful proprietary protections or that we may not have the
financial resources to mount sustained patent defense. Also, while we have
licensed or optioned certain patented technologies, the validity of these
patents may be challenged in the future or a claim of infringement of a holder
of a previously filed patent may be claimed. We could also incur substantial
costs in asserting our intellectual property or proprietary rights against
others or if others assert their rights against us. The failure to successfully
protect our intellectual property and proprietary rights could enable others to
duplicate or claim rights to our products and systems or otherwise develop
similar or competitive products and systems which may result in decreases in our
results of operations, liquidity and cash flows. Any such decreases may
correspondingly decrease the market price of our common stock.

RISKS RELATED TO THE INDUSTRIES IN WHICH WE OPERATE

WE FACE SEVERE COMPETITION FROM TIME AND ATTENDANCE PROVIDERS, SECURITY
COMPANIES, IN GENERAL, BIOMETRIC SECURITY DEVICE PROVIDERS, EXPLOSIVE DETECTION
COMPANIES AND KEYLESS VEHICLE OPERATION COMPANIES, MANY OF WHOM HAVE GREATER
RESOURCES THAN WE DO, WHICH COULD CAUSE US TO LOSE SALES ADD EXPENSE AND DELAY
OUR OPERATIONS. We may be unable to effectively compete in the marketplaces in
which we operate. We engage in providing time and attendance resources to
employers in several sectors of the marketplace. We also provide building access
control security devices, and we are developing technologies for explosive
detection and the keyless operation of vehicles.

Our time and attendance and control access security devices incorporate
biometric fingerprint technology, "smartcard" technology, or other data input
technologies. We will compete with other providers of time and attendance
services, as well as with access control, security companies. Our competitors in
time and attendance applications include Kronos, Simplex, Smartime Software,
Time and Tech.com and Unitime Systems. Other biometric technology providers
include Identix, Secugen, Bioscrypt, and Fujitsu. These providers use
traditional technologies employed in identification and access control, as well
as biometric technologies.

Our explosive detection technology is still in the developmental stage as it
incorporates the MEMS technology, which has yet to be commercially exploited.
There are several other explosive detection providers that have significant
inroads to the market sector. There are also government compliance issues that
certain of our competitors in this field have already overcome. One specific
competitor is Invision Technologies, Inc., which has agreed to be acquired by GE
Infrastructure, a unit of General Electric, for $900 million. Invision's
technology is not MEMS-based and it is widely used by the U.S. Transportation
and Safety Administration.

Our keyless operation technology for motor vehicles, for which we have optioned
to purchase the rights to, is embodied in a working proto-type. We have yet to
enter into an agreement with anyone to use the technology. There are several
large and established automobile companies that have started to offer keyless
operation for vehicles including, Lexus, Mercedes and BMW. The technologies used
by these competitors do not identify a person by a biometric but do allow
keyless operation and, moreover, these products are currently being sold.

Most of these competitors have a longer operating history than we do and many of
them have substantially greater financial and other resources than we do. As a
result, we will likely encounter greater difficulty in implementing our business
plans than will our competitors. The introduction of similar or superior
products by current or future competitors may result in decreases in our results
of operations, liquidity and cash flows. Any such decreases may correspondingly
decrease the market price of our common stock.

                                       13
<PAGE>

WE ARE DEPENDENT UPON THIRD PARTY SOFTWARE, AND IF WE HAVE DIFFICULTY OBTAINING
NECESSARY SOFTWARE, WE WILL BE UNABLE TO MEET CONTRACTUAL OBLIGATIONS, WHICH
COULD CAUSE US TO LOSE SALES AND ADD EXPENSE AND DELAY OUR OPERATIONS. We
license software from Integrated Design, Inc. pursuant to a contract that
enables the data gathered by CheckPrint(R) T/A systems to be formatted and
transmitted to third party payroll services. Either party, on ninety days prior
written notice with or without cause, may terminate such agreement. In the event
such agreement was terminated, we would be required to license similar software
from a third party vendor or develop our own links for data export. Any failure
or delay in licensing or developing such software could result in our inability
to meet our contractual obligations and may result in decreases in our results
of operations, liquidity and cash flows. Any such decreases may correspondingly
decrease the market price of our common stock.

OTHER TYPES OF BIOMETRIC SECURITY DEVICES ARE BEING DEVELOPED AND MARKETED, AND
WE ARE UNCERTAIN IF FINGERPRINT BIOMETRIC SECURITY DEVICES WILL BE ACCEPTED IN
THE MARKETPLACE, WHICH COULD CAUSE US TO LOSE SALES ADD EXPENSE AND DELAY OUR
OPERATIONS. Our developed products incorporate fingerprint biometrics as the
basis for authenticating a person's identity. Other forms of biometric
identification, including iris scanning, voice patterns and signature
verification, are being marketed, developed and tested, both by us and others.
We have integrated several other forms of biometrics into our products on a
proto-type basis, but the fingerprint remains our standard offering. Our future
results will be dependent on our ability to successfully market our biometric
systems and support services to end-users, distributors and resellers.
Successful marketing will depend upon the acceptance of fingerprint biometrics
as a preferred form of identification. We have not commissioned a formal market
or research study to determine whether fingerprint identification is preferred
to other forms of biometric identification or whether sufficient demand for our
products and services exists to enable us to sustain operations, expand or
achieve profitability. A lack of demand for fingerprint biometric systems could
reduce our revenues of approximately $140,000 attributable almost exclusively to
sales of systems incorporating a fingerprint biometric, and may result in
decreases in our results of operations, liquidity and cash flows. Any such
decreases may correspondingly decrease the market price of our common stock.

OUR PRODUCTS RELY ON FINGERPRINT BIOMETRICS AND THE LACK OF TECHNOLOGICAL
DIVERSIFICATION IN OUR PRODUCTS COULD CAUSE OUR RESULTS TO SUFFER, WHICH COULD
CAUSE US TO LOSE SALES ADD EXPENSE AND DELAY OUR OPERATIONS. Almost all of our
products and systems incorporate fingerprint biometric technology. Our future
results may depend on the continued reliability and acceptance of Biometrics as
a method of identity verification. As a result, in the event of unforeseen
adverse events in the development, enhancement, reliability, marketing or
acceptance of fingerprint biometrics, we will be unable to temper its effects by
relying upon sales of other products. In addition, we do not currently know when
products under development incorporating other biometrics, explosive detection
technology and keyless vehicle operation will generate revenues, or whether they
can be successfully marketed. In light of our lack of product diversification
unforeseen events related to our narrow product offering may result in decreases
in our results of operations, liquidity and cash flows. Any such decreases may
correspondingly decrease the market price of our common stock.

TRADING IN OUR COMMON STOCK DURING 2004 WAS LIMITED, SO OUR SHAREHOLDERS MAY NOT
BE ABLE TO SELL AS MUCH STOCK AS THEY WANT AT PREVAILING PRICES. Shares of the
common stock are traded on the OTCBB. Approximately 183,000 shares were traded
on an average daily trading basis during 2004. If limited trading in the common
stock continues, it may be difficult for our shareholders to sell in the public
market at any given time at prevailing prices. Also, the sale of a large block
of our common stock at any time could depress the price of our common stock to a
greater degree than a company that typically has higher volume of trading of
securities.

RISK RELATED TO OUR SECURITIES AND CAPITAL STRUCTURE

THE LIMITED PRIOR PUBLIC MARKET AND TRADING MARKET MAY CAUSE POSSIBLE VOLATILITY
IN OUR STOCK PRICE WHICH MAY CAUSE YOU TO LOSE SOME OR ALL OF YOUR INVESTMENT.
There has only been a limited public market for our common stock and an active
trading market in our common stock may not be maintained. The OTCBB is an
unorganized, inter-dealer, over-the-counter market that provides significantly
less liquidity than NASDAQ, and quotes for stocks included on the OTCBB are not
listed in the financial sections of newspapers, as are those for the NASDAQ
Stock Market. In addition, the stock market in recent years has experienced
extreme price and volume fluctuations that have particularly affected the market
prices of many smaller companies. The trading price of our common stock is
expected to be subject to significant fluctuations in response to variations in
quarterly operating results, changes in analysts' earnings estimates,
announcements of innovations by us or our competitors, general conditions in the
industry in which we operate and other factors. These fluctuations, as well as
general economic and market conditions, may decrease the market price of our
common stock.

                                       14
<PAGE>

THE MARKET PRICE FOR OUR COMMON STOCK MAY BE SUBJECT TO EXTREME VOLATILITY,
WHICH MAY CAUSE YOU TO LOSE SOME OR ALL OF YOUR INVESTMENT. The market for
securities of high-technology companies, including companies such as ours that
participate in emerging markets, has historically been more volatile than the
market for stocks in general. As a result, the price of our common stock may be
subject to wide fluctuations in response to factors some of which are beyond our
control, including, without limitation, the following:

      o  Quarter-to-quarter variations in our operating results;

      o  Our announcement of material events;

      o  Price fluctuations in sympathy to others engaged in our industry; and,

      o  The effects of media coverage of our business.

PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF THE
COMPANY'S SECURITIES, WHICH MAY CAUSE YOU TO LOSE SOME OR ALL OF YOUR
INVESTMENT. The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price (as defined) of less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. As a result, our common
stock is subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a risk
disclosure document mandated by the Securities and Exchange Commission relating
to the penny stock market. The broker-dealer must also disclose the commission
payable to both the broker-dealer and the registered representative, current
quotations for the securities and, if the broker-dealer is the sole market
maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our securities
and may affect the ability of investors to sell our securities and the price at
which such purchasers can sell any such securities.

Our shareholders should be aware that, according to the Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include:

      o  Control of the market for the security by one or a few broker-dealers
         that are often related to the promoter or issuer;

      o  Manipulation of prices through prearranged matching of purchases and
         sales and false and misleading press releases;

      o  "Boiler room" practices involving high pressure sales tactics and
         unrealistic price projections by inexperienced sales persons;

      o  Excessive and undisclosed bid-ask differentials and markups by selling
         broker-dealers; and

      o  The wholesale dumping of the same securities by promoters and
         broker-dealers after prices have been manipulated to a desired level,
         along with the inevitable collapse of those prices with consequent
         investor losses.

Our management is aware of the abuses that have occurred historically in the
penny stock market.

ADDITIONAL AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK AVAILABLE FOR
ISSUANCE MAY DECREASE THE MARKET PRICE FOR OUR COMMON STOCK. We are authorized
to issue 100,000,000 shares of common stock. As of the date of annual report,
there were 33,322,858 shares of common stock issued and outstanding. We have
also reserved a total of 13,218,930 shares for future issuance consisting of
2,085,000 shares issuable upon the exercise of options that have been granted,
approximately 2,056,340 shares available for issuance under our stock option
plans and 9,077,590 shares issuable upon exercise of options that have been
granted. The options and warrants are exercisable at prices ranging from $.16 to
$1.50 per share. To the extent stock is issued upon the exercise of options or
warrants, our existing shareholders will experience further dilution. In
addition, in the event that any future financing should be in the form of, be
convertible into or exchangeable for, equity securities, the issuance of our
shares upon their exercise will result in additional dilution.

                                       15
<PAGE>

WE MAY ISSUE PREFERRED STOCK, WHICH MAY DECREASE THE MARKET PRICE FOR OUR COMMON
STOCK AND MAY HAVE RIGHT SUPERIOR TO YOUR COMMON STOCK RIGHTS. In addition to
the above-referenced shares of common stock that we may issue without
shareholder approval, we have the right to authorize and issue preferred stock.
We presently have no issued and outstanding shares of preferred stock and while
we have no present plans to issue any shares of preferred stock, our Board of
Directors has the authority, without shareholder approval, to create and issue
one or more series of such preferred stock and to determine the voting, dividend
and other rights of holders of such preferred stock. The issuance of any of such
series of preferred stock may have superior rights to the holders of common
stock.

WE HAVE NO HISTORY OF PAYING DIVIDENDS ON OUR COMMON STOCK. We have never paid
any cash dividends on our shares of common stock and do not anticipate paying
any cash dividends on our common stock in the foreseeable future. We plan to
retain any future earnings to finance growth. If we decide to pay dividends to
the holders of the common stock, such dividends may not be paid on a timely
basis.

OUR COMMON STOCK IS THINLY TRADED AND AN ACTIVE AND VISIBLE TRADING MARKET FOR
OUR COMMON STOCK MAY NOT DEVELOP. Our common stock is currently traded on a
limited basis on the OTC Bulletin Board under the symbol "SEHO". The quotation
of our common stock on the OTCBB does not assure that a meaningful, consistent
and liquid trading market currently exists. We cannot predict whether a more
active market for our common stock will develop in the future. In the absence of
an active trading market:

   o  Investors may have difficulty buying and selling or obtaining market
      quotations;

   o  Market visibility for our common stock may be limited; and

   o  A lack of visibility for our common stock may have a depressive effect on
      the market price for our common stock.

OTHER RISKS

LIMITATION ON DIRECTOR/OFFICER LIABILITY MAY LIMIT THE AMOUNT YOU CAN RECOVER
FOR A BREACH FIDUCIARY DUTIES BY AN OFFICER OR DIRECTOR. As permitted by Florida
law, our certificate of incorporation limits the liability of our directors for
monetary damages for breach of a director's fiduciary duty except for liability
in certain instances. As a result of our charter provision and Florida law,
shareholders may have limited rights to recover against directors for breach of
fiduciary duty. In addition, our certificate of incorporation provides that we
shall indemnify our directors and officers to the fullest extent permitted by
law. Thus your right to recover damages as a shareholder may be limited.

THE SALE OF SHARES ELIGIBLE FOR FUTURE SALE COULD HAVE A DEPRESSIVE EFFECT ON
THE MARKET PRICE FOR OUR COMMON STOCK AND COULD CUASE YOU TO LOSE SOME OR ALL
OFYOUR IVESTMENT.

As of the date of this annual report, there are 33,322,858 shares of common
stock issued and outstanding.

