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EX-32 - CERTIFICATION - SENSE TECHNOLOGIES INCcertificationexhibit32_1.htm
EX-31 - CERTIFICATION - SENSE TECHNOLOGIES INCcertificationexhibit31_1.htm

 

 

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File #000-29990


SENSE TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

 

 

 

BRITISH COLUMBIA

 

90010141

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification Number)

 

 

 

2535 N. Carleton Avenue, Grand Island, Nebraska

 

68803

(Address of principal executive offices)

 

(Zip Code)


(308) 381-1355

(Registrant's telephone no., including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   [X]   No    [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).  

 

 

 

 

Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[  ]

Smaller reporting company

[X]

(Do not check if smaller reporting company)

 

 

 

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

 

 

Yes   [  ]

No    [X]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:


At June 13, 2010, there were 72,704,650 shares of common stock outstanding.





 

 

Page No.

PART I

Item 1.

Business

3

Item 2.

Properties

9

Item 3.

Legal Proceedings

9

Item 4

Submission of Matters to a Vote of Security Holders

9

 

 

 

PART II

 

 

 

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

9

Item 6

Selected Financial Data

11

Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 8

Financial Statements and Supplementary Data

17

 

Balance Sheets –  February 28, 2010 and February 28, 2009

 

 

Statements of Operations- Years Ended February 28, 2010 and February 28, 2009

 

 

Statement of Changes in Stockholders’ Deficit – Years Ended February 28, 2010 and February 28, 2009

 

 

Statements of Cash Flows- Years Ended February 28, 2010 and February 28, 2009

 

 

 

 

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

34

Item 9A

Controls and Procedures

34

Item 9B

Other Information

36

 

 

 

PART III

 

 

 

Item 10

Directors, Executive Officers and Corporate Governance

36

Item 11

Executive Compensation

38

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

39

Item 13

Certain Relationships and Related Transactions, and Director Independence

40

Item 14

Principal Accounting Fees and Services

40

 

 

 

PART IV

 

 

 

Item 15

Exhibits, Financial Statement Schedules

41

 

 

 

Signatures

 

42




Sense Technologies 10 K February 28, 2010

Page 2



SENSE TECHNOLOGIES INC.

FORM 10-K


NOTE REGARDING FORWARD LOOKING STATEMENTS


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



PART I


ITEM 1.  DESCRIPTION OF BUSINESS


OVERVIEW


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


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


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


CORPORATE HISTORY


Sense Technologies, Inc. (“Sense”) was incorporated under the laws of the Province of British Columbia, Canada, on May 25, 1988 under the name Wizard Resources Ltd.  Our corporate name was changed to Graham Gold Mining Corporation on October 11, 1988 and subsequently to Sense Technologies Inc. on October 27, 1997 in connection with the acquisition of our current business.  On December 14, 2001, we changed our jurisdiction of organization from British Columbia to the Yukon Territories.  On November 15, 2007, we changed our jurisdiction of organization from the Yukon Territory back to British Columbia.


Our shares are currently quoted on the Pink OTC Market under the trading symbol SNSG.  We were previously listed on the both the Canadian Venture Exchange (now called the TSX Venture Exchange) and the Nasdaq SmallCap Market.  We voluntarily delisted our shares from the Canadian Venture Exchange on October 3, 2001.  On April 25, 2002 our stock was delisted from the Nasdaq Small Cap Market as we were unable to meet quantitative listing requirements. In addition we were delisted from the Over the Counter Bulletin Board due to not meeting listing requirements.


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




Sense Technologies 10 K February 28, 2010

Page 3



INDUSTRY OVERVIEW


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


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


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


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


OUR GUARDIAN ALERT PRODUCT


GUARDIAN ALERT ®


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


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


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



Sense Technologies 10 K February 28, 2010

Page 4



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


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


PRODUCTION OF OUR GUARDIAN ALERT ® DOPPLER AWARENESS SYSTEM


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


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


MARKET AND MARKETING OF OUR GUARDIAN ALERT ® DOPPLER AWARENESS SYSTEM


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


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

·

Manufacturers of vehicles, including cars, sport utility vehicles, light trucks, heavy vehicles and equipment, and original equipment suppliers to these manufacturers.

·

Owners of commercial fleet vehicles and government departments and agencies using fleet vehicles.

·

Consumer outlets of after-market automotive accessories, including dealerships, automotive service shops and automotive retailers, direct sales via the Internet and infomercials.


The North American automotive manufacturers segment has been growing consistently for the last several years beginning with the emergence of the minivan as a force in the market and continuing with the more recent trend towards sport utility vehicles. We believe this segment and the large luxury sedan segment provide the best markets for our products. Our primary efforts will initially be focused on the mid to higher end of this market that is expected to be less price sensitive and more interested in new technologies. We are actively marketing to decision makers in the original equipment market through manufacturers.  Our marketing emphasis has, however, been to the higher margin market including dealerships and consumer outlets.  Dealerships provide an opportunity to add our product to a vehicle after it leaves the manufacturer, but before it is sold.


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


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


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



Sense Technologies 10 K February 28, 2010

Page 5



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


·  The product should be priced at a level readily acceptable to SUV and light truck purchasers;


·  Attractive margin must be made available to OEMs and distribution partners;


·  Fleet products must offer attractive ROI to owners; and


·  Margins to Sense will increase faster with higher volume than higher pricing.


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


COMPETITION AND OUR COMPETITIVE ADVANTAGES


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


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


Other systems use infrared or ultrasonic sensors.  Infrared sensors project infrared beams and detect reflected infrared light from objects in the scanned zone behind the vehicle, which in turn activates an audio or visual alarm. Ultrasonic Systems work on the principle of emitting an ultrasonic sound burst and detecting a reflected energy wave returned to the source by contact with an object in the detection zone, again activating an alarm.  Both systems require a clean sensor in order to function properly, and accordingly performance can be affected by environmental conditions.


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


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


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


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



Sense Technologies 10 K February 28, 2010

Page 6



OUR SCOPEOUT® PRODUCT


SCOPEOUT®


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


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


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


PRODUCTION OF OUR SCOPEOUT® PRODUCT


All of our manufacturing and engineering is being out-sourced to a firm located in Phoenix, Arizona.  We’re evaluating whether this should change to a Tier-1 Company near Detroit, Michigan.


MARKET AND MARKETING OF OUR SCOPEOUT® PRODUCT


The potential market for ScopeOut® is owners or operators of cars, vans, SUV’s and trucks worldwide.   There are over 200 million vehicles on the road at any given time, and 16 to 18 million new vehicles being built and sold each year.  In combination with our Guardian Alert®, we have the only “Surround Safety System” that addresses all the blind spots encountered around the rear of most vehicles at a cost that permits us to set price points that are affordable for most consumers.


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


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


●  New and used auto dealers

●  AAA Insurance

●  AARP

●  Mass merchandisers

●  Drugstore chains

●  Insurance companies

●  Rental car companies

●  Electronics stores

●  Supermarket chains

●  Independent auto aftermarket stores

●  OEM market

●  Internet and infomercials

●  QVC and HSN



COMPETITION AND OUR COMPETITIVE ADVANTAGES


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


OUR PATENTS, TRADEMARKS & LICENSES


Patents & Trademarks


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


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

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



Sense Technologies 10 K February 28, 2010

Page 7




Licenses & Royalties


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


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


a)

$6.00(US) per unit on the first one million units sold;

b)

thereafter, the greater of $4.00(US) per unit sold or 6% of the wholesale selling price on units sold; and

c)

50% of any fees paid to Sense in consideration for tooling, redesign, technical or aesthetic development or, should the licensors receive a similar fee, the licensors will pay 50% to Sense.


Prior to 2004, the Company had held an exclusive license and patent rights.  Under the terms and conditions of maintaining the exclusive rights, the Company was required to manufacture and sell a minimum number of units as follows:


a)

30,000 units by the end of the calendar year containing the second anniversary of the date of commencement of commercial production;

b)

a cumulative total of 60,000 units by the end of the calendar year containing the third anniversary of the date of   commencement of commercial production;

c)

a cumulative total of 110,000 units by the end of the calendar year containing the fourth anniversary of the date of commencement of commercial production;

d)

a cumulative total of 210,000 units by the end of the calendar year containing the fifth anniversary of the date of commencement of commercial production; and

e)

an additional 125,000 units by the end of each calendar year thereafter.


In order to retain the exclusive right to manufacture, market and distribute the Guardian Alert, the Company had been required, upon being assigned the license, to manufacture and sell various minimum numbers of units by certain milestone dates.  As a result of not being able to meet the minimum milestone requirements under the license agreement, during the year ended February 28, 2004, the Company determined that it did not wish to retain the exclusive right to manufacture, market and distribute the Guardian Alert unit and ceased accruing the minimum royalty due to the licensor. Any product sales subsequent to this date are considered to be part of the minimum royalty until such time that amounts exceed the minimum royalty accrued.


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


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


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


Our ScopeOut® license called for $150,000 to be paid over two years (paid) along with a royalty of 10% of wholesale price for each ScopeOut® unit sold, but not less than $2.00 per unit.  In order to maintain the exclusive license for the ScopeOut® products, in accordance with the license agreement with Palowmar Industries, LLC, we are required to pay royalties to the licensor based on the following minimum quantities of units sold:


a)

30,000 units per year beginning in years 1-2

b)

60,000 units per year beginning in years 3-4

c)

100,000 units per year beginning in years 5 and above.


We have not been able to pay the minimum royalty requirement as noted above but we have accrued the required minimum royalty annually.  



Sense Technologies 10 K February 28, 2010

Page 8



GOVERNMENTAL APPROVAL


Because our Guardian Alert product is an emitting device, the Federal Communications Commission (FCC) we were required to obtain equipment authorization which was granted on October 31, 1995.  The microwave signals emitted by the device can potentially interfere with radar detectors and other existing emitting systems. All FCC tests have been completed and a FCC certification in the name of Sense Technologies Inc. has been obtained. There are no other material regulatory approvals required for Sense to achieve its stated business objectives.


EMPLOYEES


We currently have one employee.  We have hired three independent consultants for purposes of marketing and selling our ScopeOut® products.


ITEM 2.  DESCRIPTION OF PROPERTY


Sales inquiries for Guardian Alert® products are being processed for Sense by Tim Goldsbury and Associates, Inc., at Alhambra Plaza, 725 N. Hwy A-1-A, Jupiter, FL  33477, and for Scopeout® by Bruce Schreiner at 2535 N Carleton Avenue, Grand Island, Nebraska. Administration is handled from offices located at 2535 N Carleton Avenue, Grand Island, Nebraska. Both the Florida and Nebraska office spaces are provided to us at no cost.  We have determined that the value of contributed premises to be insignificant.


ITEM 3.  LEGAL PROCEEDINGS


To the best of our knowledge, there are no legal actions pending, threatened or contemplated against us.


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


No matters were submitted to a vote of the Company’s shareholders during the fourth quarter of fiscal year 2010.



PART II


ITEM 5. MARKET FOR COMMON AND PREFERRED EQUITY AND RELATED STOCKHOLDER MATTERS


MARKET AND TRADING PRICE FOR COMMON SHARES


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


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


Quarter Ended

High

Low

February 28, 2010

$0.05

$0.05

November30, 2009

$0.03

$0.03

August 31, 2009

$0.02

$0.02

May 31, 2009

$0.02

$0.02

February 28, 2009

$0.02

$0.01

November 30, 2008

$0.05

$0.01

August 31, 2008

$0.14

$0.01

May 31, 2008

$0.09

$0.03


The above sales prices were based on the closing trades reported on the NASD Over-the-Counter quotation system and reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

  

As of February 28, 2010, there were 357 shareholders of record holding 66,804,651 shares of our common stock; as of June 13, 2010, there were 72,704,650 common shares outstanding.  



Sense Technologies 10 K February 28, 2010

Page 9



DIVIDENDS


There are no dividend restrictions in the Company.


RECENT SALES OF UNREGISTERED SECURITIES


On March 2, 2009, one investor under Rule 506 of Regulation D, subscribed for 500,000 common shares at a price of $.05 per share for total proceeds to the Company of $25,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On March 6, 2009, one investor under Rule 506 of Regulation D, subscribed for 200,000 common shares at a price of $.05 per share for total proceeds to the Company of $10,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On April 9, 2009, one investor under Rule 506 of Regulation D, subscribed for 500,000 common shares at a price of $.05 per share for total proceeds to the Company of $25,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On May 1, 2009, one investor under Rule 506 of Regulation D, subscribed for 500,000 common shares at a price of $.05 per share for total proceeds to the Company of $25,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On May 27, 2009, one investor under Rule 506 of Regulation D, subscribed for 500,000 common shares at a price of $.05 per share for total proceeds to the Company of $25,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On June 18, 2009, one investor under Rule 506 of Regulation D, subscribed for 500,000 common shares at a price of $.05 per share for total proceeds to the Company of $25,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On June 24, 2009, one investor under Rule 506 of Regulation D, subscribed for 500,000 common shares at a price of $.05 per share for total proceeds to the Company of $25,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On July 17, 2009, one investor under Rule 506 of Regulation D, subscribed for 200,000 common shares at a price of $.05 per share for total proceeds to the Company of $10,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On July 31, 2009, one investor under Rule 506 of Regulation D, subscribed for 200,000 common shares at a price of $.05 per share for total proceeds to the Company of $10,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On December 29, 2009, one investor under Rule 506 of Regulation D, subscribed for 1,000,000 common shares at a price of $.03 per share for total proceeds to the Company of $30,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On December 29, 2009, another investor under Rule 506 of Regulation D, subscribed for 1,200,000 common shares at a price of $.03 per share for total proceeds to the Company of $36,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On December 30, 2009, one investor under Rule 506 of Regulation D, subscribed for 500,000 common shares at a price of $.03 per share for total proceeds to the Company of $15,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On February 2, 2010, one investor under Rule 506 of Regulation D, subscribed for 333,333 common shares at a price of $.03 per share for total proceeds to the Company of $10,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On February 5, 2010, one investor under Rule 506 of Regulation D, subscribed for 33,333common shares at a price of $.03 per share for total proceeds to the Company of $1,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.


On February 6, 2010, one investor under Rule 506 of Regulation D, subscribed for 333,333 common shares at a price of $.03 per share for total proceeds to the Company of $10,000.  The shares are restricted pursuant to Rule 144 promulgated under the U.S.  Securities Act  of 1933.




Sense Technologies 10 K February 28, 2010

Page 10



All of these shares have been issued.


PREFERRED SHARES


The preferred shares are entitled an annual dividend of $0.10 per share payable on July 31 of each calendar year.


The preferred shares are convertible into common shares of the Company at the rate of one common share for each 0.29 preferred share. Upon conversion, all preferred share rights cease except the right to receive declared and unpaid dividends


The preferred shares are redeemable at the option of the Company at the redemption price of $1 per Class A preferred share plus payment of all dividends cumulated thereon.  


ITEM 6. SELECTED FINANCIAL DATA


Item 6 is not required for a smaller reporting company.


ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  


The following discussion and analysis should be read in conjunction with our audited Financial Statements and Notes thereto for the period ended February 28, 2010 and our audited Financial Statements and notes thereto for the period ended February 28, 2009.


OVERVIEW OF OPERATIONS


Sense holds a non-exclusive license to manufacture, distribute, market and sublicense world-wide, a patented technology which is used to produce the Guardian Alert® backing awareness system for motor vehicles utilizing microwave radar technology.  The Company assembles the product in Charlotte, NC.  The company also holds a non-exclusive license to manufacture, distribute and market world-wide, the ScopeOut® product, a patented system of specially-designed mirrors which are placed at specific points on vehicles to offer drivers a more complete view of the blind spots toward the rear of the vehicle.  The Company has established relationships with a large OE Tier -1 Manufacturer, several dealership groups, and with other strategic sales partners.  The Company plans to create sales through development of new marketing relationships.


RESULTS OF OPERATIONS


For the period ended February 28, 2010 as compared to the period ended February 28, 2009.


 

 

             2010

             2009

Sales - Guardian Alert

141,550

60,151

Sales - Scope Out

1,190

51,391

 

 

 

 

 

Total Sales

142,740

111,542


Sales for the period ended February 28, 2010 increased by 28%. We had revenues of $142,740 and $111,542 for the years ended February 28, 2010 and February 28, 2009, respectively. The sales increase was primarily attributable to our sales related to the Guardian Alert line of product. Guardian Alert unit revenues for the years ended February 28, 2010 and February 28, 2009 were $141,550 and $60,151, respectively, an increase of 135%. This increase was largely due to our increased marketing efforts. ScopeOut® unit revenues for the years ended February 28, 2010 and February 28, 2009 were $1,190 and $51,391, respectively, a decrease of 97%. This decrease was largely due to our reduced marketing efforts regarding ScopeOut® so we could concentrate on Guardian Alert® sales.  Revenue is recognized by management only upon receipt of an actual purchase order from a customer, and the related invoicing to the company or, in the absence of a purchase order (i.e., verbal order), the actual invoicing to the customer, when the products are shipped and collection is reasonably assured.


We continued to market both products but with emphasis on large sales opportunities for Guardian Alert®.  While it is the company objective to grow sales, no assurance can be given that we will be successful in this manner and sustain comparable sales in future periods.




Sense Technologies 10 K February 28, 2010

Page 11




Direct Cost

 

 

2010

2009

Scope Out Direct Costs

 

 

 

Cost of sales

         631

39,948

 

Manufacturing expenses

            -   

-

 

Research and development

      2,630

11,156

 

Commissions

            -   

-

 

Royalties - related party

    200,000

149,834

 

Write - off of inventory

26,981   

-

Total Scope Out Direct Costs

230,242

200,938

 

 

 

 

Guardian Alert Direct Costs

 

 

 

Cost of sales

          -

166

 

Manufacturing expenses

       28,114

6,173

 

Research and development

            -   

-

 

Commissions

      44,745

21,075

 

Royalties - related party

            -   

-

 

Write - off of inventory

            -   

-

Total Guardian Alert Direct Costs

      72,859

27,414

 

 

 

 

Total Direct Costs

    303,101

    228,352


Direct costs typically include the cost of raw materials necessary to make our products.  It also includes the cost of shipping the products from manufacturing location to our warehouse.  Direct costs also include costs in respect of obsolete inventory.


Management periodically reviews inventory and makes a determination as to whether any inventory is obsolete.  If we determine that certain materials and or products are not in saleable condition and that the likelihood of them being sold is remote, management will make a decision to write off the inventory and or parts of inventory that it deems will not sell.  If previously written-off inventory later sells, costs of sale are significantly lower due to the previous write-off of those costs.  This can materially affect period gross profit ratios.   We made such a determination with respect to our remaining ScopeOut® inventory during the year ended February 28, 2010, and accordingly wrote off that balance.


Direct costs for the period ended February 28, 2010 increased by 32%. Sense Technologies incurred direct costs of $303,101 and $228,352 for the years ended February 28, 2010 and February 29, 2009, respectively.