Of the currently issued and outstanding shares, 33,252,858 shares of our common
stock (of which 2,431,530 shares are owned by our officers, directors and
principal shareholders) have been registered for resale or will have been held
for in excess of one year and are currently available for public resale pursuant
to Rule 144 promulgated under the Securities Act ("Rule 144"). The resale of our
shares of common stock owned by officers, directors and affiliates is subject to
the volume limitations of Rule 144. In general, Rule 144 permits our
shareholders who have beneficially owned restricted shares of common stock for
at least one year to sell without registration, within a three-month period, a
number of shares not exceeding one percent of the then outstanding shares of
common stock. Furthermore, if such shares are held for at least two years by a
person not affiliated with us (in general, a person who is not one of our
executive officers, directors or principal shareholders during the three month
period prior to resale), such restricted shares can be sold without any volume
limitation. Sales of our common stock under Rule 144 or pursuant to such
registration statement may have a depressive effect on the market price for our
common stock.

IT IS NOT POSSIBLE TO FORESEE ALL RISKS WHICH MAY AFFECT US. MOREOVER, WE CANNOT
PREDICT WHETHER WE WILL SUCCESSFULLY EFFECTUATE OUR CURRENT BUSINESS PLAN. EACH
PROSPECTIVE PURCHASER IS ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF
AN INVESTMENT IN THE SHARES AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH
ANALYSIS, AMONG OTHERS, THE RISK FACTORS DISCUSSED ABOVE.

                                       16
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES

Our corporate offices to approximately 7,000 square feet of office space in
Sunrise, Florida. The lease is with an unaffiliated party. Our monthly lease
payment is $4,664 over the lease term. The lease expired in March 2005 and
provided that we may not assign or sublet the premises without the landlord's
prior written consent. We are currently on a month-to-month leasing arrangement
with our landlord. Our relationship with our landlord is good and we are
currently negotiating a new lease. These facilities are suitable and adequate
for our current needs and allow for anticipated expansion during the term of the
lease. We currently maintain commercial general liability and property insurance
coverage with policy limits of $1,000,000 and $125,000, respectively. We may
increase this coverage to the extent business growth dictates.

ITEM 3.  LEGAL PROCEEDINGS

We are not a party to any material legal proceeding, nor are any of our
officers, directors or affiliates, a party adverse to us in any legal
proceeding.

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

We submitted no matters to our shareholders during the fourth quarter in the
year ending December 31, 2004.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Our shares of common stock are currently traded on the Over-the-Counter Bulletin
Board under the symbol SEHO (previously CTSMD). Prior to February 28, 2000, our
shares were listed on the National Quotation Bureau's Pink Sheets. There is
currently a limited trading market for our shares and we do not know whether an
active market will develop. The quarterly reported high and low bid prices for
the common stock are shown below for the period two fiscal years ended December
31, 2004. The quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission, and may not represent actual transactions. The quotation
of our common stock on the OTC Bulletin Board does not assure that a meaningful,
consistent and liquid trading market for such securities currently exists and,
in fact at the present time, such a market does not exist.

          Period                                     High              Low
         ---------                                 ------           --------

         First Quarter ended 3/31/03               $0.52              $0.25
         Second Quarter ended 6/30/03              $0.32              $0.16
         Third Quarter ended 9/30/03               $0.40              $0.15
         Fourth Quarter ended 12/31/03             $0.32              $0.18

         First Quarter ended 3/31/04               $0.42              $0.22
         Second Quarter ended 6/30/04              $0.59              $0.21
         Third Quarter ended 9/30/04               $0.25              $0.13
         Fourth Quarter ended 12/31/04             $0.36              $0.14

On April 11, 2005, the last sale price of our common stock as reported on the
OTCBB was $0.19.

As of April 11, 2005, our common stock is owned of record by approximately 900
holders. We have never paid cash dividends on our common stock. We intend to
keep future earnings, if any, to finance the expansion of our business, and we
do not anticipate that any cash dividends will be paid in the foreseeable
future. Our future payment of dividends will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.

The Securities and Exchange Commission has adopted regulations which generally
define a "penny stock" to be any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. Depending on market
fluctuations, our common stock could be considered to be a "penny stock". A
penny stock is subject to rules that impose additional sales practice
requirements on broker/dealers who sell these securities to persons other than
established customers and accredited investors. For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of these securities. In addition he must receive the purchaser's
written consent to the transaction prior to the purchase. He must also provide
certain written disclosures to the purchaser. Consequently, the "penny stock"
rules may restrict the ability of broker/dealers to sell our securities, and may
negatively affect the ability of holders of shares of our common stock to resell
them.

                                       17
<PAGE>

Recent Sales of Unregistered Securities

On April 30, 2004, we issued 237,000 common shares of our common stock for
services rendered. These services include investment relations services and
business development services. The shares were issued at the fair values at the
date of the issuance of $.285 per share. In connection with these shares, the
Company recorded non-cash compensation and consulting expense of $67,545.

On November 17, 2004, we entered into a six-month consulting agreement with a
third party for business development and investor relations services. In
connection with this consulting agreement, we issued 1,000,000 shares of common
stock for services rendered over the contract period unless terminated earlier.
We valued these shares at their fair market value based on the trading price on
the date of issuance of $.23 per share or $230,000 to be amortized over the
service period.

The consultants and advisors (a) had a preexisting business relationship with
us, (b) had access to financial statements and other relevant information
concerning the Company; (c) had such knowledge in business and financial matters
that they were able to understand the risks and merits of an investment in the
Company, and were, therefore, sophisticated investors at the time of acquisition
and (d) the shares that were issued contained a legend restricting their
transferability absent registration under the Act or the availability of an
applicable exemption there from. Accordingly, these transactions were exempt
from the registration requirements of the Act by reason of Section 4(2) of the
Act and the rules and regulations there under.

Please refer to Item 11 Section - Compensation Under Existing Equity
Compensation Plans for options granted under existing employee stock
compensation plans.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following analysis of the results of operations and financial condition of
the Company should be read in conjunction with the financial statements of Sense
Holdings, Inc. for the year ended December 31, 2004 and notes thereto contained
in this Report on Form 10-KSB of Sense Holdings, Inc.

OVERVIEW

We design, develop, manufacture and sell fingerprint-based identification
products and systems that incorporate state-of-the-art biometric technology to
verify a person's identity. We also own, license or have optioned for purchase
the additional security-related technologies.

Our current base of customers primarily consists of two large enterprise level
clients and numerous smaller companies. To date, our ability to conduct
significant marketing activities that we deem critical to building broad market
awareness of, and demand for, our systems have been severely limited due to
financial constraints. The financial constraints were brought on in part by the
cash required to be spent in research and development. However, we have been
successful in limiting further research and development expenses and have sought
to market and refine our existing systems. We continue to seek funds to enable
us to begin to move forward with such marketing without the burden of past
research and development expenditures.

We have incurred substantial operating and net losses, as well as negative
operating cash flows, since our inception. As a result, we continued to have
significant working capital and limited shareholders' equity at December 31,
2004. In recognition of such, our independent certified public accountants
included an explanatory paragraph in their report on our consolidated financial
statements for the year ended December 31, 2004 that expressed substantial doubt
regarding our ability to continue as a going concern.

Although profit margins may be lower for existing system sales, lower profit
margins are significantly offset by dramatically lower operating costs. In
addition, we will continue to make customizations to our existing systems if
such systems can be supported by our reduction in research and development
spending and our smaller staff. However, additional funding identified above is
still needed to fund our longer-term operating needs, including our continued
conducting of those marketing activities we deem critical to building broad
public awareness of, and demand for, our current systems. Within the
restrictions set forth above, we are continuing to pursue additional financing.
We believe that additional financing, a reduction in research and development
expenses followed by the sales increases we expect to realize from the
additional marketing activities will be sufficient to support us until that
point in time at which we forecast that our business will become self-sustaining
from internally generated cash flow. There is no assurance we will be able to
raise additional financing or increase sales in the coming year.

                                       18
<PAGE>

We have realized, and expect to continue to realize, a substantial gross margin
averaging approximately 58% on our product sales and higher gross margins on
service related revenues. With respect to our operating cost structure, we
implemented a series of difficult, yet necessary, cost-cutting measures during
our preceding fiscal year. The most significant of which was the elimination of
substantially all non-critical personnel, consultants and infrastructure.

We currently operate with a core staff of 6 full-time employees. Additionally,
we eliminated a substantial portion of our product research and development
expenditures in the prior year. We expect to continue to reduce research and
development expenses as we focus on existing systems. We expect that our product
research and development needs and expenditures for the foreseeable future will
remain nominal.

Although we have limited our current expenditures on research and development,
and have eliminated non-critical personnel, we have maintained the employees
necessary to continue operations and incorporate changes to our core products
based on customers needs. We have done this to reduce expenses and because our
core products are operational and saleable to a broad market with very little
modification.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2004 AS COMPARED TO YEAR ENDED DECEMBER 31, 2003

REVENUES

For the year ended December 31, 2004, we generated revenues of $139,321. The
cost of goods sold was $55,581, which includes a $36,600 reserve expense for
slow-moving inventory. This resulted in a gross profit of $83,740 and a gross
profit percentage of 60% for the year ended December 31, 2004. For the year
ended December 31, 2003, we generated revenues of $444,147. The cost of goods
sold was $169,681 resulting in a gross profit of $274,466 and a gross profit
percentage of 62%. The decrease in revenues generated was $304,826 or a decrease
of 69%. The decrease is mainly attributed to the fact that four major clients
purchased our goods and services in the previous period. Two of the major
clients began to purchase under their respective master purchase agreements
after initial pilot installations. The sales to these customers have slowed
down. Additionally, through June 2004, we lacked working capital funds to spend
on marketing and advertising programs. Also, we have dedicated man hours and
resources to the acquisition and marketing of intellectual property during
fiscal 2004, which has taken away from sales efforts of our existing product
line. We believe the decrease is only temporary because we are further into the
sales cycle for the intellectual property. In addition, we are refocusing on the
sale of our existing product line, expanding our existing product line and have
the capital to engage in effective sale efforts. We experienced an increase in
gross profit percentage of approximately 24% mainly attributed to a higher
percentage of revenues generated from the sale of professional services and
maintenance fees versus from the sale of our products during the year ended
December 31, 2004 as compared to the year ended December 31, 2003. This increase
was offset by a reduction of gross profit of 26.4% attributable to the recording
of a reserve for slow-moving inventory of $36,600 in 2004. There is a lower
margin on the sale of our product versus the sale of professional services. Our
revenue breakdown is summarized below:

                                                  Year Ended
                                                 December 31,
                                                 2004      2003
                                               -------   --------
       Revenues:
         Sale of tangible products .........   $82,097   $444,147
         Consulting services and
            maintenance ....................    57,224          -
                                               -------   --------

            Total revenues .................  $139,321   $444,147
                                              --------   --------

At December 31, 2004, accounts receivables and inventories are unusually high
considering the level of sales for the year ended December 31, 2004. There are
two primary factors which explain that situation.

1.       Included in our accounts receivable balance is approximately $44,000
         from two customers who pay us slowly (180 days). We have spoken with
         these customers and they have assured us that we will receive payment
         onthese open accounts receivable balances. We expect to collect the
         remaining amounts in the near future.

                                       19
<PAGE>

2.       We purchased hardware in large quantities in the expectation of future
         business in order to receive volume discounts on the hardware. The
         sales have lagged behind the expectations of future business. However,
         all of the hardware that we carry in inventory is still utilized in our
         core products and we have no plans to redesign the core products to
         render the inventory obsolete. We believe that increased sales efforts
         of our core products will normalize sales verses inventory levels as we
         order less inventory to support those sales, however due to the lack of
         sales and the slow movement of inventory, we recorded a reserve for
         slow-moving inventory of $36,600 in 2004.

OPERATING EXPENSES

Depreciation and amortization decreased 73% to $11,618 for the year ended
December 31, 2004 compared to $43,119 for the year ended December 31, 2003. This
decrease is attributable to the amortization of a technology license in 2003.

For the year ended December 31, 2004, research and development costs amounted to
$163,492 as compared to $203,546 for the year ended December 31, 2003, a
decrease of $40,054 or 20%. This decrease is attributable to a decrease in our
research and development efforts and the concentration of our efforts on
currently developed products.

For the year ended December 31, 2004, general and administrative expenses were
$1,304,374 as compared to $1,162,558 for the year ended December 31, 2003 and
included the following:

                                                   2004                2003
                                                   ----                ----
         Salaries and related taxes .........   $  345,364         $  433,124
         Non-cash compensation and consulting      335,652            146,467
         Rent ...............................       56,546             59,549
         Professional fees ..................      152,218            151,425
         Bad debt                                   86,357             30,000
         Other General and administrative ...      328,237            341,993
                                                ----------         ----------
              Total ..........................  $1,304,374         $1,162,558
                                                ==========         ==========

For the year ended December 31, 2004, salaries and related taxes decreased to
$345,364 as compared to $433,124 for the year ended December 31, 2003. Overall,
our salaries and related taxes decreased from the reduction of staff. For the
year ended December 31, 2004, we allocated less salaries and related taxes to
research and development expense compared to the 2003 period.

For the year ended December 31, 2004, non-cash compensation and consulting
expense increased to $335,652 as compared to $146,467 for the year ended
December 31, 2003. The increase is related to the grant of common stock for
services in 2004 as well as the amortization of deferred compensation for shares
previously issued.

For the year ended December 31, 2004, professional fees increased to $152,218
compared to $151,425 for the year ended December 31, 2003. Our professional fees
primarily related to professional fees incurred due to the filing of our
registration statement on form SB-2, our SEC filings, and our private placement
as well as $15,000 of fees paid to a consultant seeking opportunities in China.

For the year ended December 31, 2004, other general and administrative expenses
decreased to $328,237 as compared to $341,993 for the year ended December 31,
2003. The decrease is primarily related to cost-cutting measures.

For the year ended December 31, 2003, we determined that, as of December 31,
2003, a write-down of the remaining license agreement associated with our
subsidiary, Micro Sensor, was necessary as the projections of future operations
results indicated impairment. Accordingly, we recorded an impairment of
$117,072.

INTEREST EXPENSE

Interest expense decreased to $108,143 for the year ended December 31, 2004 as
compared to interest expense of $148,436 for the year ended December 31, 2003.
This decrease is attributable to the repayment of our outstanding debt during
2004.

                                       20
<PAGE>

GAIN (LOSS) FROM MARKETABLE SECURITIES

For the year ended December 31, 2004, we recorded a loss from the sale of
marketable securities of $1,760 as compared to a loss of $11,401 for the year
ended December 31, 2003. For the year ended December 31, 2004, we recorded an
unrealized gain on securities held of $1,529 for the year ended December 31,
2004 and compared to an unrealized loss of $3,173 for the year ended December
31, 2003.

OVERALL

We reported a net loss for the year ended December 31, 2004 of $(1,499,284)
compared to a net loss for the year ended December 31, 2003 of $(1,409,675).
This translates to an overall per-share loss of ($.06) for the year ended
December 31, 2004 compared to per-share loss of ($.08) for the year ended
December 31, 2003.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our growth and cash requirements through equity investments and
debt and equity financing. We do not currently have any credit facilities from
financial institutions or private lenders. We do not currently have any material
commitments for capital expenditures accept as disclosed herein.

In April 2004, we consummated a capital raise through a private placement
offered to accredited investors. We offered investment units each costing
$35,000, with each unit consisting of (a) a number of shares of common stock of
the Company determined by dividing the unit price by $.175 per share and (b) one
common stock purchase warrants for every two shares of common stock received
upon conversion with an exercise price of $.20 per share. In April 2004, we sold
six units under the private placement aggregating 1,200,000 shares of common
stock and 600,000 warrants for net proceeds of $210,000. The warrants expire in
April 2009.

In May 2004, note holders comprising the $750,000 notes payable converted
$175,000 of debt into 673,078 shares of common stock. Additionally, we repaid
notes holders $550,000.

On May 10, 2004, we issued 6,600,000 shares of common stock and granted
1,650,000 warrants for net proceeds of approximately $1,188,000 in connection
with a private placement. In June 2004, we issued an additional 3,200,000 shares
of common stock and granted 800,000 warrants for net proceeds of $545,750 in
connection with a private placement.

Cash used in operations for the year ended December 31, 2004 was $910,770
attributable primarily to the net loss of $1,499,284 offset by non-cash
compensation of $335,652, depreciation and amortization of $11,618, the
amortization of the discount on notes payable of $75,520, other non-cash items
and change in asset and liability accounts. Cash used in operations for the year
ended December 31, 2003, was $1,021,451 attributable to a net loss of $1,409,675
and an increase in accounts receivable of $112,662 offset by non-cash
compensation of $146,467, amortization of deferred compensation of $19,685,
amortization of the discount on notes payable of $45,312, a loss on impairment
of license agreement of $117,072, changes in the allowance for doubtful accounts
of $14,283; change in accounts payable and accrued expenses of $55,269;
depreciation and amortization of $43,119, change in inventories of $37,320, and
other non-cash items and change in asset and liability accounts other.

For the year ended December 31, 2004, net cash provided by investing activities
was $50,032 and consisted of net proceeds from the sale of marketable securities
of $63,329 offset by funds used for the purchase of marketable securities of
$13,297. For the year ended December 31, 2003, net cash provided by investing
activities was $114,872 and consisted of net proceeds from the sale of
marketable securities of $330,498 offset by funds used for the purchase of
marketable securities of $189,236 and the purchase of equipment and software of
$26,390.

For the year ended December 31, 2004, net cash provided by financing activities
was $1,406,796 and consisted of proceeds from the sale of common stock of
$1,943,750 and proceeds from a margin loan of $13,046 offset by the repayment of
notes payable of $550,000. For the year ended December 31, 2003, net cash
provided by financing activities was $755,484 and was attributed to proceeds
from notes payable secured during the reporting period and proceeds from a
margin loan of $5,484.

As a result of the above, total cash increased by $546,058 during year ended
December 31, 2004 as compared to a decrease in cash of $151,095 for the year
ended December 31, 2003.

                                       21
<PAGE>

Since our inception, we have been engaged in research development activities
relating to our first generation of biometric security products. We commenced
delivery of these products in the third quarter of 1999 and have been generating
revenues since the fourth quarter of 1999. We have completed development of our
second and third generation product, and have recognized revenue on their sales
since the year ended December 31, 2000. We have also recognized revenue for
consulting fees since the third quarter of 2000. We will continue to make
enhancements to our second-generation product so that it will support a larger
database, and enable us to market CheckPrint T/A to larger companies, resulting
in a greater profit margin to us. We will continue to develop other products and
services relating to biometrics, security, data management, explosive detection,
and consulting services.

In the long term, based upon purchase orders we have received, anticipated
future product sales and cash on hand, we believe that we will have the need for
additional capital investment and are actively pursuing additional outside
capital investments that will be necessary to meet our cash flow needs beyond
the next twelve months. This is due primarily to our history of sales lagging
expenses. However, we have taken action to reduce our expenses and plan to focus
more on future sales.

In the short term, less than twelve months, we do not foresee needing additional
capital unless, an unforeseen business opportunity requires more funds than we
have currently on hand. On both the long and short term, should revenues not
reach projected levels or should unforeseen events arise, we may be required to
secure additional funds to meet our operating needs sooner than anticipated.

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60 requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Note 1 to our consolidated financial statements includes a
summary of the significant accounting policies and methods used in the
preparation of our consolidated financial statements. The following is a brief
discussion of the more significant accounting policies and methods used by us.

ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of revenues and expenses. Actual
results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. All material inter-company transactions have been
eliminated.

REVENUE RECOGNITION

The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the various revenues streams of
the Company:

The Company recognizes revenues as units of its product are delivered and
installed to its customers.

Revenue from periodic maintenance agreements is generally recognized ratably
over the respective maintenance periods provided no significant obligations
remain and collectibility of the related receivable is probable

MARKETABLE SECURITIES

Marketable securities are classified as trading securities and are held for
resale in anticipation of short-term market movements. At December 31, 2004,
marketable securities consisted of U.S. Treasury and Federal Agency securities
held for resale. Gains or losses are recognized in the statement of operations
when the bonds are sold. Unrealized gains or losses are recognized in the
statement of operations on a monthly basis based on changes in their estimated
fair value.

                                       22
<PAGE>

INVENTORY

Inventory is stated at the lower of average cost or market and consists of raw
materials and finished goods.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet for cash, marketable
securities, receivables, inventory and accounts payable approximate their fair
market value based on the short-term maturity of these instruments.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred. These costs primarily
consist of fees paid for the development of the Company's software.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the Company's second quarter of fiscal 2006.
We are in process of evaluating the impact of this pronouncement on its
financial position.

In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. We believe that the adoption of this
standard will have no material impact on our financial statements.

In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments." The EITF reached a consensus about the
criteria that should be used to determine when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss and how that criteria should be applied to investments
accounted for under SFAS No. 115, "ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES." EITF 03-01 also included accounting considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. Additionally, EITF 03-01 includes new
disclosure requirements for investments that are deemed to be temporarily
impaired. In September 2004, the Financial Accounting Standards Board (FASB)
delayed the accounting provisions of EITF 03-01; however the disclosure
requirements remain effective for annual reports ending after June 15, 2004. We
believe that the adoption of this standard will have no material impact on our
financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

Under SEC regulations, we are required to disclose our off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors. An off-balance sheet arrangement means
a transaction, agreement or contractual arrangement to which any entity that is
not consolidated with us is a party, under which we have:

   o  Any obligation under certain guarantee contracts;
   o  Any retained or contingent interest in assets transferred to an
      unconsolidated entity or similar arrangement that serves as credit,
      liquidity or market risk support to that entity for such assets;
   o  Any obligation under a contract that would be accounted for as a
      derivative instrument, except that it is both indexed to our stock and
      classified in stockholder's equity in our statement of financial position;
      and
   o  Any obligation arising out of a material variable interest held by us in
      an unconsolidated entity that provides financing, liquidity, market risk
      or credit risk support to us, or engages in leasing, hedging or research
      and development services with us.

As of the date of this report, we do not have any off-balance sheet arrangements
that we are required to disclose pursuant to these regulations. In the ordinary
course of business, we enter into operating lease commitments, purchase
commitments and other contractual obligations. These transactions are recognized
in our financial statements in accordance with generally accepted accounting
principles in the United States.

                                       23
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

See Index to Financial Statements for the financial statements included in this
Form 10-KSB.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING AND FINANCIAL
         DISCLOURE STATEMENTS

         None.

ITEM 8A. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer (collectively, the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for us. Based upon such officers' evaluation
of these controls and procedures and subject to the limitations noted
hereinafter, the Certifying Officers have concluded that our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by us in this Annual Report is accumulated and communicated to management,
including our principal executive officers as appropriate, to allow timely
decisions regarding required disclosure.

The Certifying Officers have also indicated that there were no significant
changes in our internal controls or other factors that could significantly
affect such controls subsequent to the date of their evaluation, and there were
no corrective actions with regard to significant deficiencies and material
weaknesses.

Our management, including each of the Certifying Officers, does not expect that
our disclosure controls or our internal controls will prevent all error and
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls also is based in
part upon certain assumptions about the likelihood of future events, and their
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of these inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.

                                       24
<PAGE>

ITEM 8B. OTHER INFORMATION

         NONE
                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS

The following table includes the names, positions held and ages of our executive
officers and directors.

NAME                  AGE                       POSITION

Dore Scott Perler     44    Chief Executive Officer, President and Chairman
                            Vice President, Treasurer, Secretary and Director

Andrew Goldrich       44    Director, Chief Financial Officer

Shawn Tartaglia       35    Vice President, Chief Technical Officer and Director

Julie Slater          45    Director

DORE SCOTT PERLER has served as our Chief Executive Officer, President and
Chairman of our board of directors since July 1998. From May 1993 to July 1998,
Mr. Perler was a founder, Director, and Vice President of Sales covering the
Southeast United States and Latin America, for Latinrep, Inc., a manufacturer's
representative organization. He assisted in the formation of Latin Channels, a
trade show for Latin American distributors.

ANDREW GOLDRICH has served as our Vice President, Chief Financial Officer,
Treasurer, Secretary and a Director since July 1998. From January 1984 to July
1998, Mr. Goldrich was Vice President of Sales and Finance for Sassy Knitting
Mills, Inc., a privately held garment manufacturer. He was a founder of Sassy
Knitting Mills, where he implemented a national sales force and was responsible
for overall financial and marketing activities.

SHAWN TARTAGLIA has served as our Vice President, Chief Technical Officer and
Director since July 1998. From November 1997 to July 1998, Mr. Tartaglia was
Manager of Information Systems for CompScript, Inc., a privately held
pharmaceutical provider. From February 1993 to November 1997, Solopak
Pharmaceuticals, a privately held pharmaceutical supplier, employed him as its
Systems and Telecommunications Manager.

JULIE SLATER has served as a Director on our board of directors since January
1999. From 1984 and continuing until the present, Ms. Slater has been Vice
President of All Eyes Optical, a privately held optometry and retail eyewear
provider. She is the sister-in-law to our Chief Executive Officer, Dore Perler.

ADVISORY BOARDS AND KEY CONSULTANTS

We have established two non binding advisory boards: an Operations Advisory
Board and the Executive Operation Board. The Operations Advisory Board makes
suggestions to the Board of Directors regarding hardware, engineering and
manufacturing. The Executive Advisory Board makes suggestions to the Board of
Directors regarding strategic goals and objectives of the organization.

We have also engaged several consultants who have played significant roles for
us since our inception. The members of our advisory boards and consultants are:

ALEX SCHLINKMANN is a member of our Operations Advisory Board and a consultant.
Mr. Schlinkmann has been a consultant to us, through Test Systems Engineering,
since July 1998. Since 1991 he has been President and Design Engineer for Test
Systems Engineering. He has helped with the design of several components of our
hardware housing, given advice on best manufacturing methods and constructed
prototypes of new hardware housings and components.

JAMIE SCHLINKMANN is also a member of our Operations Advisory Board and a
consultant. Mr. Schlinkmann is the brother of Alex Schlinkmann, and has been a
consultant to us since July 1998. Since 1991 he has been Vice President and
Design Engineer for Test Systems Engineering. He has also helped with the design
of several components of our hardware housing, given advice on best
manufacturing methods and constructed prototypes of new hardware housings and
components.

                                       25
<PAGE>

PHILIP KENDAL is a member of our Executive Advisory Board and a consultant. Mr.
Kendal is a successful business professional and currently serves as the
Chairman of G-Com2 Solutions, which provides systems and services are designed
to expedite document preparation and reduce production time and cost. This
value-added process dramatically benefits its clients in the mutual fund,
commercial and association industries.

DR. PANOS DATSKOS is also a member of our Executive Advisory Board. Dr. Datskos
is a scientist at Oak Ridge National Laboratory and serves as a liaison between
Sense and the laboratory. He advises the Board of Directors with regards to the
MEMS technology currently under license.

The Advisory Board positions are voluntary and each member is an equity owner in
Sense.

BOARD OF DIRECTORS

All Directors serve for one year or such longer time until their successors are
elected and qualify. Directors do not receive compensation for serving as such.
The Board of Directors appoints officers and terms of office are, unless
otherwise stated in employment contracts, at the discretion of the Board of
Directors.

Pursuant to a Private Placement Agreement, wherein Joseph Stevens and Company,
Inc., ("Joseph Stevens") assisted in the placement of $750,000 in our securities
to individual investors in 2001, Joseph Stevens has the right to designate one
member to our board of directors or, in lieu thereof, appoint one observer to
our board of directors until not later than March 26, 2006. To date, Joseph
Stevens has not designated a director or observer. We have agreed to reimburse
such designee for out-of-pocket expenses incurred in connection with attending
meetings of our board of directors.

BOARD COMMITTEES

We do not as yet have an audit committee or a compensation committee. Our Board
of Directors, by majority, handles the tasks of unformed board committees. No
members of our board are independent, within the meaning of rules of the
Securities and Exchange Commission or self-regulatory organizations. Inasmuch as
the Company does not have an audit committee, the Company does not have an
"audit committee financial expert" within the meaning of Item 401(e) of
Regulation SB.