Direct costs related to ScopeOut® were $230,242 and $200,938 for the years ended February 28, 2010 and February 28, 2009, respectively, an increase of 49%. The increase is primarily attributable to the $26,981 expense for inventory written off in 2010 and the increase in royalties accrued. The ScopeOut® inventory write off in 2010 was done so because meaningful sales of the product were not being achieved. Cost of Sales were $631 and $39,948 in the years ended February 28, 2010 and February 28, 2009, respectively. The decrease was due to low sales and also the fact that such inventory cost was written off prior.  In 2009, Cost of Sales represented new version inventory costs against new version sales that we believed would be saleable.


ScopeOut® research and development costs decreased from $11,156 in 2009 to $2,630 in 2010, a decrease of 76%.  This was primarily due to the ScopeOut® products aesthetic re-design being previously completed.


Direct costs related to Guardian Alert were $72,859 and $27,414 for the years ended February 28, 2010 and February 28, 2009, respectively. This change represents an increase of 165%. The increase is primarily from commissions and assembly costs related to Guardian Alert. Manufacturing expenses incurred were $28,114 and $6,173 for the years ended February 28, 2010 and February 28, 2009, respectively. This increase is attributed to the expenses incurred in 2010 related to the assembly components of the Guardian Alert product line.



Sense Technologies 10 K February 28, 2010

Page 12




Selling, General, and Administrative

 

2010

2009    

Advertising and marketing

51,958

234,195  

Consulting fees

17,000

131,348  

Contract labor

15,179

11,000  

Depreciation

14,296

12,209  

Filing fees

4,985

6,286  

Financing fees

-

42,889  

Insurance

28,252

33,584  

Interest and bank charges

200,322

194,380  

Legal and accounting  

55,704

108,677  

Management fees

19,729

-  

Office and miscellaneous

191,432

75,900  

Rent

 

102,969

66,100  

Repairs and maintenance

305

623  

Shareholder information and printing

        3,012

-   

Telephone and utilities

1,531

4,680  

Transfer agent fees

6,354

12,765  

Travel and automotive

16,258

19,750  

 

Total

729,286

954,386  


Sense Technologies, Inc. had selling, general and administrative expenses of $729,286 for the year ended February 28, 2010, compared to selling, general and administrative expenses of $954,386 for the year ended February 28, 2009, a decrease in selling, general and administrative expenses of $225,100 from the prior period. The decrease of 24% was mainly due to the elimination of some of the costs attributable to the ScopeOut® sales operations.


Advertising and marketing fees decreased during this fiscal year, $51,958 and $234,195 for the years ended February 28, 2010 and February 28, 2009, respectively.


Consulting fees decreased from $131,348 for the year ended February 28, 2009 to $17,000 for the year ended February 28, 2010, a decrease of 87%.  The decrease was a result of a reduction of consulting related to the ScopeOut® product sales.


Sense Technologies, Inc. incurred contract labor expenses of $15,179 compared to $11,000 for the years ended February 28, 2010 and February 28, 2009, respectively. The increase is a result of expenses relating to outsourcing our bookkeeping and administrative services.


Financing fees decreased from $42,889 in the year ended February 28, 2009 to $0 in the year February 28, 2010.    The Company received no financing fees billings in the current year, so could not reflect any sale expense, though it did receive some financing.


Insurance expense decreased to $28,252 in the year ended February 28, 2010 from $33,584 in the year ended February 28, 2009. The decrease of 16% is a result of decreased premiums for workman’s compensation insurance.


Interest and bank charges increased slightly in the year ended February 28, 2010 to $200,322 from $194,380 in the year ended February 28, 2009. This increase was due to larger balances on notes outstanding during 2010 and thus increased interest expense.


Legal, accounting and audit fees decreased from $108,677 in the year ended February 28, 2009 to $55,704 for the year ended February 28, 2010. The decrease of 49% is largely a result of reduced expenses incurred from a change in the Company’s auditing firm.


Office and miscellaneous fees were $191,432 and $75,900 for the years ended February 28, 2010 and February 28, 2009 respectively. The increase of 153% was largely due to our renewed effort to revive Guardian Alert sales and the writeoff of the inventory deposit for ScopeOut® product.


Rent expenses increased to $102,969 in the fiscal year February 28, 2010 from $66,100 in the year ended February 28, 2009. The increase of 55% was a result of the Company default on a lease and write off security deposit and last months rent.



Sense Technologies 10 K February 28, 2010

Page 13





Components of Office and Miscellaneous Expenses and Travel and Automotive Expenses for the periods follow:


 

2010

2009

Office and Miscellaneous Expenses:

 

 

Postage and Delivery

$        2,466

$    1,235

Internet Access

  280

 964

Foreign Exchange

   (10)

  (127)

Dues and subscriptions

  231

-

Licenses and Permits

  160

 228

Freight & Delivery

  2,673

 4,717

Office Supplies

  803

 840

Payroll Expenses

  2,351

 10,008

Supplies

  15,273

 842

Payroll Taxes

 367

 971

Printing and Reproduction Costs

-

    7,439

Deposit write-off

 69,228

  -  

San Tan Development Settlement

 73,065

General Miscellaneous

   24,545

 48,783

     Total

$  191,432

$  75,900

 



Travel and Automotive Expenses:



Guardian Alert Travel

$    6,258

$           -

ScopeOut travel

 -

5,304

Arizona Expenses

 10,000

14,446

     Total

$  16,258

$ 19,750


Our travel costs have been focused on the Guardian Alert® product as opposed to the ScopeOut® in the year ended February 28, 2010.


Following summarizes the overall operations results:


 

 

 

2010

 

2009

Increase

( Decrease)

%  Increase

(decrease)

 

 

 

 

 

Sales

$142,740

$    111,542

$    31,198

28 %

Direct Costs

$303,101

$    228,352

$    74,749

32 %

General and Administrative expenses


Net Loss from Operations


$729,286



$889,647


$    954,386



$1,071,196


$(225,100)


(24) %


We had a loss from operations of $889,647 for year ended February 28, 2010, compared to a loss from operations of $1,071,196 for the year ended February 28, 2009, a decrease in loss from operations of $181,549 from the prior year. The decrease in the loss from operations was primarily attributable to the decrease in selling, general and administrative expenses relative to ScopeOut® product sales efforts.


Other Income

 

 

2010

2009

Rental Income

6,544

3,272

Gain on forgiveness of debt

-

54,198


During the year ending February 28, 2009 we had an increase of $54,198 relating to a gain on forgiveness of debt. The amount was related to our settlement with Morton and Company.


LIQUIDITY AND CAPITAL RESOURCES


Our cash position at February 28, 2010 was $709 as compared to $645 at February 28, 2009. This slight increase was due to the net of our use of cash in operating and investing activities and cash provided by financing activities.



Sense Technologies 10 K February 28, 2010

Page 14




Our net loss of $883,104 for fiscal year 2010 includes non-cash charges of $19,729 for management fees to directors through the issuance of common stock and depreciation expense of $14,296. Our net loss of $1,013,726 for fiscal year 2009 includes non-cash charges of $232,600 for services to be paid through the issuance of our common stock and a depreciation expense of $12,209.  Non-cash working capital changes included decreases in inventory and, prepaid expenses and an increase in accounts payable. The net cash used in operating activities for fiscal 2010 was $259,155 as compared to $621,783 for fiscal year 2009.


We have generated only limited revenues to date, have a working capital deficit of $3,841,036 as of February 28, 2010, compared to $3,327,295 as of February 28, 2009. If we are unable to raise adequate working capital for fiscal 2010, we will be restricted in the implementation of our business plan.  If this were to happen, the value of our securities would diminish and we may be forced to change our business plan for fiscal 2011, which would result in the value of our securities declining in value and/or becoming worthless.  If we raise an adequate amount of working capital to implement our business plan, we anticipate incurring significant expenses relating to paying down our notes payable and royalties that are in arrears. Additionally we will incur net losses until a sufficient client base can be established, of which there can be no assurance.


NET CASH USED IN OPERATING ACTIVITIES


Net cash used in operating activities was $259,155 during fiscal year 2010, compared to $621,783 during fiscal 2009. The decrease in cash used in fiscal 2010 was primarily due to the following factors:

 

 

(i)  

Write-off of Deposit on purchase of new inventory

(ii)  

Reduction of expenses incurred relative to the ScopeOut® product sales effort.

The Company is in arrears with respect to seven notes payable totaling $584,447. The Company plans to address this situation on a per-note basis as sufficient net cash flows are generated with which to negotiate new terms on these notes.  In the meantime, these notes could be foreclosed on which would negatively impact the Company’s ability to continue in business.  Should that happen, a plan for an interim solution to each note default would be attempted, but there is no assurance these efforts would be successful to forestall a serious impairment of the Company’s ability to continue.


NET CASH USED IN INVESTING ACTIVITIES


Net cash used in investing activities was $0 during fiscal year 2010 compared to $50 during fiscal 2009. The cash used in the prior year was used to find the purchase of property and equipment which is primarily used to manufacture our products.


NET CASH PROVIDED BY FINANCING ACTIVITIES


Net cash provided by financing activities was $259,219 during fiscal year 2010 compared to net cash provided of $621,490 during fiscal year 2009.


During fiscal year 2010, we received $282,000 through subscriptions to private placements of our common shares and $18,000 through the issuance of promissory notes receivable. In the fiscal 2009, we had received $245,000 from through subscriptions to private placements of our common shares and $471,273 through the issuance of promissory notes receivable.


FUTURE OPERATIONS


Presently, our cash flow generated from operations is not sufficient to meet operating and capital expenses. We have incurred operating losses since inception, and we project this to continue for the next nine to twelve months.


Our present average monthly costs are approximately $25,000 per month. Our plan is to sustain the Company while continuing to market both products, but with the majority of the emphasis on our Guardian Alert® products.