CODE OF ETHICS

We have adopted a code of ethics applicable to all of our officers, directors
and employees. The code of ethics also includes provisions that apply only to
our chief executive officer and senior financial officers. A copy of our code of
ethics is file as an exhibit to this report.

EMPLOYMENT AGREEMENTS AND COMPENSATION PACKAGES

Employment Agreements

In December 2002, the Company entered into two-year employment contracts with
its Chief Executive Officer, Chief Financial Officer and Chief Technology
Officer that expired on December 31, 2004. On April 1, 2005, we entered into
three-year employment contracts with our Chief Executive Officer, Chief
Financial Officer and Chief Technology Officer which expire on April 1, 2008.
Specific terms are detailed below:

DORE PERLER. Pursuant to his employment agreement with us, Mr. Perler renders
full-time professional services to Sense in the capacity of Chief Executive
Officer. He is obligated, at all times, to faithfully, industriously and to the
best of his ability, perform all duties set forth in Sense bylaws and in policy
statements of the board of directors.

In consideration for these services as Chief Executive Officer, effective April
1, 2005, we will pay Mr. Perler a salary of $137,500 per annum through May 6,
2005 and $156,000 through May 7, 2006. In addition, Mr. Perler is provided a car
allowance of up to $ 500 per month.

ANDREW GOLDRICH. Pursuant to his employment agreement with us, Mr. Goldrich
renders full-time professional services to Sense in the capacity of Chief
Financial Officer. He is obligated, at all times, to faithfully, industriously
and to the best of his ability, perform all duties set forth in Sense bylaws and
in policy statements of the board of directors.

In consideration for these services as Chief Financial Officer, effective April
1, 2005, we will pay Mr. Goldrich a salary of $137,500 per annum through May 6,
2005 and $156,000 through May 7, 2006. In addition, Mr. Goldrich is provided a
car allowance of up to $ 500 per month.

                                       26
<PAGE>

SHAWN TARTAGLIA. Pursuant to his employment agreement with us, Mr. Tartaglia
renders full-time professional services to Sense in the capacity of Chief
Technical Officer. He is obligated, at all times, to faithfully, industriously
and to the best of his ability, perform all duties set forth in Sense bylaws and
in policy statements of the board of directors.

In consideration for these services as Chief Technical Officer, Effective April
1, 2005, we will pay Mr. Tartaglia a salary of $96,800 per annum.

INCENTIVE COMPENSATION

In addition to the base salary, each of our executives who have employment
agreements with us are entitled to receive, as incentive compensation in respect
of each calendar year (or portion thereof) of Sense, an amount determined in
accordance with any bonus or short term incentive compensation program (which
may be based upon achieving certain specified performance criteria) which may be
established by the board. Sense's Board of Directors shall review the
determination as to the amounts of any awards available to our executives under
these programs at least annually. The review shall ensure that such amounts are
competitive, and comparable, with awards granted to similarly situated
executives of publicly held companies comparable to Sense.

OTHER BENEFITS

The employment agreements with our executives also provide other benefits.
Executives receive 10 paid vacation days and such other paid holidays in
accordance with Sense's policy. In addition, they are compensated in accordance
with Sense's disability policies. An executive may receive up to six (6) months
salary continuation in the event of short-term disability. An executive may be
granted permission to be absent from Sense during working days to attend
professional meetings and to attend to such outside professional duties in the
biometrics field as have been mutually agreed upon. Attendance at such approved
meetings and accomplishment of approved professional duties shall be fully
compensated service time and shall not be considered vacation time. We shall
reimburse the executive for all expenses incurred by the executive incident to
attendance at approved professional meetings and such entertainment expenses
incurred by the executive in furtherance of Sense's interests, provided,
however, that such reimbursement is approved by the Board of Directors. We pay
dues to professional associations and societies and to such service
organizations and clubs of which the executive is a member, which has been
approved by the Board of Directors as being in the best interests of Sense. The
executives receive all other fringe benefits to which all other employees of
Sense are entitled.

INSURANCE

All of our executives are covered under our general liability insurance policy
for all acts done by him in good faith as an officer throughout the term of
their contracts with us. Sense does not have an additional insurance policy
covering its Directors and Officers. We also provide comprehensive health and
major medical insurance for our executives and their families, according to
Sense's benefit package.

TERMINATION

In the event of involuntary termination without "cause" or disability, each
executive will be entitled to the following compensation for the succeeding 24
months following the date of termination:

      o  A total of two hundred (200%) percent of the executive's base
         compensation in effect on the date of the employment termination; plus

      o  A total of two hundred (200%) percent of the executive's annual
         incentive bonus earned on a quarterly basis as of the date of the
         termination, assuming the executive was employed on the last day of the
         quarter in which termination of employment occurred.

In the event the executive is terminated for "cause" the executive will be
entitled to any unpaid salary through the date of termination and deferred
compensation will be forfeited. In the event there is a "Change in Control", we
will be required to pay the executive a lump sum equal to 299% of the
executive's base compensation in effect on the date of employment plus 299% of
the executive's prior year incentive bonus. The executives may, at their
discretion, elect to terminate the contract the executive must give the board 90
days written notice and the executive would not be entitled to severance
benefits.

                                       27
<PAGE>

INDEMNIFICATION

Our Articles of Incorporation further provide for the indemnification of any and
all persons who serve as our director, officer, employee or agent to the fullest
extent permitted under Florida law. Insofar as indemnification for liabilities
arising under the Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Commission, this indemnification is
against public policy as expressed in the securities laws, and is, therefore
unenforceable.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

We are not currently subject to Section 16(a) of the Securities Exchange Act of
1934, and, therefore, our directors and executive officers, and persons who own
more than ten percent of our common stock are not required to file with the
Securities and Exchange Commission reports disclosing their initial ownership
and changes in their ownership of our common stock. We have agreed to register
under Section 12(g) of the Securities Exchange Act of 1934, at which time our
directors, executive officers and 10% shareholders will become subject to
section 16(a). We have not as yet registered our securities under Section 12(g).

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information relating to all compensation awarded
to, earned by or paid by us for each of the last three fiscal years ended
December 31, to: (a) our President and Chief Executive Officer; and (b) each of
our executive officers who earned more than $100,000 during the fiscal year
ended December 31, 2004:
<TABLE>
<CAPTION>

                                Annual Compensation                      Long-Term Compensation
                      ---------------------------------------------     -------------------------
                                                                        Restricted     Securities
                                                       Other Annual        Stock       Underlying
Name and Principal    Fiscal       Salary      Bonus   Compensation       Awards        Options      All Other
Position               Year          ($)        ($)        ($)              ($)          SAR (#)    Compensation
----------------------------------------------------------------------------------------------------------------
<S>                    <C>        <C>          <C>         <C>          <C>              <C>            <C>
Dore Scott Perler,     2004       $131,788     $  -        $  -         $ 91,100(1)      600,000        -0-
Chief Executive        2003       $125,000     $  -        $  -         $    -              -           -0-
Officer                2002       $101,250     $  -        $  -         $    -           150,000        -0-

Andrew Goldrich,       2004       $131,788     $  -        $  -         $ 91,100(1)      600,000        -0-
Chief Financial        2003       $125,000     $  -        $  -         $    -              -           -0-
Officer                2002       $101,250     $  -        $  -         $    -           150,000        -0-

Shawn Tartaglia        2004       $ 96,000     $  -        $  -         $ 42,800(2)      300,000        -0-
Director and Chief     2003       $ 96,000     $  -        $  -         $    -              -           -0-
Operating Officer
</TABLE>
_________
(1) Represents the estimated fair value of 600,000 stock options granted to each
    individual, respectively, at exercise prices as follows:

                   # of           Exercise
                  Options          Price
                  -------         --------
                  250,000           $.27
                  250,000           $.19
                  100,000           $.17
                  -------
                  600,000
                  -------

(2) Represents the estimated fair value of 300,000 stock options granted at
    exercise prices as follows:

                   # of           Exercise
                  Options          Price
                  -------         --------
                  250,000           $.19
                   50,000           $.17
                  -------
                  300,000
                  -------

                                       28

<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

         The following table sets forth information concerning individual grants
of options made during Fiscal 2004 to the Named Executive Officers.
<TABLE>
<CAPTION>
                                          % of Total
                    Number of Shares    Options Granted   Exercise or     FMV of
                   Underlying Options   to Employees in    Base Price   Shares on       Expiration
                      Granted (#)         Fiscal Year       ($/Sh)      Grant Date         Date
-------------------------------------------------------------------------------------------------------
<S>                     <C>                  <C>            <C>          <C>         <C>
Dore Scott Perler       250,000              30.1%          $ 0.27       $ 0.27      May 21, 2007
Dore Scott Perler       250,000              30.1%          $ 0.19       $ 0.19      December 30, 2009
Dore Scott Perler       100,000              30.1%          $ 0.17       $ 0.19      December 30, 2007
Andrew Goldrich         250,000              30.1%          $ 0.27       $ 0.27      May 21, 2007
Andrew Goldrich         250,000              30.1%          $ 0.19       $ 0.19      December 30, 2009
Andrew Goldrich         100,000              28.3%          $ 0.17       $ 0.19      December 30, 2007
Shawn Tartaglia         250,000              28.3%          $ 0.19       $ 0.19      December 30, 2009
Shawn Tartaglia          50,000              28.3%          $ 0.17       $ 0.19      December 30, 2007
</TABLE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

The following table indicates each exercise of stock options (or tandem SARS)
and freestanding SRAS during the last fiscal year by each of the names executive
officers and the total number and value of exercisable and unexercisable stock
options held by Named Executive Officers as of December 31, 2004.
<TABLE>
<CAPTION>
                                                     Number of Securities             Value of Unexercised
                                                    Underlying Unexercised                In-the-Money
                       Shares                    Options at Fiscal Year-End (#)    Options at Fiscal Year-end
                    acquired on     Value        ------------------------------    ---------------------------
Name                Exercise(#)   Realized($)    Exercisable      Unexercisable    Exercisable   Unexercisable
-----------------   -----------   -----------    -----------      -------------    -----------   -------------
<S>                      <C>           <C>        <C>                   <C>           <C>             <C>
Dore Scott Perler        -             -            750,000             -             $ -0-           $  -
Andrew Goldrich          -             -            750,000             -             $ -0-           $  -
Shawn Tartaglia          -             -            525,000             -             $ -0-           $  -
</TABLE>

INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN

1999 Plan: On July 19, 1999, the board of directors and shareholders adopted our
1999 stock option plan. We reserved 1,500,000 shares of common stock for
issuance upon exercise of options granted from time to time under the 1999 stock
option plan. The 1999 stock option plan is intended to assist us in securing and
retaining key employees, directors and consultants by allowing them to
participate in our ownership and growth through the grant of incentive and
non-qualified options.

Under the stock option plan we may grant incentive stock options only to key
employees and employee directors, or we may grant non-qualified options to our
employees, officers, directors and consultants. Our board of directors currently
administers the 1999 stock option plan.

Subject to the provisions of the stock option plan, the board will determine who
shall receive options, the number of shares of common stock that may be
purchased under the options, the time and manner of exercise of options and
exercise prices. The term of options granted under the stock option plan may not
exceed ten years or five years for an incentive stock option granted to an
optionee owning more than 10% of our voting stock. The exercise price for
incentive stock options will be equal to or greater than 100% of the fair market
value of the shares of the common stock at the time granted. However, the
incentive stock options granted to a 10% holder of our voting stock are
exercisable at a price equal to or greater than 110% of the fair market value of
the common stock on the date of the grant. The exercise price for non-qualified
options will be set by the board, in its discretion, but in no event shall the
exercise price be less than 75% of the fair market value of the shares of common
stock on the date of grant. The exercise price may be payable in cash or, with
the approval of the board, by delivery of shares or by a combination of cash and
shares. Shares of common stock received upon exercise of options will be subject
to restrictions on sale or transfer. As of April 13, 2005 we have granted
options to purchase 1,265,000 shares under the 1999 stock option plan. There are
235,000 shares remaining under the 1999 stock option plan and none of the
options granted to date have been exercised.

                                       29
<PAGE>

2001 Plan: On November 28, 2001, the board of directors adopted our 2001 equity
compensation plan, and on November 28, the 2001 plan was ratified by holders of
a majority of our outstanding common stock. We had reserved 2,000,000 shares of
common stock for issuance as stock grants and upon exercise of options granted
from time to time under the 2001 equity compensation plan. In April 2005, we
will file an S-8 registration statement increasing the reserved shares issuable
under the 2001 stock option plan by 2,000,000 to 4,000,000. The 2001 plan is
intended to assist us in securing and retaining key employees, directors and
consultants by allowing them to participate in our ownership and growth through
the grant of incentive and non-qualified options, as well as direct stock
grants. In April 2005, we will file an S-8 registration statement increasing the
reserved shares issuable under the 2001 stock option plan by 2,000,000 to
4,000,000.

Under the 2001 plan we may grant incentive stock options only to key employees
and employee directors. We may grant non-qualified options and issue direct
stock awards to our employees, officers, directors and consultants. Our Board of
Directors currently administers the 2001 equity compensation plan.

Subject to the provisions of the 2001 plan, the board will determine who shall
receive options or grants, the number of shares of common stock that may be
purchased under the options, the time and manner of exercise of options and
exercise prices. The term of options granted under the stock option plan may not
exceed ten years or five years for an incentive stock option granted to an
optionee owning more than 10% of our voting stock. The exercise price for
incentive stock options will be equal to or greater than 100% of the fair market
value of the shares of the common stock at the time granted. However, the
incentive stock options granted to a 10% holder of our voting stock are
exercisable at a price equal to or greater than 110% of the fair market value of
the common stock on the date of the grant. The exercise price for non-qualified
options will be set by the board, in its discretion, but in no event shall the
exercise price be less than the par value for our common stock The exercise
price may be payable in cash or, with the approval of the board, by delivery of
shares or by a combination of cash and shares. The board may also direct the
issuance of shares of our common stock as awards under the 2001 plan. Absent
registration under the Securities Act of 1933, as amended, or the availability
of an applicable exemption there from, shares of common stock received as stock
grants and upon exercise of options will be subject to restrictions on sale or
transfer. As of April 13, 2005, we have granted options or awarded shares in the
amount of 1,978,660 under the 2001 plan. Under the 2001 plan, there are
2,021,340 shares remaining and none of the options granted to date have been
exercised.

The following table sets forth, as of December 31, 2004, information known to us
relating to shares, options, warrants and rights issued under existing equity
compensation plans.
<TABLE>
<CAPTION>
                                                                                            (c)
                                     (a)                       (b)             Number of Securities remaining
                             Number of securities       Weighted-average            available for future
                               issued or to be          exercise price of          issuance under equity
                             issued upon exercise          outstanding              compensation plans
                            of outstanding options      options, warrants          (excluding securities
Plan Category                warrants and rights            and rights            reflected in column (a))
-------------               ----------------------      -----------------      ------------------------------
<C>                               <C>                         <C>                       <C>
Equity Compensation Plans approved by Security Holders
------------------------------------------------------

1999 Plan                         1,265,000                   $.23                        235,000
2001 Plan                         1,978,660                   $.21                      2,021,340

Equity Compensation Plans not approved by Security Holders
----------------------------------------------------------

                                          0                   $.00                             00
</TABLE>

Other Plans

Other plans includes equity compensation plans not approved by shareholders.
These plans are comprised of options granted and/or warrants issued to employees
and non-employees, including directors, consultants, advisors, suppliers,
vendors, customers and lenders for purposes including to provide continued
incentives, as compensation for services and/or to satisfy outstanding
indebtedness to them.

As of December 31, 2004, we had outstanding warrants covering 9,077,590 shares
of our common stock under equity plans not approved by shareholders. The
warrants have exercise prices ranging from $.16 per share to $1.50 per share and
expiration dates ranging from April 2006 to June 2009.

                                       30
<PAGE>

The grants of these options were approved on a case-by-case basis by the board
of directors, and are within the limits of the number of shares that we are
authorized to issue. The grant of warrants were not authorized by our
shareholders. We may, in the future, authorize the grant of additional options
and/or issuance of additional warrants for the foregoing purposes and other
valid corporate purposes.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

As authorized by the Florida Business Corporation Law, our Articles of
Incorporation provide that none of our directors shall be personally liable to
for monetary damages for breach of fiduciary duty as a director, to
shareholders, except liability for:

      o  Any breach of the director's duty of loyalty to our company or its
         shareholders;
      o  Acts or omissions not in good faith or which involve intentional
         misconduct or a knowing violation of law;
      o  unlawful payments of dividends or unlawful stock redemptions or
         repurchases; and
      o  any transaction from which the director derived an improper personal
         benefit.

This provision limits our rights and the rights of our shareholders to recover
monetary damages against a director for breach of the fiduciary duty of care
except in the situations described above. This provision does not limit our
rights or the rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws.

Our Articles of Incorporation further provide for the indemnification of any and
all persons who serve as our director, officer, employee or agent to the fullest
extent permitted under Florida law.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC, this indemnification is against public policy as expressed in the
securities laws, and is, therefore unenforceable.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the date of this annual report,
information known to us relating to the beneficial ownership of shares of common
stock by: each person who is the beneficial owner of more than five percent of
the outstanding shares of common stock; each director; each executive officer;
and all executive officers and directors as a group.

Unless otherwise indicated, the address of each beneficial owner in the table
set forth below is in care of: Sense Holdings, Inc., 4503 NW 103rd Avenue, Suite
200, Sunrise, Florida 33351.

We believe that all persons named in the table have sole voting and investment
power with respect to all shares of common stock beneficially owned by them.

Under securities laws, a person is considered to be the beneficial owner of
securities he owns and that can be acquired by him within 60 days from the date
of this annual report upon the exercise of options, warrants, convertible
securities or other understandings. We determine a beneficial owner's percentage
ownership by assuming that options, warrants or convertible securities that are
held by him, but not those held by any other person and which are exercisable
within 60 days of the date of this annual report, have been exercise or
converted.

Except as other wise required by Securities and Exchange Commission rules
relating to beneficial ownership, the table does not give effect to the issuance
of up to:

      o  2,085,000 shares of common stock issuable upon exercise of options that
         have been granted;
      o  2,056,340 in the event that shares available for award under our stock
         option plans are awarded; and
      o  9,077,590 shares of common stock issuable upon exercise of outstanding
         purchase warrants; and/or

                                       31
<PAGE>

Name and Address of             Amount and Nature of               Percentage
 Beneficial Owner               Beneficial Ownership                of Class

Dore S. Perler                  1,919,723 shares(1)                   5.76%
9400 S.W. 49th Place
Cooper City, FL 33328

Andrew Goldrich                 1,779,519 shares(1)                   5.34%
21653 Marigot Drive
Boca Raton, FL 33428

Shawn Tartaglia                   718,585 shares(2)                   2.16%
6888 Ashburn Road
Lake Worth, FL 33467

Julie Slater                       48,703 shares(3)                      *
402 N.W. 118th Terrace
Coral Springs, FL 33071

Officers and Directors          4,466,530 shares(3)                  13.40%
as a group (4 persons)
_________
* Less than 1%.
(1) Includes 750,000 shares issuable upon exercise of currently exercisable
    options.
(2) Includes 525,000 shares issuable upon exercise of currently exercisable
    options.
(3) Includes 10,000 shares issuable upon exercise of currently exercisable
    options.
(4) Includes 2,034,000 shares issuable upon exercise of currently exercisable
    options.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the years 2000, 2001 and 2002, Dore Perler was loaned $42,000, Andrew
Goldrich was loaned $24,500 and Shawn Tartaglia was loaned $1,722. As of
December 31, 2004, $57,000 of these balances are still owed. These loans bear
interest at 4% per annum, are secured by Sense common shares held by the
respective individual, and are payable on December 31, 2006.

                                       32
<PAGE>

ITEM 13. EXHIBITS.

     Exhibit No.                  Description of Document
     -----------                  -----------------------
        2.1     Agreement and Plan of Merger between Century Silver Mines, Inc.
                and Sense Holdings, Inc.(1)
        3.1(a)  Articles of Incorporation of Sense Holdings, Inc.(1) 3.1(b)
                Articles of Merger of Century Silver Mines, Inc. into Sense
                Holdings, Inc. (FL)(1)
        3.1(c)  Articles of Merger of Century Silver Mines, Inc. into Sense
                Holdings, Inc. (ID)(1)
        3.2     Bylaws (1)
        10.1    1999 Stock Option Plan (1)
        10.2    Employment Agreement between the Company and Dore Scott Perler
                (1)
        10.3    Employment Agreement between the Company and Andrew Goldrich (1)
        10.4    Employment Agreement between the Company and Shawn Tartaglia (1)
        10.5    Technology License Agreement, as amended, with SAC Technologies,
                Inc.(1)
        10.6    Lease for Tamarac Office (1)
        10.11   Manufacturing and Non-Compete Agreement with Test Systems
                Engineering (1)
        10.12   Sales Agreement with Integrated Design, Inc.(1)
        10.13   Agreement and Plan of Acquisition dated May 31, 2001 with Micro
                Sensor Technologies, Inc. (2)
        10.14   Patent License Agreement dated March 26, 2001, between Micro
                Sensor Technologies, Inc. and UT-Battelle, LLC (2)
        10.15   Consulting Agreement dated June 1, 2001, between Micro Sensor
                Technologies, Inc. and Dr. Thomas Thundat (2)
        10.16   Work for Others Agreement dated June 4, 2001, between
                UT-Battelle, LLC and Micro Sensor Technologies, Inc. (2)
        10.17   Form of Promissory Note, as amended (4)
        10.18   Lease for Sunrise Office. (4)
        10.19   2001 Equity Compensation Plan (3)
        10.20   Employment Agreement between the Company and Dore Scott Perler
                as of December 16, 2002(4)
        10.21   Employment Agreement between the Company and Andrew Goldrich as
                of December 16, 2002 (4)
        10.22   Employment Agreement between the Company and Shawn Tartaglia as
                of December 16, 2002(4)
        10.23   Employment Agreement between the Company and Dore Scott Perler
                as of April 1, 2005(5)
        10.24   Employment Agreement between the Company and Andrew Goldrich as
                of April 1, 2005 (5)
        10.25   Employment Agreement between the Company and Shawn Tartaglia as
                of April 1, 2005(5)
        14      Code of Ethics (5)
        31.1    Certification of CEO dated April 14, 2005 (5)
        31.2    Certification of CFO dated April 14, 2005 (5)
        32.1    Certification of CEO dated April 14, 2005 (5)
        32.2    Certification of CFO dated April 14, 2005 (5)
        _________
        (1) Incorporated by reference to exhibits with the corresponding number
        filed with our registration statement on Form SB-2 (File No. 333-87293).

        (2) Incorporated by reference to exhibits with the corresponding number
        filed with our registration statement on Form SB-2 (File No.333-62874).

        (3) Incorporated by reference to exhibits with the corresponding number
        filed with our registration statement on Form S-8 (File No.333-81306).

        (4) Previously filed with Form 10-KSB filed on April 15, 2003.

        (5) Filed herewith

                                       33
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate fees billed by the Company's auditors for professional services
rendered in connection with the audit of the Company's annual consolidated
financial statements for fiscal 2004 and 2003 and reviews of the consolidated
financial statements included in the Company's Forms 10-KSB for fiscal 2004 and
2003 were approximately $35,500 and $28,000, respectively.

AUDIT-RELATED FEES

For fiscal 2004 and 2003, the Company's auditors billed for service related to
an SB-2 registration filing with the SEC in the amount of $7,580 and $1,500
respectively. The Company's auditors did not bill any additional fees for
assurance and related services that are reasonably related to the performance of
the audit or review of the Company's financial statements and are not reported
under "Audit Fees" above.

TAX FEES

The aggregate fees billed by the Company's auditors for professional services
for tax compliance, tax advice, and tax planning were $0 and $1,500 for fiscal
2004 and 2003, respectively.

ALL OTHER FEES

The aggregate fees billed by the Company's auditors for all other non-audit
services rendered to the Company, such as attending meetings and other
miscellaneous financial consulting, in fiscal 2004 and 2003 were $0 and $0,
respectively.

                                       34
<PAGE>
                                   SIGNATURES

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

                                       Sense Holdings, Inc.
Date:   April 15, 2005
                                       By: /s/ Dore Scott Perler
                                           ------------------------
                                           Dore Scott Perler, DIRECTOR,
                                           CHIEF EXECUTIVE OFFICER AND PRESIDENT



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

     Signature                          Capacity                       Date


 /s/ Dore Scott Perler     Director, Chief Executive Officer      April 15, 2005
 ---------------------     and President (Principal Executive
 Dore Scott Perler         Officer)


 /s/ Andrew Goldrich       Chief Financial Officer and Director   April 15, 2005
 ---------------------     (Principal Financial and Accounting
 Andrew Goldrich           Officer)


 /s/ Shawn Tartaglia       Chief Technical Officer and Director   April 15, 2005
 ---------------------
 Shawn Tartaglia


 /s/ Julie Slater          Director                               April 15, 2005
 ---------------------
 Julie Slater


                                       35
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

                                    CONTENTS


Report of Independent Registered Public Accounting Firm......................F-2

Consolidated Financial Statements:

   Consolidated Balance Sheet at December 31, 2004...........................F-3

   Consolidated Statements of Operations -
         For the Years Ended December 31, 2004 and 2003......................F-4

   Consolidated Statements of Changes in Shareholders' Equity (Deficit) -
         For the Years Ended December 31, 2004 and 2003......................F-5

   Consolidated Statements of Cash Flows -
         For the Years Ended December 31, 2004 and 2003......................F-6

Notes to Consolidated Financial Statements...........................F-7 to F-25


                                       F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders:
 Sense Holdings. Inc.

We have audited the accompanying consolidated balance sheet of Sense Holdings,
Inc. and Subsidiary as of December 31, 2004, and the related consolidated
statements of operations, changes in shareholders' equity (deficit) and cash
flows for the years ended December 31, 2004 and 2003. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the 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 amount and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Sense
Holdings, Inc. and Subsidiary, as of December 31, 2004, and the consolidated
results of their operations and their cash flows for the years ended December
31, 2004 and 2003, in conformity with accounting principles generally accepted
in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has an accumulated deficit of
$9,227,055, has a net loss for the year ended December 31, 2004 of $1,499,284,
and used cash in operations of $910,770 for the year ended December 31, 2004.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regards to these matters are also
described in Note 2. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



                                        /s/ Sherb & Co., LLP
                                        --------------------
                                        Sherb and Co., LLP
Boca Raton, Florida                     Certified Public Accountants
April 13, 2005


                                       F-2
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004


                                     ASSETS
Current assets:
   Cash and cash equivalents ...................................    $   637,542
   Marketable securities, at market ............................         23,575
   Accounts receivable, net of allowance
        for doubtful accounts of $47,438 .......................         49,181
   Inventories, net ............................................         36,601
   Other current assets ........................................         16,050
                                                                    -----------

   Total current assets ........................................        762,949

Property and equipment, net ....................................         25,180

Due from shareholders ..........................................         57,000
                                                                    -----------

   Total assets ................................................    $   845,129
                                                                    ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable ............................................    $    47,455
   Accrued expenses ............................................         74,748
   Deferred revenue ............................................         16,060
   Margin loan payable .........................................         18,530
   Notes payable ...............................................         25,000
                                                                    -----------

   Total current liabilities ...................................        181,793
                                                                    -----------

Shareholders' equity:
   Common stock, $.10 par value, 100,000,000 shares
     authorized; 32,572,858 shares issued and outstanding ......      3,257,286
   Additional paid-in capital ..................................      6,932,317
   Accumulated deficit .........................................     (9,227,055)
   Deferred compensation .......................................       (299,212)
                                                                    -----------

   Total shareholders' equity ..................................        663,336
                                                                    -----------

   Total liabilities and shareholders' equity ..................    $   845,129
                                                                    ===========

                 See notes to consolidated financial statements.