The Company’s payables and presently un-serviced debt will be retired only as the net cash flow from this anticipated growth allows.


We project that we will have the following cash needs to fund our ongoing operating expenses and working capital requirements through February 28, 2010 as detailed below.

 

 

 

Engineering, research and development

$               30,000

General and administrative

300,000

Debt repayment

100,000

General Working Capital (1)

570,000

TOTAL

 $         1,000,000




Sense Technologies 10 K February 28, 2010

Page 15




 

 

(1)  

Our working capital requirements are impacted by our inventory requirements. Therefore, any increase in sales of our products will be accompanied not only by an increase in revenues, but also by an increase in our working capital requirements.


The continuation of our business is dependent upon obtaining further financing, further market acceptance of our current products and any new products that we may introduce, the continuing successful development of our products and related technologies, and, finally, achieving a profitable level of operations.


We are hopeful that internal cash flow will cover our cash requirements, but otherwise plan to raise additional capital as required to meet the balance of our estimated funding requirements through February 28, 2010, through either or a combination of:


 

 

(1)  

issuance of promissory notes payable

(2)  

private placements of our common shares

(3)  

cash flow from operations


The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. In respect of our cash requirements, we plan to raise $50,000 from equity investors via private placements of our common stock  and we need to secure debt financing through a line of credit facility in the amount of $250,000 to finance our initial inventory purchases. Should our inventory not turn over as anticipated, we will need to raise additional funds through a combination of debt issuances and equity offerings.


Given our lack of sales in recent years, projecting cash flow from operations is inherently uncertain.  Any funds we generate from operations must, in part, be used to pay down our debt obligations.  Our convertible promissory notes payable totaling approximately $584,000 and various accounts payable are significantly in arrears.  While we anticipate being successful in obtaining our required financing, there is no assurance we will be able to do so at terms we find acceptable.   Additionally, we rely upon the continuing support and patience of creditors in connection with current and in-arrears amounts owed to them.  The failure to obtain sufficient financing or continued support of the creditors could result in our company ceasing operations.



Sense Technologies 10 K February 28, 2010

Page 16






ITEM 8.  FINANCIAL STATEMENTS



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors

Sense Technologies, Inc.



We have audited the accompanying balance sheets of Sense Technologies, Inc. as of February 28, 2010 and February 28, 2009, and the related statements of operations, changes in stockholders' deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements referred to above present fairly, in all material respects, the financial position of Sense Technologies, Inc. as of February 28, 2010 and February 28, 2009, and the results of its operations, changes in stockholders' equity deficiency and cash flows for the periods then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has insufficient working capital, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

June 16, 2010






Sense Technologies 10 K February 28, 2010

Page 17





SENSE TECHNOLOGIES, INC.
BALANCE SHEETS
As of February 28, 2010 and February 28, 2009
(Stated in US Dollars)

  

  

February 28

  

  

February 28

  

  

  

2010

  

  

2009

  

 

 

 

 

 

 

 

ASSETS

  

Current

  

  

  

  

  

  

     Cash

$

709

 

$

645

 

     Accounts Receivable

 

7,034

 

 

-

 

     Accounts Receivable–Related Party

 

2,532

 

 

2,532

 

     Inventory

 

-

  

 

27,611

  

     Prepaids

  

8,974

  

  

14,345

  

  Total Current Assets

  

19,249

  

  

45,133

  

Deposit

  

-

  

  

84,928

  

Equipment – Net of accumulated depreciation   of $93,308 and $79,012 at February 28, 2010   and February 28, 2009, respectively

  

49,399

  

  

63,695

  

Intangible assets

  

51

  

  

52

  

  Total Assets

$

68,699

  

$

 193,808

  


LIABILITIES

  

Current

  

  

     Bank overdraft

$

-

 

$

45,778

 

     Accounts payable

 

251,055

 

 

188,976

  

     Accounts payable-related party

 

47,284

 

 

44,552

 

     Accrued expenses

 

841,155

 

 

584,664

 

     Accrued expenses-related party

 

977,945

 

 

793,528

 

     Notes payable

  

472,062

  

  

499,842

  

     Notes payable-related party

 

432,500

 

 

427,500

 

     Advances payable – related entity

  

19,105

  

  

-

  

     Dividends payable

  

234,732

  

  

203,141

  

     Convertible promissory notes payable

  

584,447

  

  

584,447

  

  Total Current Liabilities

  

3,860,285

  

  

3,372,428

  

 

 

 

 

 

 

 

  STOCKHOLDERS' DEFICIENCY   

  

  

  

  

  

  

  

  

Class A preferred shares, without par value, redeemable at $1 per  share 20,000,000 shares authorized, 315,914 shares  issued at February 28, 2010

  

  

  

  

  

  

 (February 28, 2009: 315,914)

 

315,914

 

 

315,914

 

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

  

  

  

  

  

  

66,804,651 shares issued at February 28, 2010(February 28,     2009: 62,204,651)

  

13,135,268

  

  

 12,903,039

  

Common stock subscribed – Note 8

  

190,889

  

  

121,389

  

Deficit

  

  (17,433,657)

 

  

(16,518,962)

 

  Total Stockholders’ Deficiency

  

(3,791,586)

 

  

(3,178,620)

 


 Total Liabilities and Stockholders’ Deficiency



68,699

  


$

 

193,808

 

 

 

 

 

 

 

 




SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS




Sense Technologies 10 K February 28, 2010

Page 18



SENSE TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS
for the twelve months ended February 28, 2010 and February 28, 2009
(Stated in US Dollars)

  

  

Twelve months ended

  

  

  

February 28,

February 28,

  

  

  

2010

  

  

2009

  

Sales

$

142,740

  

$

111,542

  

Direct costs

  

  

  

  

  

  

     Cost of sales

 

631

  

 

40,114

 

     Manufacturing expenses

  

28,114

  

  

6,173

  

     Research and development

  

2,630

  

  

11,156

  

     Commissions

 

44,745

 

 

21,075

 

     Royalties – related party

 

200,000

 

 

149,834

 

     Write-off of inventory and deposit

  

26,981

  

  

-

  

          Total Direct Costs

 

303,101

 

 

228,352

 

           Gross Profit

 

(160,361

)

 

(116,810

)

 

 

 

 

 

 

 

   Advertising and marketing

  

51,958

17,000

15,179

  

  

234,195

131,348

11,000

  

   Consulting fees

   Contract labor

   Depreciation

  

14,296

  

  

12,209

  

   Filing fees

  

4,985

  

  

6,286

  

   Financing fees

  

-

  

  

42,889

  

   Insurance

  

28,252

  

  

33,584

  

   Interest and bank charges

  

200,322

  

  

194,380

  

   Legal and accounting  

  

55,704

  

  

108,677

  

   Management fees

 

19,729

 

 

-

 

   Office and miscellaneous

  

191,432

  

  

75,900

  

   Rent

  

102,969

  

  

66,100

  

   Repairs and maintenance

 

305

 

 

623

 

   Shareholder information and printing

  

3,012

  

  

-

  

   Telephone and utilities

  

1,531

  

  

4,680

  

   Transfer agent fees

 

6,354

 

 

12,765

 

   Travel and automotive

 

16,258

 

 

19,750

 

  

  

729,286

  

  

954,386

 

Net operating loss

 

(889,647

)

 

(1,071,196

)

 

 

 

 

 

 

 

Rental income

 

6,543

 

 

3,272

 

Gain on forgiveness of debt

 

-

 

 

54,198

 

 

 

 

 

 

 

 

 Net loss

 

(883,104

)

 

 (1,013,726

 

 

 

 

 

 

 

Preferred dividends, paid or accrued

 

                         31,591

 

 

                         31,591

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

$

                     (914,695

)

$

                  (1,045,317

)

 

 

 

 

 

 

 

 Basic and diluted loss per share

$

 (0.01

)

$

 (0.02

)

Weighted average number of shares outstanding

  

  

  

  

  

  

 

  

64,195,884

  

  

53,949,706

 




SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENT




Sense Technologies 10 K February 28, 2010

Page 19



SENSE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
for the twelve months ended February 28, 2010 and February 28, 2009
(Stated in US Dollars)

  

  

2010

  

  

2009

  

Operating Activities

  

  

  

  

  

  

     Net loss for the period

$

 (883,104

)

$

 (1,013,726

)

     Adjustments to reconcile net loss to net cash used in

        Operating activities:

  

  

  

  

  

  

           Depreciation

  

14,296

 

  

12,209

 

           Common shares issued for services

 

19,729

 

 

232,000

 

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

  

  

  

  

  

  

           Accounts Receivable

 

(7,034

)

 

-

 

           Inventory

  

27,611

 

  

13,624

 

           Prepaids

  

5,371

 

  

13,589

 

           Deposits

 

84,928

 

 

(69,228

)

           Accounts payable

  

19,034

 

  

(34,642

)

           Accrued expenses

 

440,908

 

 

264,441

 

           Advances payable

  

19,105

 

  

(40,050

)

Net cash used in operating activities

  

(259,155

)

  

(621,783

Investing Activities

  

  

  

  

  

 

     Purchase of equipment

  

-

 

  

(50

)

Net cash used in investing activities

  

-

 

  

(50

)

  

  

  

  

  

  

  

Financing Activities

  

  

  

  

  

 

     Borrowing on notes payable  

  

41,056

 

  

471,273

 

   Repayment on notes payable

 

(56,975)

 

 

-

 

   Repayment on bank indebtedness

 

(6,862)

 

 

    (94,783)

 

     Proceeds from common share subscriptions

  

282,000

  

  

245,000

  

Net cash provided by financing activities

  

259,219

  

  

621,490

  

  

  

  

  

  

  

  

Decrease in cash during the period

  

64

 

  