                                       F-3
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                        For the Years Ended
                                                            December 31,
                                                    ---------------------------
                                                        2004            2003
                                                    ------------   ------------

Revenues:
   Sale of tangible products .....................  $     82,097   $    444,147
   Consulting services and maintenance ...........        57,224              -
                                                    ------------   ------------

        Total revenues ...........................       139,321        444,147

Cost of goods sold - tangible products ...........        55,581        169,681
                                                    ------------   ------------

Gross profit .....................................        83,740        274,466
                                                    ------------   ------------

Operating expenses:
   Depreciation and amortization .................        11,618         43,119
   Research and development ......................       163,492        203,546
   General and administrative ....................     1,304,374      1,162,558
   Impairment of license agreement ...............             -        117,072
                                                    ------------   ------------

        Total operating expenses .................     1,479,484      1,526,295
                                                    ------------   ------------

Loss from operations .............................    (1,395,744)    (1,251,829)
                                                    ------------   ------------

Other income (expenses):
   Loss on sale of securities ....................        (1,760)       (11,401)
   Interest income ...............................         4,834          5,164
   Interest expense ..............................      (108,143)      (148,436)
   Unrealized gain (loss) on securities ..........         1,529         (3,173)
                                                    ------------   ------------

        Total other expenses .....................      (103,540)      (157,846)
                                                    ------------   ------------

Net loss .........................................  $ (1,499,284)  $ (1,409,675)
                                                    ============   ============

Net loss per common share - basic and diluted ....  $      (0.06)  $      (0.08)
                                                    ============   ============
Weighted average number of shares
   outstanding - basic and diluted ...............    26,639,839     16,907,464
                                                    ============   ============

                 See notes to consolidated financial statements.

                                       F-4
<PAGE>
<TABLE>
                                              SENSE HOLDINGS, INC. AND SUBSIDIARY
                                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                         FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
<CAPTION>

                                       Common Stock, $.10 Par Value                                                   Total
                                       ---------------------------     Additional                                 Shareholders'
                                        Number of                       Paid-in       Deferred     Accumulated       Equity
                                          Shares          Amount        Capital     Compensation     Deficit        (Deficit)
                                       -----------     -----------     ----------   ------------   -----------     -----------
<S>                                     <C>            <C>             <C>           <C>           <C>             <C>
Balance, December 31, 2002 ..........   16,656,905     $ 1,665,690     $5,487,363    $  (4,048)    $(6,318,096)    $   830,909

Grant of stock warrants and options
  issued for services ...............            -               -         81,897            -               -          81,897

Grant of stock warrants in connection
  with notes payable ................            -               -        120,832            -               -         120,832

Common stock issued for services ....    1,661,610         166,162        148,608     (250,200)              -          64,570

Cancelled shares ....................      (15,000)         (1,500)         1,500            -               -               -

Amortization of deferred compensation            -               -              -       19,685               -          19,685

Net loss for the year ...............            -               -              -            -      (1,409,675)     (1,409,675)
                                       -----------     -----------     ----------    ---------     -----------     -----------

Balance, December 31, 2003 ..........   18,303,515       1,830,352      5,840,200     (234,563)     (7,727,771)       (291,782)

Common stock issued for cash ........   11,980,000       1,198,000        745,750            -               -       1,943,750

Common stock issued for debt ........      673,078          67,308        107,692            -               -         175,000

Common stock issued for services ....    1,616,265         161,626        238,675     (304,000)              -          96,301

Amortization of deferred compensation            -               -              -      239,351               -         239,351

Net loss for the year ...............            -               -              -            -      (1,499,284)     (1,499,284)
                                       -----------     -----------     ----------    ---------     -----------     -----------

Balance, December 31, 2004 ..........   32,572,858     $ 3,257,286     $6,932,317    $(299,212)    $(9,227,055)    $   663,336
                                       ===========     ===========     ==========    =========     ===========     ===========


                                        See notes to consolidated financial statements.

                                                              F-5
</TABLE>
<PAGE>
<TABLE>
                                   SENSE HOLDINGS, INC. AND SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                   For the Years
                                                                                Ended December 31,
                                                                          -----------------------------
                                                                              2004              2003
                                                                          -----------       -----------
<S>                                                                       <C>               <C>
Cash flows from operating activities:
   Net loss ........................................................      $(1,499,284)      $(1,409,675)
                                                                          -----------       -----------
   Adjustments to reconcile net loss to net cash used in operations:
        Depreciation and amortization ..............................           11,618            43,119
        Common stock, warrants and options issued for services .....           96,301           146,467
        Amortization of deferred compensation ......................          239,351            19,685
        Amortization of discount of notes payable ..................           75,520            45,312
        Loss (gain) on sale of investments .........................            1,760            11,401
        Unrealized (gain) loss on investments ......................           (1,529)            3,173
        Allowance for doubtful accounts ............................             (345)           14,283
        Reserve for slow moving inventory ..........................           36,600                 -
        Loss on impairment of license agreement ....................                -           117,072

   Changes in assets and liabilities:
        Accounts receivable ........................................          111,390          (112,662)
        Inventories ................................................           12,588            37,320
        Prepaid expenses ...........................................            8,472             5,416
        Other current assets .......................................           (6,243)            2,369
        Due from shareholders ......................................           11,722                 -
        Accounts payable ...........................................          (16,620)          (19,910)
        Accrued expenses ...........................................           (8,131)           75,179
        Deferred Revenue ...........................................           16,060                 -
                                                                          -----------       -----------

      Total adjustments ............................................          588,514           388,224
                                                                          -----------       -----------

Net cash used in operating activities ..............................         (910,770)       (1,021,451)
                                                                          -----------       -----------

Cash flows from investing activities:
   Purchases of marketable securities ..............................          (13,297)         (189,236)
   Proceeds from sales of marketable securities ....................           63,329           330,498
   Purchase of equipment and software ..............................                -           (26,390)
                                                                          -----------       -----------

Net cash flows provided by investing activities ....................           50,032           114,872
                                                                          -----------       -----------

Cash flows from financing activities:
   Proceeds from notes payable .....................................                -           750,000
   Proceeds from margin loan .......................................           13,046             5,484
   Payment of notes payable ........................................         (550,000)                -
   Net proceeds from sale of common stock ..........................        1,943,750                 -
                                                                          -----------       -----------

Net cash flows provided by financing activities ....................        1,406,796           755,484
                                                                          -----------       -----------

Net increase (decrease) in cash and cash equivalents ...............          546,058          (151,095)

Cash and cash equivalents - beginning of year ......................           91,484           242,579
                                                                          -----------       -----------

Cash and cash equivalents - end of year ............................      $   637,542       $    91,484
                                                                          ===========       ===========

Supplemental disclosure of cash flow information:
   Cash paid for:
    Interest .......................................................      $    27,863       $    26,535
                                                                          ===========       ===========
    Income taxes ...................................................      $         -       $         -
                                                                          ===========       ===========

 NON-CASH INVESTING AND FINANCING ACTIVITIES:
      Common stock issued for debt .................................      $   175,000       $         -
                                                                          ===========       ===========

                             See notes to consolidated financial statements.

                                                   F-6
</TABLE>
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

NOTE 1 - BASIS OF PRESENTATION

Organization

Sense Technologies, Inc. ("Sense") was formed on July 13, 1998, to design,
develop, manufacture and sell biometric security identification systems.

On January 19, 1999, Sense was acquired by Century Silver Mines, Inc. ("CSM"),
an Idaho corporation, for 4,026,700 shares of CSM stock (the "Exchange"). The
Exchange was completed pursuant to the Agreement and Plan of Reorganization
between Sense and CSM. The Exchange has been accounted for as a reverse
acquisition under the purchase method for business combinations. Accordingly,
the combination of the two companies is recorded as a recapitalization of Sense,
pursuant to which Sense is treated as the continuing entity. In August 1999,
pursuant to the approval of the Board of Directors of CSM, the name of the
company changed to Sense Holdings, Inc. (the "Company").

On May 31, 2001, the Company acquired 100% of the outstanding stock of Micro
Sensor Technologies, Inc. ("Micro Sensor") in exchange for 2,000,000 shares of
the Company's common stock, thereby indirectly acquired the rights and
obligations of Micro Sensor under various agreements to which it is a party,
including a Patent License Agreement

Principles of consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary. All material inter-company transactions have been
eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

Marketable Securities

Marketable securities are classified as trading securities and are held for
resale in anticipation of short-term market movements. At December 31, 2004,
marketable securities consisted of U.S. Treasury and Federal Agency securities
held for resale. Gains or losses are recognized in the statement of operations
when the bonds are sold. Unrealized gains or losses are recognized in the
statement of operations on a monthly basis based on changes in the estimated
fair value. For the years ended December 31, 2004 and 2003, net unrealized gains
(losses) related to investments held for trading were $1,529 and $(3,173),
respectively.

As of December 31, 2004, marketable securities consisted of U.S. Treasury
Securities with a market value of $23,575.

                                       F-7
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts receivable

Accounts receivable are reported at net realizable value. The Company has
established an allowance for doubtful accounts based upon factors pertaining to
the credit risk of specific customers, historical trends, and other information.
Delinquent accounts are written-off when it is determined that the amounts are
uncollectible. At December 31, 2004, the allowance for doubtful accounts was
$47,438.

Inventories

Inventories are stated at the lower of average cost or market and consist of raw
materials and finished goods. The Company writes down inventory for estimated
obsolescence or unmarketable inventory based upon assumptions and estimates
about future demand and market conditions. If actual market conditions are less
favorable than those projected by the Company, additional inventory write-downs
may be required. For the years ended December 31, 2004 and 2003, the Company
recorded a reserve for slow moving inventory of $36,600 and $0, respectively and
is included in cost of sales on the accompanying statements of operations.

Property and Equipment

Property and equipment is stated at cost. Depreciation on property and equipment
is calculated using the straight-line method over the estimated useful lives of
the assets. Expenditures for major renewals and betterments that extend the
useful lives of property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred.

Income Taxes

Under the asset and liability method of FASB Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities, and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Deferred
tax assets are reduced by a valuation allowance, when in the Company's opinion
it is likely that some portion or the entire deferred tax asset will not be
realized.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

                                       F-8
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash, marketable
securities, receivables, inventories, accounts payable and accrued expenses,
margin loan payable, and notes payable approximate their fair market value based
on the short-term maturity of these instruments.

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the various revenues streams of
the Company:

The Company generates revenue from the sale of its products. Revenues from the
sale of these items are recognized upon delivery of the product to the customer.

Revenue from periodic maintenance agreements is generally recognized ratably
over the respective maintenance periods provided no significant obligations
remain and collectibility of the related receivable is probable

Impairment of long-lived assets

The Company reviews the carrying value of intangibles and other long-lived
assets for impairment at least annually or whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of long-lived assets is measured by comparison of
its carrying amount to the undiscounted cash flows that the asset or asset group
is expected to generate. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the property, if any, exceeds its fair market value.

Research and Development

Research and development costs are expensed as incurred. These costs primarily
consist of salaries paid for the development of the Company's software. Research
and development costs for the years ended December 31, 2004 and 2003 were
$163,492 and $203,546, respectively.

                                       F-9
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation

The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. The Company adopted the disclosure provisions of SFAS No.
123, "Accounting for Stock-Based Compensation" and SFAS 148, "Accounting for
Stock-Based Compensation -Transition and Disclosure", which permits entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had been applied. The Company accounts for stock options
and stock issued to non-employees for goods or services in accordance with the
fair value method of SFAS 123.

Had compensation cost for the stock option plan been determined based on the
fair value of the options at the grant dates consistent with the method of SFAS
123, "Accounting for Stock Based Compensation", the Company's net loss and loss
per share would have been changed to the pro forma amounts indicated below for
the years ended December 31, 2004 and 2003:

                                                       For the year ended
                                                          December 31,
                                                  ----------------------------
                                                       2004           2003
                                                  ------------    ------------
Net loss as reported                              $(1,499,284)    $(1,409,675)
Less: total stock-based employee
compensation expense determined under
fair value based method, net of related tax
effect                                               (227,730)        (18,184)
                                                  -----------     -----------

Pro forma net loss                                $(1,727,014)    $(1,427,859)
                                                  ===========     ===========

Basic loss per share:
               As reported                        $      (.06)    $      (.08)
                                                  ===========     ===========
               Pro forma                          $      (.06)    $      (.08)
                                                  ===========     ============

The above pro forma disclosures may not be representative of the effects on
reported net earnings for future years as options vest over several years and
the Company may continue to grant options to employees.

                                      F-10
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation (continued)

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants:

                                            2004               2003
                                            ----               ----
         Dividend yield                     0%                  0%-
         Expected volatility range          74% to 130%         70%
         Risk-free interest rate            4.00%               4.00%
         Expected holding periods           3-5 years           2 years

License Agreement

License agreement is stated at cost, less accumulated amortization. Amortization
was computed using the straight-line method over an estimated life of five years
based upon management's expectations relating to the life of the technology and
current competitive market conditions. For the years ended December 31, 2004 and
2003, amortization of the license agreement amounted to $0 and $32,928,
respectively. In the fourth quarter of 2003, based on an impairment test, the
Company decided to write-off the remaining unamortized licensing fee of
$117,072. The decision to recognize an impairment loss was made in light of the
subsidiary's inability to generate a profit from this licensing agreement, the
length of time estimated for us to recover the initial investment, and the
uncertainty of market conditions and business performance.

Advertising

Advertising is expensed as incurred. Advertising expenses for the years ended
December 31, 2004 and 2003 totaled approximately $3,795 and $12,510,
respectively.

Warranty Obligations

The Company generally provides the ultimate consumer a warranty with each
product and accrues warranty expense at the time of the sale based on the
Company's prior claims history. Actual warranty costs incurred are charged
against the accrual when paid.

                                      F-11
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents,
marketable securities and notes payable. The Company's investment policy is to
invest in low risk, highly liquid investments. The Company does not believe it
is exposed to any significant credit risk in its cash investment.