(343

)

  

  

  

  

  

  

  

Cash, beginning of period

  

645

  

  

988

  

  

  

  

  

  

  

 

Cash, end of period

$

709

  

$

645

  

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrual of Preferred Stock Dividend

 

31,591

 

 

31,591

 





SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENT



Sense Technologies 10 K February 28, 2010

Page 20



SENSE TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIENCY
for the period ended February 28, 2010 and February 28, 2009
(Stated in US Dollars)

  

Common Stock

 

 

Preferred Stock

 

 

 

 

 

Promissory

 

 

Common

 

 

 

 

 

 

  

  

Issued

Shares

 

 

Amount

 

 

Issued

Shares

 

 

Amount

 

 

Contribute

Surplus

 

 

Note

Receivable

 

 

Stock

Subscribed

 

 

Accumulated

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, February 29, 2008

45,575,551

 

$

12,499,471

 

 

315,914

 

$

315,914

 

$

-

 

$

-

 

$

47,957

 

$

(15,473,645

)

$

(2,610,303

Common share subscriptions

 

 

 

 (524,016

)

 

-

 

 

-

 

 

-

 

 

-

 

 

769,016

 

 

-

 

 

245,000

Common Stock issued fund previously received

8,929,100

 

 

495,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(495,584

)

 

 

 

 

-

Management fee shares issued

2,500,000

 

 

200,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(200,000)

 

 

-

 

 

-

Consulting fees

3,000,000

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

-

 

 

100,000

Royalties Payable

2,200,000

 

 

132,000

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

132,000

Dividends

-

  

  

-

  

  

-

  

  

-

  

  

-

 

  

-

  

  

-

  

  

(31,591

)

  

(31,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

    (1,013,726)

 

 

(1,013,726)

Balance, February 28, 2009

62,204,651

 

 

12,903,039

 

 

315,914

 

 

315,914

 

 

-

 

 

-

 

 

   121,389

 

 

(16,518,962

)

 

(3,178,620)

Common share subscriptions

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

282,000

 

 

-

 

 

282,000

Common stock issued

4,600,000

 

 

212,500

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(212,500

)

 

-

 

 

-

Dividends

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(31,591

)

 

(31,591)

Options Issued to Directors

 

-

 

-

 

 

-

 

 

-

 

 

19,729

 

 

-

 

 

-

 

 

-

 

 

19,729

Net loss for the period

 

-

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(883,104

)

 

(883,104)

Balance, February 28, 2010

66,804,651

 

 

13,115,539

 

 

315,914

 

 

315,914

 

 

-

 

 

-

 

 

190,889

 

 

(17,433,657

)

 

(3,791,586)



SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS





Sense Technologies 10 K February 28, 2010

                                                                        Page 21




SENSE TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS


NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCUNTING


POLICIES


Background

The Company was incorporated pursuant to the British Columbia Companies Act on May 25, 1988 as Graham Gold Mining Corporation.  On October 27, 1997, the Company changed its name to Sense Technologies Inc. and on December 14, 2001, the Company was continued in the Yukon Territory, Canada and during the year ended February 29, 2008, the Company changed its jurisdiction of organization from the Yukon Territory back to British Columbia, Canada.


The Company holds a non-exclusive license to manufacture, distribute, market and sell the ScopeOut® product, a system of specially designed mirrors which are placed at specific points on automobiles, trucks, sport utility vehicles or commercial vehicles to offer drivers a more complete view behind the vehicle.


During the years ended February 28, 2010 and February 28 2009, the Company had assets and generated sales primarily in the United States of America.


Use of Estimates

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuations, asset impairment, stock based compensation and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.


Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents.  We had no cash equivalents at either February 28, 2010 or February 28, 2009.


Basis of Presentation

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary of a fair presentation have been included.


Accounts Receivable

Accounts Receivable are stated at the amounts management expects to collect from the outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based upon it’s assessment of the current collection status of individual accounts. Delinquent amounts that are outstanding after management has conducted reasonable collection efforts are written of through a charge to the valuation allowance and a credit to accounts receivable. Total Allowance for Doubtful Accounts during the years ended 2009 and 2010 was zero and zero, respectfully. The net Accounts Receivable is $9,566 and $2,532 at February 28, 2010 and February 28, 2009, respectively.  Balances due from related parties are classified as such on the balance sheet.  


Inventory

Inventory consists of finished goods which are recorded at the lower of average cost and net realizable value. Average cost is determined using the weighted-average method and includes invoice cost, duties and freight where applicable plus direct labor applied to the product and an applicable share of manufacturing overhead. A provision for obsolescence for slow moving inventory items is estimated by management based on historical and expected future sales and is included in cost of goods sold.


Property and Equipment

Property and equipment are recorded at cost.  Depreciation is provided on the straight-line method and the declining balance method over the estimated useful lives of the assets, which range from five to seven years.  Expenditures for major renewals and betterments that extend the original estimated economic useful lives of the applicable assets are capitalized.  Expenditures for normal repairs and maintenance are charged to expense as incurred.  The cost and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts, and any gain or loss is included in operations.



Sense Technologies 10 K February 28, 2009

Page 22




Intangible Assets

The Company’s intangible assets are comprised of licenses fees and patent costs.  Licensing fees and patent costs are generally amortized on a straight-line basis over the periods of benefit and recognized on the statements of loss.


Foreign Currency Transactions

The functional and reporting currency of the Company is the United States dollar.  Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the fiscal year-end rate of exchange.  Non-monetary assets and liabilities denominated in other currencies are translated at historic rates and revenues and expenses are translated at average exchange rates prevailing during the month of transaction.


Revenue Recognition

The Company recognizes revenue when there is persuasive evidence of an arrangement, goods are shipped and title passes, collection is probable, and the fee is fixed or determinable. Provisions are established for estimated product returns and warranty costs at the time the revenue is recognized. The Company records deferred revenue when cash is received in advance of the revenue recognition criteria being met.


Credit Risk

Sense Technologies does not require collateral from its customers with respect to accounts receivable. Sense determines any required allowance by considering a number of factors including lengths of time accounts receivable are past due. Reserves for accounts receivable are made when accounts become uncollectible. Payments subsequently received are credited to allowance for doubtful accounts.


Income Taxes

The Company accounts for income taxes in accordance with the asset and liability method. Under this method, deferred income taxes are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts and their respective income tax bases and for loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. Deferred income tax assets are evaluated and if their realization is not considered to be "more likely than not", a valuation allowance is provided.


(Loss) Per Share

The Company computes net loss per share in accordance with FASB literature.  Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the year.  Diluted EPS gives effect to all dilutive potential common shares outstanding during the year including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method.  In computing diluted EPS, the average stock price for the year is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.  Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.    


For the year ended February 28, 2010, potentially dilutive common shares relating to options, convertible promissory notes payable and convertible preferred shares outstanding totaling 4,957,199 (2009 – 3,957,199) were not included in the computation of loss per share because the effect was anti-dilutive.


Product Warranty

The Company generally sells products with a limited warranty on product quality and accrues for known warranty if a loss is probable and can be reasonably estimated.  The Company accrues for estimated incurred based on historical activity. The accrual and the related expense for known issues were not significant during the periods presented.


Advertising Costs

The Company expenses the costs of advertisements and marketing at the time the expenditure occurs, and expenses the costs of communicating advertisements in the period in which the advertising space or airtime is used.


Impairment of Long-Lived Assets

Long-lived assets are continually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. 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 assets exceeds the fair value of the assets.   



Sense Technologies 10 K February 28, 2009

Page 23




Stock-Based Compensation

The Company is required to record compensation expense, based on the fair value of the awards, for all awards granted after the date of the adoption and for the unvested portion of previously granted awards that remain outstanding as at the date of adoption. The Company has elected to use the Black-Scholes option pricing model to determine the fair value of stock options granted. For employees, the compensation expense is amortized on a straight-line basis over the requisite service period which approximates the vesting period. Compensation expense for stock options granted to non-employees is amortized over the contract services period or, if none exists, from the date of grant until the options vest. Compensation associated with unvested options granted to non-employees is re-measured on each balance sheet date using the Black-Scholes option pricing model.


Fair Value of Financial Instruments

The carrying value of cash, bank indebtedness, accounts payable, advances payable, dividends payable and promissory notes payable approximate fair value because of the demand or short-term maturity of those instruments.  The carrying value of the convertible promissory notes payable also approximates fair value.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments .


The Company discloses the assets and liabilities that are recognized and measured at fair value on a non-recurring basis, presented in a three-tier fair value hierarchy, as follows:

·

Level 1.  Observable inputs such as quoted prices in active markets;

·

Level 2.  Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

·

Level 3.  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.


The following presents the gross value of assets and liabilities that are measured and recognized at fair value on a non-recurring basis at February 28, 2010.   


Level 1:  none

Level 2:  none

Level 3:  Convertible promissory notes payable:  $584,447


There were no gains or losses in fair value during the years ended February 28, 2010 or February 28, 2009.


Reclassification

Certain amounts reported in the prior period financial statements have been reclassified to the current period presentation.


Recently Adopted and Recently Enacted Accounting Pronouncements


In April 2008, the FASB issued ASC 350-10, "Determination of the Useful Life of Intangible Assets." ASC 350-10 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under ASC 350-10, "Goodwill and Other Intangible Assets." ASC No. 350-10 is effective for fiscal years beginning after December 15, 2008. The adoption of this ASC did not have a material impact on our consolidated financial statements.


In April 2009, the FASB issued ASC 805-10, "Accounting for Assets Acquired and Liabilities assumed in a Business Combination That Arise from Contingencies—an amendment of FASB Statement No. 141 (Revised December 2007), Business Combinations". ASC 805-10 addresses application issues raised by preparers, auditors and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. ASC 805-10 is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. ASC 805-10 will have an impact on our accounting for any future acquisitions and its consolidated financial statements.


In May 2009, the FASB issued ASC Topic 855, “Subsequent Events”. ASC Topic 855 established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. ASC Topic 855 also requires disclosure of the date through which subsequent events are evaluated by management. ASC Topic 855 was effective for interim periods ending after June 15, 2009 and applies prospectively. Because ASC Topic 855 impacts the disclosure requirements, and not the accounting treatment for subsequent events, the adoption of ASC Topic 855 did not impact our consolidated results of operations or financial condition. See Note 10 for disclosures regarding our subsequent events.




Sense Technologies 10 K February 28, 2009

Page 24



Effective July 1, 2009, we adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 105-10, Generally Accepted Accounting Principles—Overall ("ASC 105-10"). ASC 105-10 establishes the FASB Accounting Standards Codification (the "Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates ("ASUs"). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout these consolidated financials have been updated for the Codification.


In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value measurements. This ASU is effective October 1, 2009. We are currently evaluating the impact of this standard, but would not expect it to have a material impact on the our consolidated results of operations or financial condition.


NOTE 2 – GOING CONCERN


At February 28, 2010, the Company had not yet achieved profitable operations, had an accumulated deficit of $17,433,657 (2009 - $16,518,962) since its inception and incurred a net loss of 883,104 (2009 - $ 1,013,726) for the year and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers obtaining additional funds by equity financing and/or from related party. Management expects the Company’s cash requirement over the twelve-month period ended February 28, 2011 to be $300,000. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds for operations.


NOTE 3 – EQUIPMENT


The following is a summary of this category, including estimated useful lives of the assets:


 

February 28,

2010

February 28

2009

Computer Equipment (5 yrs)

38,297

38,297

Furniture and Fixtures (7 yrs)

11,217

11,217

Testing Equipment (5 yrs)

27,137

27,137

Product Molds (7 yrs)

66,056

66,056

Subtotal

142,707

142,707

Less: Accumulated Depreciation

 (93,308)

 (79,012)

Total

$   49,399

63,695




Sense Technologies 10 K February 28, 2009

Page 25



NOTE 4 – INTANGIBLES


Intangible assets are comprised as follows:


  

February 28,

2010

February 28,

2009

Guardian Alert License

$             50

$                51

Net carrying cost

 

 

Scope Out Mirror License

  1

1

Net carrying cost

$               51

  $                 52


Guardian Alert License

By an Assignment Agreement dated April 30, 1992 and amendments thereto dated May 27, 1992, July 14, 1992, April 5, 1993, August 13, 1993, March 10, 1997, May 29, 1997 and February 25, 1999 the Company has been assigned the right, title, interest and obligations in a License Agreement to manufacture, market and distribute a microwave radar collision avoidance device for motor vehicles.   

Pursuant to this license, the Company is required to make royalty payments to the licensor as follows: a) $6.00(US) per unit on the first one million units sold;

b) thereafter, the greater of $4.00(US) per unit sold or 6% of the wholesale selling price on units sold; and   

c) 50% of any fees paid to Sense in consideration for tooling, redesign, technical or aesthetic development or, should the licensors receive a similar fee, the licensors will pay 50% to Sense.


At February 28, 2010, the royalty payable - related party to the Guardian Alert License was $480,000 (2009: $480,000). We intend to repay these payables upon successful completion of our business plan and raising of capital via debt or equity instruments.


In order to retain the exclusive right to manufacture market and distribute the Guardian Alert, the Company had been required, upon being assigned the license, to manufacture and sell various minimum numbers of units by certain milestone dates.  As a result of not being able to meet the minimum milestone requirements under the license agreement, during the year ended February 28, 2004, the Company determined that it did not wish to retain the exclusive right to manufacture, market and distribute the Guardian Alert unit and, with agreement of the licensor, ceased accruing the minimum royalty due to the licensor.  Any product sales subsequent to this date are considered to be part of the minimum royalty until such time that amounts exceed the minimum royalty accrued.


During the year ended February 28, 2005, based on an assessment of recoverability that took into consideration a history of operating losses and a forecast that demonstrated continuing losses associated with the use of the Guardian Alert, the Company wrote-down the license rights to a nominal value of $50.


Scope Out Mirror License

During the year ended February 28, 2005, the Company acquired a license with a unlimited life to manufacture, sell, deliver and install the Lateral-View Mirror (“Scope Out Mirror”).  As consideration, the Company paid a license fee of $150,000.


During the year ended February 28, 2007, the Company determined the license was impaired and accordingly, wrote it down to a nominal value of $1 (Note 19(a)).


Pursuant to the ScopeOut® Mirror License agreement, the Company is obligated to pay a royalty of 10% of the wholesale price for each ScopeOut® Mirror sold which, in any event, shall not be less than $2.00 per unit.


In order to retain the exclusive right to manufacture, sell, deliver and install the ScopeOut® Mirror, the Company is required to pay the royalty due on the following minimum number of units sold:   i) 30,000 units per year for the years ended September 23, 2005 and 2006;


ii)

60,000 units for the year ended September 23, 2007; and

iii)

100,000 units per year in the years ended September 23, 2008 and thereafter.


During the year ended February 28, 2010, the Company accrued $200,000 (2009: $149,834) in respect of the royalty owed in respect of the ScopeOut® Mirror License agreement.  Under the terms and conditions of the license agreement, the Company is obligated to pay interest on the outstanding royalty payable to the extent that the minimum royalties due under the agreement have not been paid and is calculated at a rate of 8% per annum. As of February 28, 2010, the Company has accrued $59,929 as interest payable.  The Company has been unable to make this payment timely, causing the license to revert to non-exclusive.




Sense Technologies 10 K February 28, 2009

Page 26



The following table presents the changes in the accrued royalties – related party balance from February 28, 2010 to February 28, 2009:


Guardian Alert

February 28, 2010

February 28, 2009

Beginning balance

480,000

480,000

Accrued

-   

-   

Paid

-   

-   

Total Guardian Alert

480,000

480,000

Scope Out

 

 

Beginning balance

273,334

233,500

Accrued

200,000

149,834

Paid

 -

       (110,000)

 

473,334

273,334

Total Accrued Royalties

953,334

753,334


NOTE 5 - DEPOSITS


Deposits consisted of the following:


 

February 28, 2010

February 28, 2009

Inventory deposit

-

$        69,228

Security deposit

-

15,700

 

-

$ 84,928


As of February 28, 2010 and February 28, 2009, the Company had a zero and $15,700 security deposit on leased property.  The deposit was forfeited because of default of lease.  


During fiscal 2009, the Company paid $69,228 to acquire certain inventory items.  Since this represented a partial payment on the inventory, the Company did not acquire title to the goods until all money is received by vendor.  We presently do not expect to use the vendor with which the inventory deposit was made, and since we expect it will be required to be forfeited, we have written it off.


NOTE 6 – ACCRUED EXPENSES/ACCRUED EXPENSES – RELATED PARTY


Other liabilities and accrued expenses consisted of the following:


 

 February 28, 2010

February 28, 2009

Bank overdraft

$                -

$       45,778

Accounts payable

251,055

188,976

Accounts payable – related party

47,284

44,552


Detail of Accrued Expenses:

 

 

Lease Settlement

69,065

-

Accrued payroll

53,694

55,869

Accrued interest payable

533,327

 356,858

Accrued non-resident withholding taxes, including accrued interest

 133,052

120,956

Accrued taxes payable

52,017

50,981

  Total accrued expenses

$    841,155

$    584,664

 

 

 

Detail of Accrued Expense – Related party:

 

 

Accrued royalties payable ScopeOut – related party

473,334

273,334

Accrued royalties payable Guardian Alert – related party

480,000

480,000

Accrued taxes payable – related party

24,611

40,194

  Total accrued expenses – related party

$    977,945

$    793,528




Sense Technologies 10 K February 28, 2009

Page 27




As of February 28, 2010, included in the trade payables  is $33,495 (2009: $33,495) and $13,789 (2009: $10,194) owing to directors of the Company, an accounting firm in which a director of the Company is a partner and a company controlled by the Company’s President and a director with respect to unpaid fees, purchases and expenses, $480,000 (2009: $480,000) owing to stockholders of the Company  in respect of royalties payable, $473,334 (2009: $273,334) owing to a director of the Company in respect of royalties payable and $53,694 (2009: $53,694) owing to the former president of the Company in respect of unpaid wages.


At February 28, 2010, advances payable of $19,105 (2009: $0) are due to a company controlled by a director of the Company.   


At February 28, 2010, promissory notes payable of $432,500 (2009:  $427,500) is due to a profit sharing and retirement plan which is administered by a director of the Company.


The accounts payable and advances payable are unsecured, non-interest bearing and have no specific terms of repayment. Sense Technologies, Inc. plans to use the funds from sales, and if we are able to raise funds through equity issuances, to fund the payment of delinquent liabilities.


The Company is in arrears with respect to seven notes payable totaling $584,447.


NOTE 7 – ROYALTIES PAYABLE


Pursuant to the licenses with ScopeOut® license called for $150,000 to be paid over two years (paid) along with a royalty of 10% of wholesale price for each ScopeOut® unit sold, but not less than $2.00 per unit.  In order to maintain the exclusive license for the ScopeOut® products, in accordance with the license agreement with Palowmar Industries, LLC, we are required to pay royalties to the licensor based on the following minimum quantities of units sold:


a)

30,000 units per year beginning in years 1-2

b)

60,000 units per year beginning in years 3-4

c)

100,000 units per year beginning in years 5 and above.