The Company maintains its cash balances at quality financial institutions which,
at times, exceed federally insured limits. These balances are insured by the
Federal Deposit Insurance Corporation up to $100,000. At December 31, 2004, the
Company had $517,693 in United States bank deposits, which exceed federally
insured limits. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk on cash on deposit.
The Company performs on-going credit evaluations of its customer base including
those included in accounts receivable at December 31, 2004, and, generally, does
not require collateral. The Company maintains reserves for potential credit
losses and such losses have been within management's expectations.

Loss Per Common Share

Basic net earnings (loss) per share equals net earnings (loss) divided by the
weighted average shares outstanding during the year. The computation of diluted
net earnings per share does not include dilutive common stock equivalents in the
weighted average shares outstanding as they would be anti-dilutive. Not included
in basic shares are stock options and warrants of 11,767,590 and 8,977,590
because they are anti-dilutive in 2004 and 2003, respectively.

Recent Accounting Pronouncements

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the Company's second quarter of fiscal 2006.
The Company is in process of evaluating the impact of this pronouncement on its
financial position.

In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. The Company believes that the adoption of
this standard will have no material impact on its financial statements.

                                      F-12
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (continued)

In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments." The EITF reached a consensus about the
criteria that should be used to determine when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss and how that criteria should be applied to investments
accounted for under SFAS No. 115, "ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES." EITF 03-01 also included accounting considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. Additionally, EITF 03-01 includes new
disclosure requirements for investments that are deemed to be temporarily
impaired. In September 2004, the Financial Accounting Standards Board (FASB)
delayed the accounting provisions of EITF 03-01; however the disclosure
requirements remain effective for annual reports ending after June 15, 2004. The
Company believes that the adoption of this standard will have no material impact
on its financial statements.

Reclassifications

Certain prior periods' balances have been reclassified to conform to the current
period's financial statement presentation. These reclassifications had no impact
on previously reported results of operations or shareholders' equity.

NOTE 2 - BASIS OF PRESENTATION

The accompanying consolidated financial statements are prepared assuming the
Company will continue as a going concern. During the years ended December 31,
2004 and 2003, the Company incurred losses from operations of $1,499,284 and
$1,409,675, respectively, and had negative cash flows from operations in the
amount of $910,770 and $1,021,451, respectively. While the Company is attempting
to increase sales, the growth has not been significant enough to support the
Company's daily operations. Management intends to attempt to raise additional
funds by way of a public or private offering. While the Company believes in the
viability of its strategy to improve sales volume and in its ability to raise
additional funds, there can be no assurances to that effect.

NOTE 3 - MAJOR CUSTOMERS

For the year ended December 31, 2003, four customers accounted for 87% of the
Company's revenue. These same four customers accounted for 80% of the
outstanding accounts receivable at December 31, 2003. For the year ended
December 31, 2004, three customers accounted for 72% of the Company's revenues.
These same three customers accounted for 57% of the outstanding gross accounts
receivable at December 31, 2004.

                                      F-13
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 4 - INVENTORIES

At December 31, 2004 inventories consists of:

         Raw materials                                  $  59,051
         Finished goods                                    14,150
                                                        ---------
                                                           73,201
         Less: Reserve for slow moving inventory          (36,600)
                                                        ---------
                                                        $  36,601
                                                        =========

NOTE 5 - RELATED PARTY TRANSACTIONS

Prior to fiscal 2003, certain shareholders received funds from the Company in
the form of demand notes. At December 31, 2004, the balance on the amount owed
to the Company was $57,000. These loans bear interest at 4% per annum, are
secured by Company common shares held by the respective individuals, and are
payable on December 31, 2006.

NOTE 6 - PROPERTY AND EQUIPMENT

At December 31, 2004, property and equipment consisted of the following:

                                        Estimated life
                                        --------------
      Computer equipment and software      3-5 years          $   41,585
      Furniture and fixtures                7 years               19,104
                                                              ----------
                                                                  60,689
      Less: Accumulated depreciation                             (35,509)
                                                              ----------
                                                              $   25,180
                                                              ==========

For the years ended December 31, 2004 and 2003, depreciation expense amounted to
$11,618 and $10,191, respectively.

NOTE 7 - LOANS PAYABLE

During fiscal 2003, the Company raised capital from accredited investors under a
private placement memorandum. The private placement provided for the sale of 15
units at a price of $50,000 per unit in order to raise up to a total of
$750,000. Each unit consisted of a Promissory Note of $50,000 and a Common Stock
Purchase Warrant to purchase 25,000 shares of the Company's common stock
exercisable at $.16 per share. The purchase warrants expire in five years from
the date of the warrant. The notes had a term of one year and provided for
interest accrual on the unpaid principal balance of 10% per year. Under the
terms of the note, interest is payable quarterly commencing on May 20, 2003. In
fiscal 2003, the Company received funds in the amount of $750,000 in connection
with the private placement and issued 375,000 in purchase warrants. In May 2004,
note holders comprising the $750,000 notes payable converted $175,000 of debt
into 673,078 shares of common stock. Additionally, the Company repaid notes
holders $550,000. As of December 31, 2004, the Company has a remaining note
payable of $25,000 and has accrued interest in the amount of $20,438 in
connection with the notes.

                                      F-14
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 7 - LOANS PAYABLE (CONTINUED)

In connection with the warrants issued with the notes, the Company recorded
imputed interest in the amount of $120,832 that will be amortized over the life
of the notes. For the years ended December 31, 2004 and 2003, the amount of
imputed interest charged to interest expense was $75,520 and $45,312,
respectively.

In connection with this transaction, in 2003, the Company issued warrants to
purchase 150,000 shares of common stock, as compensation to the placement agent.
The Company valued these warrants utilizing the Black-Scholes options pricing
model at approximately $0.38 or $57,615 and recorded non-cash consulting
expense.

NOTE 8 - MARGIN LOAN PAYABLE

The Company has a margin loan payable balance of $18,530 as of December 31,
2004, which was used to purchase the various government securities. This margin
loan bears interest at a variable rate. The rate on the margin loan was 9% at
December 31, 2004. The securities purchased with the funds are held by the
clearing agent as collateral. The margin loan is due and repaid as the
securities are sold.

NOTE 9 - COMMITMENTS

Operating Lease

The Company leases office space under an operating lease commencing March 1,
2002. The lease terminated on February 28, 2005. Subsequent to February 2005,
the Company is on a month-to-month lease. At December 31, 2004, minimum rental
commitments are as follow:

                     2005                       $ 7,305
                                                =======

For the years ended December 31, 2004 and 2003 rent expense was $56,546 and
$59,549, respectively.

License Agreement

On August 27, 2001, the Company entered into a license agreement with a software
development company. Under the terms of the agreement, the Company has been
granted a non-exclusive, non-transferable right to incorporate, use, copy,
reproduce, market, sell, and distribute the software company's technology in its
identification systems. The agreement expires on August 31, 2004 and may be
renewed for an additional year. The Company paid an initial transfer fee of
$25,000 and is required to pay an annual maintenance fee of $15,300. In
addition, the Company is required to pay royalty fees in the amount of between
$10 and $25 per system sold, depending on the quarterly volume. Under the terms
of the original agreement the Company was required to pay a minimum quarterly
royalty fee of $25,000 beginning in 2003. In December 2002, both parties agreed
to amend the agreement and reduced the required minimum quarterly royalty fee to
$5,000 beginning in 2003.

                                      F-15
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 10 - INCOME TAXES

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). SFAS No. 109
requires the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and tax bases of
assets and liabilities, and for the expected future tax benefit to be derived
from tax loss and tax credit carryforwards. SFAS No. 109 additionally requires
the establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets. The provision (benefit) for income taxes
differs from the amounts computed by applying the statutory federal income tax
rate to income (loss) before provision for income taxes, the reconciliation is
as follows:

                                       Year Ended December   Year Ended December
                                            31, 2004              31, 2003
                                       -------------------   -------------------
Tax benefit computed at statutory rate     $ (510,000)           $ (479,000)
                 Permanent differences        118,500                85,500
    State income taxes, net of benefit        (15,000)              (20,000)
       Income tax benefit not utilized        406,500               413,500
                                           ----------            ----------

                Net income tax benefit     $        -            $        -
                                           ==========            ==========

The Company has a net operating loss carry forward for tax purposes totaling
approximately $6,500,000 at December 31, 2004, expiring through the year 2024.
Such amounts would be subject to the limitations under Section 382 of the
Internal Revenue Code relating to changes in ownership.

Listed below are the tax effects of the items related to the Company's net tax
asset:

                                                December 31,     December 31,
                                                     2004            2003
                                                ------------     ------------
Tax benefit of net operating loss carryforward  $  2,273,000     $  1,846,500
Impairment of license agreement                            -           42,000
Other                                                 29,200            8,000
Valuation Allowance                               (2,302,200)      (1,896,500)
                                                ------------     ------------

Net deferred tax asset recorded                 $          -     $          -
                                                ============     ============

After consideration of all the evidence, both positive and negative, management
has recorded a valuation allowance at December 31, 2004 and 2003, due to the
uncertainty of realizing the deferred income tax assets. The valuation allowance
was increased by $405,700 from the prior year.

                                      F-16
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 11 - SHAREHOLDERS' EQUITY

Common Stock

During the year ended December 31, 2003, the Company amortized deferred
compensation of $4,048 related to commons shares issued in fiscal 2002.

In fiscal 2002, a former employee of the Company was issued 15,000 shares of
common stock from the company's 2001 Equity Compensation Plan as settlement of a
contractual dispute. During the quarter ended March 31, 2003 the Company
canceled the same 15,000 shares of stock that were returned to the Company by
the former employee in connection with the settlement.

During the period ended March 31, 2003, the Company issued 30,250 shares of its
common stock for services rendered. The shares were issued at the fair value at
the date of the issuance at prices ranging from $.27 to $.42. The Company
recorded an expense of $10,867.

During the quarter ended June 30, 2003 the Company issued 133,000 shares of its
common stock for services rendered. The shares were issued at the fair value at
the date of the issuance at prices ranging from $.19 to $.22. The Company
recorded an expense of $25,930.

During the quarter ended September 30, 2003 the Company issued 14,720 shares of
its common stock for services rendered. The shares were issued at the fair value
at the date of the issuance at prices ranging from $.24 to $.35. The Company
recorded an expense of $4,646.

During the quarter ended December 31, 2003, the Company issued 23,640 shares of
its common stock for services rendered to an employee. The shares were issued at
the fair value at the date of the issuance at prices ranging from $.21 to $.26.
The Company recorded an expense of $5,625.

On November 17, 2003, in connection with two-year consulting agreements expiring
on November 16, 2005, the Company issued 1,390,000 shares of common stock for
services rendered and to be rendered in the future. The Company valued these
shares at their market value on the date of issuance of $.18 per share or
$250,200. For the years ended December 31, 2004 and 2003, the Company recorded
non-cash compensation expense of $125,100 and $15,637, respectively. At December
31, 2004, the Company recorded deferred compensation of $109,463 related to the
issuance of these shares, which will be amortized over the remaining service
period.

On December 31, 2003, the Company issued 70,000 shares of common stock in
connection with the payment of past due and future rent. The Company valued
these shares at their market value on the date of issuance of $.25 per share or
$17,500 and for the years ended December 31, 2004 and 2003, recorded rent
expense of $2,917 and $14,583, respectively.

In March 2004, the Company, by a vote of the majority shareholders and the
approval of the board of directors, increased its authorized common shares to
100,000,000.

                                      F-17
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 11 - SHAREHOLDERS' EQUITY (CONTINUED)

Common Stock, continued

During the quarter ended March 31, 2004, the Company issued 117,625 common
shares of its common stock for services rendered. These services include legal
services, investment relation services and business development services. The
shares were issued at the fair values at the date of the issuance which were at
prices ranging from $.30 to $.34. In connection with these shares, the Company
recorded non-cash compensation and consulting expense of $36,625.

During the quarter ended June 30, 2004, the Company issued 360,474 common shares
of its common stock for services rendered. These services include legal
services, investment relations services and business development services. The
shares were issued at the fair values at the date of the issuance which were at
prices ranging from $.23 to $.37. In connection with these shares, the Company
recorded non-cash compensation and consulting expense of $103,171.

In April 2004, the Company consummated a capital raise through a private
placement offered to accredited investors. The Company offered investment units
each costing $35,000, with each unit consisting of (a) a number of shares of
common stock of the Company determined by dividing the unit price by $.175 per
share and (b) one common stock purchase warrants for every two shares of common
stock received upon conversion with an exercise price of $.20 per share. In the
event that the Company fails to satisfy registration rights, as defined, the
purchase price will be adjusted to $.125 per share. In April 2004, the Company
sold six units under the private placement aggregating 1,200,000 shares of
common stock and 600,000 warrants for net proceeds of $210,000. The warrants
expire in April 2009.

In May 2004, the Company consummated a capital raise through a private placement
offered to accredited investors. The Company is offering, through a placement
agent, investment units each costing $10,000, with each unit consisting of (a) a
number of shares of common stock of the Company determined by dividing the
(i)unit price by (ii) a price equal to 80% of the 5-day average of the closing
bid price of the shares of common stock prior to the initial closing or any
subsequent closing of the Placement, with floor on the common stock purchase
price of $.20 and a ceiling on the commons tock purchase price of $.26, and (b)
a warrant to purchase, at any time prior to the fifth anniversary following the
date of issuance of the warrant, a number of shares equal to 25% of the number
of shares included with the unit, at a exercise price equal to $.50 per share of
common stock. On May 10, 2004, the Company closed on its initial funding and
issued 6,600,000 shares of common stock and granted 1,650,000 warrants for net
proceeds of $1,188,000. In June 2004, the Company closed on additional funding
and issued 3,200,000 shares of common stock and granted 800,000 warrants for net
proceeds of $545,750.