We have not been able to pay the minimum royalty requirement as noted above but we have accrued the required minimum royalty annually. The current royalties accrued for Scope Out royalties are $473,334 and $273,334 as of February 28, 2010 and February 28, 2009, respectively.


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


a)

$6.00(US) per unit on the first one million units sold;

b)

thereafter, the greater of $4.00(US) per unit sold or 6% of the wholesale selling price on units sold; and

c)

50% of any fees paid to Sense in consideration for tooling, redesign, technical or aesthetic development or, should the licensors receive a similar fee, the licensors will pay 50% to Sense.


In order to retain the exclusive right to this license we incurred minimum royalty fees. Because we were unable to pay these fees, we accrued the royalties as a payable. Royalties accruals were ceased in 2004 and rights of exclusivity were forfeited. Royalties payable to Guardian Alert are $480,000 and $480,000 as of February 28, 2010 and February 28, 2009, respectively.





Sense Technologies 10 K February 28, 2009

Page 28



NOTE 8 – NOTES PAYABLE, CONVERTIBLE NOTES PAYABLE, AND NOTES PAYABLE – RELATED PARTY


 

February 28,

2010

February 28,

2009

Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment terms between March 2010 and January 18, 2011.

$     236,000 

$       223,000 

Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment terms between March and December 12, 2010.

432,500 

 427,500 

Promissory note payable, personally guaranteed by a director of the Company, maturing on October 15, 2010. The note is repayable in monthly principal and interest payments of $2,149.

25,785 

58,924 

Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due January 12, 2011

10,000 

10,000 

Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due March 30, 2010

10,000 

 10,000 

Promissory note payable, personally guaranteed by a director of the Company, bearing interest at 7.5% per annum and maturing on March 22, 2010.

85,000 

91,862 

Finance agreement on directors and officers life insurance policy, bearing interest at 5.25%, maturing May 23, 2010.  This agreement is repayable in monthly principal and interest payments of $1,887.

5,277 

6,056 

Promissory note payable, personally guaranteed by a director of the Company, no stated interest or maturity date

100,000 

100,000 

  

904,562 

927,342 

Less:  current portion

 (904,562)

 (927,342)

Long-term portion

$                   - 

$                   - 



 

February 28,

2010

February 28,

2009

 

 

 

Series B secured promissory notes payable, secured by a charge over the Company’s inventory, bearing interest at 10% per annum and are payable on demand, along with accrued interest thereon, on or after August 30, 2005. These notes plus accrued interest may be redeemed at any time after August 30, 2005. These notes may be converted into common shares of the Company at any time prior to demean for payment at the rate of one common share for each $0.29 of principal and interest owed. As of February 28, 2010 and February 28, 2009, these notes were in arrears.

$534,447 

 $534,447 

 

 

 

Unsecured promissory notes bearing interest at 10% per annum. These notes plus accrued interest are convertible into common shares of the Company at the rate of one common share for each $5.40 of principal and interest owed. These notes have matured and the holders thereof have received default judgments against the Company.

50,000 

50,000 

 

$584,447 

$584,447 




Sense Technologies 10 K February 28, 2009

Page 29



NOTE 9 – PREFERRED STOCK

The Class A preferred shares entitle the holders thereof to cumulative dividends of $0.10 per share annually and the right to convert the preferred shares into common shares at the rate of $0.29 per share. The shares were redeemable at the option of the Company at any time after August 30, 2005 at the redemption price of $1.00 per share plus payment of unpaid dividends.


Dividends on preferred shares are payable annually on July 31 of each year.  During the year ended February 28, 2010, the Company accrued dividends payable of $31,591 (2009: $31,591). Dividends are currently accruing and total $234,732.


NOTE 10 – COMMON STOCK


a)

Common stock subscribed


During the year ended February 28, 2010, the company issued 325,000 shares of common stock previously subscribed.  During the year ended February 28, 2010, the company received proceeds of $102,000 for 3,400,000 shares of common stock, presented as Common Stock Subscribed as of February 28, 2010.


b)

Common stock issued for cash


During the year ended February28, 2010, the company issued 4,275,000 shares of common stock for cash proceeds of $180,000.


c)

Common Stock issued for Services


During the year ended February 29, 2008, the Company granted an officer and a director of the Company to the right to receive 2,500,000 common shares for past services provided.  The fair value of each common share was $0.08 on the grant date.  The shares, fully vested and non-forfeitable on the grant date, were issued in 2009.  This balance is presented as Common Stock as of February 28, 2010.  Further, in connection with a consulting services agreement, the Company also committed to issue 1,111,110 common shares with fair value of $88,889, being $0.08 per share based on the quoted market price of the Company’s common shares.  This balance is presented as Common Stock Subscribed as of February 28, 2010.


d)

Options


Stock-based Compensation Plan

The Company has adopted a Stock Option Plan (‘the plan”) in which the Compensation Committee of the Board of Directors makes a determination to whom options should be granted and at what price and their terms of vesting.


The Company has elected to use the Black-Scholes option pricing model to determine the fair value of stock options granted. For employees, the compensation expense is amortized on a straight-line basis over the requisite service period which approximates the vesting period. Compensation expense for stock options granted to non-employees is amortized over the contract services period or, if none exists, from the date of grant until the options vest. Compensation associated with unvested options granted to non-employees is re-measured on each balance sheet date using the Black-Scholes option pricing model.


The expected volatility of options granted has been determined using the historical stock price. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. For non-employees, the expected term of the options approximates the full term of the options. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. Based on the best estimate, management applied the estimated forfeiture rate of Nil in determining the expense recorded in the accompanying Statement of Loss.




Sense Technologies 10 K February 28, 2009

Page 30



The Company has granted directors common share purchase options.  These options were granted with an exercise price equal to the market price of the Company’s stock on the date of the grant.


  

February 28, 2010

 

Options

Weighted

Average

Exercise

Price

Outstanding and exercisable at beginning of the year

1,000,000

$0.05

Issued during the year

1,000.000

0.03

Outstanding and exercisable, February 28, 2010

2,000,000

$0.04



 

February 28, 2009

    

Options

Weighted

Average

Exercise

Price

Outstanding and exercisable at beginning of the year

1,025,000

$0.07

Expired

 (25,000)

$1.00

Outstanding and exercisable, February 28, 2009

1,000,000

$0.05


The weighted average remaining contractual life of the share purchase options at February 28, 2010 is 4 years (February 28, 2009: 3.83 years)


For the year ended February 28, 2010, the Company granted a total of 1,000,000 options expiring on December 31, 2014 to the directors of the Company.  These options vested at the grant date with exercise price of $0.03 per share.  The fair value of these options was $0.02 per share, totaling $19,729 which was recognized as management fee in the year ended February 28, 2010.  The fair value of the options was estimated using the Black-Scholes option pricing model with the following assumptions:


2010

Expected dividend yield

0.0%

 

 

Expected volatility

3.21%

 

 

Risk-free interest rate

1.35%

 

 

Expected term in years

2.5%


As at February 28, 2010, the unamortized compensation expense on the outstanding options was $19,729 (2009: $0).


At February 28, 2010, the following director common share purchase options were outstanding entitling the holders thereof the right to purchase one common share for each share purchase option held:


Number

Exercise

Price

Aggregate Intrinsic

Value Closing

Price

Expiry Date

  

  

  

  

1,000,000

$0.05

$30,000

December 31, 2012

1,000.000

$0.03

$20,000

December 31, 2014




Sense Technologies 10 K February 28, 2009

Page 31




Warrants


As of February 28, 2010 and February 28, 2009, the Company had no outstanding warrants .


NOTE 11 – WRITE OFF INVENTORY


During the year ended February 28, 2010, the Company wrote off the ScopeOut inventory totaling $26,981. This is because this inventory version has not demonstrated any sales value potential.


NOTE 12 – INCOME TAXES


The tax effects of the temporary differences that give rise to the Company's estimated deferred tax assets and liabilities are as follows:


  

  

February 28,

2010

February 29

2009

  

(35.00%)

(26.00%)

Net operating loss carryforwards

$     2,493,531 

$      1,619,000 

Valuation allowance for deferred tax assets

  (2,493,531)

  (1,619,000)

Net deferred tax assets

$                    - 

$                     - 


As of February 28, 2009, the Company had net operating loss carryforwards of approximately $6,261,000 available to offset future taxable income.    


The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current income. As management of the Company does not currently believe that it is more likely than not that the Company will receive the benefit of this asset, a valuation allowance equal to the deferred tax asset has been established at both February 28, 2010 and February 29, 2009.


Uncertain Tax Positions


The Company files income tax returns in the U.S. federal jurisdiction, various state and foreign jurisdictions.  All our tax returns are subject to tax examinations by U.S. federal and state tax authorities, or examinations by foreign tax authorities until respective statue of limitation.  The Company currently has no tax years under examination.


Based on the management’s assessment of pronouncements, they concluded that no significant impact on the Company’s results of operations or financial position, and required no adjustment to the opening balance sheet accounts.   The year-end analysis supports the same conclusion, and the Company does not have an accrual for uncertain tax positions as of February 29, 2010. As a result, tabular reconciliation of beginning and ending balances would not be meaningful. If interest and penalties were to be assessed, we would charge interest to interest expense, and penalties to other operating expense. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.


The Company is in arrears on filing its statutory income tax returns and is therefore has estimated the expected amount of loss carry forwards available once the outstanding returns are filed.  The Company expects to have significant net operating loss carry forwards for income tax purposes available to offset future taxable income.


NOTE 13 - COMMITMENTS AND CONTRACTUAL OBLIGATIONS


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





Sense Technologies 10 K February 28, 2009

Page 32



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


a)

 $6.00(US) per unit on the first one million units sold;

b)  

thereafter, the greater of $4.00(US) per unit sold or 6% of the wholesale selling price on units sold; and

c)  

50% of any fees paid to Sense in consideration for tooling, redesign, technical or aesthetic development or, should the licensors receive a similar fee, the licensors will pay 50% to Sense.