                                      F-18
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 11 - SHAREHOLDERS' EQUITY (CONTINUED)

Common Stock, continued

In connection with the May 2004 private placement, the Company entered into a
placement agency agreement with a third party agent. For services rendered under
the Agency Agreement, the Company will pay a cash fee equal to 10% of the
aggregate consideration received by the Company in the capital raise, a cash fee
equal to five percent of the gross proceeds received by the Company upon the
exercise of warrants related to this offering and 500,000 shares of common
stock. The 500,000 shares of common stock shall increase pro rata following the
time that $1,000,000 is raised in the offering up to a maximum of 1,300,000
common shares. Additionally, the Company reduced the exercise price of 342,475
warrants previously granted to the Placement Agent from $.50 to $.10 per share
and extended the expiration date of these warrants to May 2009. Within 45 days
of the final closing date, as defined, the Company is required to file an
appropriate Registration Statement with the SEC. In June 2004, the Company
issued 980,000 shares in connection with this agreement

In May 2004, note holders comprising the $750,000 notes payable converted
$175,000 of debt into 673,078 shares of common stock.

In July 2004, the Company issued 9,402 common shares of its common stock for
services rendered. These services include legal services. The shares were issued
at the fair values at the date of the issuance of $.20 per share. In connection
with these shares, the Company recorded non-cash compensation of $1,881.

On November 17, 2004, the Company entered into a six-month consulting agreement
with a third party for business development and investor relations services. In
connection with this consulting agreement, the Company agreed to issue an
aggregate of 1,100,000 shares of common stock for services rendered over the
contract period unless terminated earlier. The Company valued these shares at
their fair market value based on the trading price on the date of issuance of
$.23 per share or $253,000. For the year ended December 31, 2004, the Company
recorded non-cash compensation expense of $63,250 and deferred compensation of
$189,750 related to the issuance of these shares, which will be amortized over
the remaining service period.

During the quarter ended December 31, 2004, the Company issued 28,764 common
shares of its common stock for legal services rendered. The shares were issued
at the fair values at the date of the issuance which were at prices ranging from
$.16 to $.22. In connection with these shares, the Company recorded non-cash
compensation expense of $5,625.

                                      F-19
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 11 - SHAREHOLDERS' EQUITY (CONTINUED)

Common Stock Option

1999 Stock Option Plan

On July 19, 1999, the board of directors adopted the Company's 1999 Stock Option
Plan (the "1999 Plan"). The company has reserved 1,500,000 shares of common
stock for issuance upon exercise of options granted from time to time under the
1999 stock option plan. The 1999 stock option plan is intended to assist the
Company in securing and retaining key employees, directors and consultants by
allowing them to participate in the Company's ownership and growth through the
grant of incentive and non-qualified options. Under the stock option plan, the
Company may grant incentive stock options only to key employees and employee
directors, or the Company may grant non-qualified options to employees,
officers, directors and consultants. The 1999 stock option plan is currently
administered by the Company's board of directors. Subject to the provisions of
the 1999 stock option plan, the board will determine who shall receive options,
the number of shares of common stock that may be purchased under the options,
the time and manner of exercise of options and exercise prices. The term of the
options granted under the 1999 stock option plan may not exceed ten years (five
years for an incentive stock option granted to an optionee owning more than 10%
of our voting stock).

The exercise price for incentive stock options will be equal to or greater than
100% of the fair market value of the shares of the common stock at the time
granted. However, the incentive stock options granted to a 10% holder of the
Company's voting stock are exercisable at a price equal to or greater than 110%
of the fair market value of the common stock at the date of the grant. The
exercise price for non-qualified options will be set by the board, in its
discretion, but in no event shall the exercise price be less than 75% of the
fair market value of the shares of common stock on the date of grant. The
exercise price may be payable in cash or, with the approval of the board, by
delivery of shares or a combination of cash and shares. Shares of common stock
received upon exercise of options will be subject to restrictions on sale or
transfer.

2001 Equity Compensation Plan

On November 26, 2001, the board of directors adopted the Company's 2001 Equity
Compensation Plan (the "2001 Plan"). The Company has reserved 2,000,000 shares
of the Company's common stock. The purpose of the 2001 Plan is to provide
designated employees, certain key advisors who perform services for the Company,
and non-employee board members with the opportunity to receive grants of
incentive stock options, nonqualified stock options and restricted stock. The
Company believes that the Plan will encourage the participants to contribute
materially to the growth of the Company, thereby benefiting the Company's
shareholders. The Plan will be administered by the Company's board of directors
or a committee appointed by the board. Subject to the provisions of the stock
option plan, the board of directors or its appointed committee shall have the
sole authority to determine the individuals to whom grants shall be made, the
type, size and terms of the grants to be made to each individual. In addition,
the board or its appointed committee will determine the time when the grants
will be made and the duration of grants including exercise or restrictions and
criteria for exercisability.

                                      F-20
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 11 - SHAREHOLDERS' EQUITY (CONTINUED)

Common Stock Option, continued

The term of the options granted under the 2001 Plan may not exceed ten years
(five years for an incentive stock option granted to an optionee owning more
than 10% of our voting stock). The exercise price for incentive stock options
may be equal to or greater than the fair market value of the shares of the
common stock at the time granted. However, the incentive stock options granted
to a 10% holder of the Company's voting stock are exercisable at a price equal
to or greater than 110% of the fair market value of the common stock at the date
of the grant. In the case of an option granted that qualifies as performance
based compensation, the exercise price may not be less than 100% of the fair
market value of the Company's stock on the date of grant. The exercise price for
non-qualified options granted to non-employee directors, shall equal 100% of the
fair market value of the Company's common stock at the date of grant. The
exercise price may be payable in cash or, with the approval of the board, by
delivery of shares or a combination of cash and shares. Shares of common stock
received upon exercise of options will be subject to restrictions on sale or
transfer.

On July 15, 2003, the Company granted 25,000 options to a consultant for
services rendered. The warrants expire 2 years from the date of grant and are
exercisable at $0.18 per option. The Company valued these warrants utilizing the
Black-Scholes options pricing model at approximately $0.073 or $1,832 and
recorded non-cash consulting expense.

In 2004 and 2003, the Company cancelled 1,780,000 and 131,333 options,
respectively, that were not exercised prior to expiration or termination of
employment from employees or were cancelled by the Company.

On December 30, 2004, the Company granted options to purchase 1,520,000 shares
of common stock to employee and directors of the Company. The options are
exercisable at $0.19 per share, which was greater than the fair market value of
the common stock at the grant date. Accordingly, under APB 25, no compensation
expense was recognized.

Stock option activity for the years ended December 31, 2004 and 2003 is
summarized as follows:

                                               Number of     Weighted average
                                                 shares       exercise price
                                               ----------    ----------------
         Outstanding at December 31, 2002       2,451,333        $   0.57
             Granted                               25,000            0.18
             Exercised                                  -               -
             Cancelled                           (131,333)           0.57
                                               ----------        --------

         Outstanding at December 31, 2003       2,345,000            0.56
             Granted                            1,520,000            0.22
             Exercised                                  -               -
             Cancelled                         (1,780,000)           0.53
                                               ----------        --------

         Outstanding at December 31, 2004       2,085,000        $   0.35
                                               ==========        ========

                                      F-21
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 11 - SHAREHOLDERS' EQUITY (CONTINUED)

Common Stock Option, continued

The following table summarizes the Company's stock options outstanding at
December 31, 2004:

                                 Options outstanding and exercisable
                                 -----------------------------------
                                               Weighted      Weighted
                                                average      average
            Range of                           remaining     exercise
         exercise price           Number         life         price
         ---------------         ---------     ---------     --------
         $          0.69           375,000       1.00          0.69
         $     0.75-0.79           165,000       1.00          0.78
         $          0.27           500,000       1.50          0.27
         $     0.18-0.19         1,045,000       3.00          0.19
                                 ---------
                                 2,085,000
                                 =========

Common Stock Warrants

On September 19, 2003, the Company granted 100,000 warrants to a consultant for
services rendered. The warrants expire 5 years from the date of grant and are
exercisable at $0.55 per warrant. The Company valued these warrants utilizing
the Black-Scholes options pricing model at approximately $0.22 or $22,450 and
recorded non-cash consulting expense.

As of December 31, 2003, in connection with the private placement discussed in
Note 8, the Company granted 375,000 warrants to purchase 375,000 shares of the
Company's common stock exercisable at $.16 per share. The purchase warrants
expire in five years from the date of the warrant. In connection with this
transaction, the Company issued warrants to purchase 150,000 shares of common
stock, as compensation to the placement agent. The Company valued these warrants
utilizing the Black-Scholes options pricing model at approximately $0.38 or
$57,615 and recorded non-cash consulting expense.

Stock warrant activity for the years ended December 31, 2004 and 2003 is
summarized as follows:

                                               Number of     Weighted average
                                                shares        exercise price
                                               ---------     ----------------
         Outstanding at December 31, 2002       6,007,590        $   0.99
             Granted                              625,000            0.22
             Exercised                                  -               -
             Cancelled                                  -               -
                                               ----------        --------

         Outstanding at December 31, 2003       6,632,590            1.06
             Granted                            3,050,000            0.44
             Exercised                                  -               -
             Cancelled                                  -               -
                                               ----------        --------

         Outstanding at December 31, 2004       9,682,590        $   0.87
                                               ==========        ========

                                      F-22
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

The following table summarizes the Company's stock warrants outstanding at
December 31, 2004:

                       Warrants outstanding and exercisable
                --------------------------------------------------
                                              Weighted      Weighted
                                               average      average
            Range of                          remaining     exercise
         exercise price           Number         life         price
         --------------         ---------     ---------     --------
         $    0.50-0.55         3,531,300        2.37         0.50
         $    1.25-1.50         5,026,290        2.56         1.28
         $    0.16-0.20         1,125,000        4.25         0.18
                                ---------

                                9,682,590
                                =========

NOTE 12 - SUBSEQUENT EVENTS

In January 2005, the Company issued 605,000 shares of common stock for exercise
of warrants for net proceeds of $120,800.

On January 1, 2005, the Company entered into a consulting agreement with a third
party for business development services for a six-month period. In connection
with the consulting agreement, the Company issued 75,000 common shares of its
common stock for services rendered and to be rendered in the future. The shares
were issued at the fair values at the date of the issuance of $.17 per share. In
connection with these shares, the Company recorded deferred compensation of
$12,750 which will be amortized over the service period.

In February 2005, the Company issued 70,000 shares of common stock for accrued
rent of $14,700.

Employment agreement

On April 1, 2005, the Company entered into three-year employment contracts with
our Chief Executive Officer, Chief Financial Officer and Chief Technology
Officer which expire on April 1, 2008. Specific terms are detailed below:

         Pursuant to an employment agreement with the Company's chief executive
         officer (CEO), in consideration for services as CEO, effective April 1,
         2005, the Company will pay CEO a salary of $137,500 per annum through
         May 6, 2005 and $156,000 through May 7, 2006. In addition, CEO is
         provided a car allowance of up to $ 500 per month.

         Pursuant to an employment agreement with the Company's chief financial
         officer (CFO), in consideration for services as CFO, effective April 1,
         2005, we will pay Mr. Goldrich a salary of $137,500 per annum through
         May 6, 2005 and $156,000 through May 7, 2006. In addition, CFO is
         provided a car allowance of up to $ 500 per month.

                                      F-23
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 12 - SUBSEQUENT EVENTS

Employment agreement (continued)

         Pursuant to an employment agreement with the Company's chief technical
         officer (CTO), in consideration for services as CTO, effective April 1,
         2005, we will pay CTO a salary of $96,800 per annum.

INCENTIVE COMPENSATION

In addition to the base salary, each of the Company's executives who have
employment agreements with the Company are entitled to receive, as incentive
compensation in respect of each calendar year (or portion thereof), an amount
determined in accordance with any bonus or short term incentive compensation
program (which may be based upon achieving certain specified performance
criteria) which may be established by the board. The Company's Board of
Directors shall review the determination as to the amounts of any awards
available to our executives under these programs at least annually. The review
shall ensure that such amounts are competitive, and comparable, with awards
granted to similarly situated executives of publicly held companies comparable
to the Company.

OTHER BENEFITS

The employment agreements with our executives also provide other benefits.
Executives receive 10 paid vacation days and such other paid holidays in
accordance with Sense's policy. In addition, they are compensated in accordance
with Sense's disability policies. An executive may receive up to six (6) months
salary continuation in the event of short-term disability. An executive may be
granted permission to be absent from the Company during working days to attend
professional meetings and to attend to such outside professional duties in the
biometrics field as have been mutually agreed upon. Attendance at such approved
meetings and accomplishment of approved professional duties shall be fully
compensated service time and shall not be considered vacation time. We shall
reimburse the executive for all expenses incurred by the executive incident to
attendance at approved professional meetings and such entertainment expenses
incurred by the executive in furtherance of the Company's interests, provided,
however, that such reimbursement is approved by the Board of Directors. We pay
dues to professional associations and societies and to such service
organizations and clubs of which the executive is a member, which has been
approved by the Board of Directors as being in the best interests of the
Company. The executives receive all other fringe benefits to which all other
employees of Sense are entitled.

                                      F-24
<PAGE>
                       SENSE HOLDINGS, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                DECEMBER 31, 2004

NOTE 12 - SUBSEQUENT EVENTS

Employment agreement (continued)

TERMINATION

In the event of involuntary termination without "cause" or disability, each
executive will be entitled to the following compensation for the succeeding 24
months following the date of termination:

o        A total of two hundred (200%) percent of the executive's base
         compensation in effect on the date of the employment termination; plus

o        A total of two hundred (200%) percent of the executive's annual
         incentive bonus earned on a quarterly basis as of the date of the
         termination, assuming the executive was employed on the last day of the
         quarter in which termination of employment occurred.

In the event the executive is terminated for "cause" the executive will be
entitled to any unpaid salary through the date of termination and deferred
compensation will be forfeited. In the event there is a "Change in Control", we
will be required to pay the executive a lump sum equal to 299% of the
executive's base compensation in effect on the date of employment plus 299% of
the executive's prior year incentive bonus. The executives may, at their
discretion, elect to terminate the contract the executive must give the board 90
days written notice and the executive would not be entitled to severance
benefits.

                                      F-25