Prior to 2004, the Company had held an exclusive license and patent rights.  Under the terms and conditions of maintaining the exclusive rights, the Company was required to manufacture and sell a minimum number of units as follows:


a)

30,000 units by the end of the calendar year containing the second anniversary of the date of commencement of commercial production;

b)

a cumulative total of 60,000 units by the end of the calendar year containing the third anniversary of the date of commencement of commercial production;

c)

 a cumulative total of 110,000 units by the end of the calendar year containing the fourth anniversary of the date of commencement of commercial production;

d)

a cumulative total of 210,000 units by the end of the calendar year containing the fifth anniversary of the date of commencement of commercial production; and

e)

 an additional 125,000 units by the end of each calendar year thereafter.


In order to retain the exclusive right to manufacture, market and distribute the Guardian Alert, the Company had been required, upon being assigned the license, to manufacture and sell various minimum numbers of units by certain milestone dates.  As a result of not being able to meet the minimum milestone requirements under the license agreement, during the year ended February 28, 2004, the Company determined that it did not wish to retain the exclusive right to manufacture, market and distribute the Guardian Alert unit and ceased accruing the minimum royalty due to the licensor. Any product sales subsequent to this date are considered to be part of the minimum royalty until such time that amounts exceed the minimum royalty accrued.


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


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


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


Our ScopeOut® license called for $150,000 to be paid over two years (paid) along with a royalty of 10% of wholesale price for each ScopeOut® unit sold, but not less than $2.00 per unit.  In order to maintain the exclusive license for the ScopeOut® products, in accordance with the license agreement with Palowmar Industries, LLC, we are required to pay royalties to the licensor based on the following minimum quantities of units sold:


a)

30,000 units per year beginning in years 1-2

b)

60,000 units per year beginning in years 3-4

c)

100,000 units per year beginning in years 5 and above.


We have not been able to pay the minimum royalty requirement as noted above but we have accrued the required minimum royalty annually.  


NOTE 14 – LAWSUIT SETTLEMENT


In August 2009 the company settled litigation related to breach of lease and past due rent for $73,065.  Prior to February 28, 2010 the company paid $4,000 of this judgment.  The remaining balance of $69,065 is presented as Accrued Expenses as of February 28, 2010.





Sense Technologies 10 K February 28, 2009

Page 33



NOTE 15 - CONCENTRATIONS AND CONTINGENCIES


Concentrations


Approximately 85% of the Company’s revenues are obtained from two (2) customers and one of these customers represents a significant portion of the accounts receivable.  The Company is exposed to significant sales and accounts receivable concentration.  Sales to these customers are not made pursuant to a long term agreement  Customers are under no obligation to continue to purchase from the Company.


For the year ended February 28, 2010, two (2) customers accounted for approximately 85% of revenue.  For the year ended February 28, 2009 these two (2) customers accounted for 78% of revenue.


As of February 28, 2010, four (4) customers accounted for 46%, 17%, 16%, and 13%, respectively, of the outstanding accounts receivable.  As of February 28, 2009, there were $0 of accounts receivable.


Contingencies


During the normal course of business we may from time to time be involved in litigation or other possible loss contingencies. As of February 28, 2010 and February 29, 2009 management is not aware of any possible contingencies that would warrant disclosure pursuant to SFAS 5.  


Commitments


Our future minimum royalty payments on the ScopeOut® agreement consist of the following:


2010 and thereafter:  100,000 units at $2.00 per unit = $200,000


NOTE 16 – SUBSEQUENT EVENTS


Subsequent to the financial statement date 5,899,999 share of common stock were issued for $177,000.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.


There were no changes in accountants and no disagreements exist with respect to any matter for the years ending February 28, 2009 and February 28, 2010.


ITEM 9A. CONTROLS AND PROCEDURES


Evaluation of disclosure controls and procedures and remediation


As required by Rule 13(a)-15 under the Exchange Act, in connection with this annual report on Form 10-K, under the direction of our Chief Executive Officer, we have evaluated our disclosure controls and procedures as of February 28, 2010, and we have concluded our disclosure controls and procedures were ineffective as discussed in greater detail below. As of the date of this filing, we are still in the process of remediating such material weaknesses in our internal controls and procedures.


It should be noted that while our management believes our disclosure controls and procedures provide a reasonable level of assurance, they do not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. 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 our 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 controls. The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.




Sense Technologies 10 K February 28, 2009

Page 34



Management’s annual report on internal control over financial reporting


Management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management evaluated, under the supervision and with the participation of our Chief Executive Officer, the effectiveness of our internal control over financial reporting as of February 28, 2010.


Based on its evaluation under the framework in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission, our management concluded that our internal control over financial reporting was not effective as of February 28, 2010, due to the existence of significant deficiencies constituting material weaknesses, as described in greater detail below. A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.


This annual report does not include an attestation report of our company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit our company to provide only management’s report in this annual report.


Limitations on Effectiveness of Controls


Our Chief Executive Officer does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. 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 our 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 a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.


In connection with the preparation of our financial statements for the year ended February 28, 2010, certain significant deficiencies in internal control became evident to management, including:


Significant Deficiencies Identified

 

 

(i)

Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the year ended February 28, 2010, we had limited staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected;

(ii)

There is a lack of sufficient supervision and review by our corporate management;

(iii)

Insufficient corporate governance policies. Our corporate governance activities and processes are not always formally documented. Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management; and

(iv)

Our company's accounting personnel does not have sufficient technical accounting knowledge relating to accounting for income taxes and complex US GAAP matters. Management corrected any errors prior to the release of our company's February 28, 2010 financial statements.


Plan for Remediation of Material Weaknesses


We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2010 assessment of the effectiveness of our internal control over financial reporting.



Sense Technologies 10 K February 28, 2009

Page 35




We have implemented certain remediation measures and are in the process of designing and implementing additional remediation measures for the material weaknesses described in this annual report. Such remediation activities include the following:

 

 

(1)

We will document a formal code of ethics

(2)

We will revise processes to provide for a greater role of independent board members in the oversight and review until such time that we are adequately capitalized to permit hiring additional personnel to address segregation of duties issues.

(3)

We will continue to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes.

(4)

We will seek to establish a relationship with a firm of certified public accountants to assist in the preparation of financial statements and with whom to consult on complex US GAAP matters.


Changes in Internal Controls over Financial Reporting


There were no changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended February 28, 2010 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B.    Other Information


None.



PART III


ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT


The names, ages, and business experience for at least the past five years and positions of the directors and executive officers of the Company as of June 10, 2009, are as follows. The Company’s board of directors consists of three directors. All directors serve until the next annual meeting of the Company’s stockholders or until their successors are elected and qualified. Executive officers of the Company are appointed by the board of directors.


DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES


Set forth below are the names, ages and positions of the executive officers and directors of the Company.


Name

Age

Position

Position Held Since

Bruce E. Schreiner

54

Director, President, CEO, & CFO

August 10, 1993

James R. Iman

63

Director

June 21, 2004

Robert Doviak

49

Director

November 15, 2007


BRUCE E. SCHREINER, Director, President, CEO, and CFO. Mr. Schreiner was appointed as a director of Sense on August 10, 1993 and has been the President and Chief Executive Officer of Sense since March 4, 2004.  Mr. Schreiner is a certified public accountant and has been a partner in Schroeder & Schreiner, P.C., a certified public accounting firm since 1991.


ROBERT DOVIAK, Director.  Mr. Doviak was appointed as a director of Sense on November 15, 2007.  Mr. Doviak is a management consultant whose clients have included oil and gas companies, technology companies, and software support and consulting companies.  He assists with capital architecture, business development, overall strategy with particular emphasis on growing the business, and establishing a dominant market position in the selected segment.   Mr. Doviak maintains an extensive network of contacts in North America, South and Central America, and the UK.  He holds a B.B.A. in Accounting with concentration in Finance from Texas Tech University.  He is a past president and vice president of the 100 of Dallas, Inc., and a member of the National Association of Corporate Directors, the Institute of Management Accountants, and Ernst Young Alumni.


JAMES R. IMAN, Director. Mr. Iman was appointed as a director of Sense on June 21, 2004.  Mr. Iman is currently associated with Corporate Finance Consulting Services of Fort Worth, Texas.



Sense Technologies 10 K February 28, 2009

Page 36




COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT


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


To Sense's knowledge, based solely on a review of the copies of Forms 3 and 4, as amended furnished to it during its most recent fiscal year, and Form 5, as amended, furnished to it with respect to such year, Sense believes that during the year ended February 28, 2009, its Directors, executive officers and greater than 10% stockholders complied with all Section 16(a) filing requirements of the Securities Exchange Act of 1934.


CODE OF ETHICS


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


CORPORATE GOVERNANCE


The Board of Directors has established an Audit Committee and a Compensation Committee. The Board of Directors has no standing nominating committee.  The functions performed by these committees are summarized below:


AUDIT COMMITTEE

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


In the course of its oversight of our financial reporting process, the directors have: (1) reviewed and discussed with management our audited financial statements for the year ended February 28, 2010; (2) received a report from M&K CPAS, PLLC, our independent auditors, on the matters required to be discussed by Statement on Auditing Standards No. 61, “Communications with Audit Committees”; (3) received the written disclosures and the letter from the auditors required by Independence Standards Board Statement No. 1, “Independence Discussions with Audit Committee”; and (4) considered whether the provision of non-audit services by the auditors is compatible with maintaining their independence and has concluded that it is compatible at this time.


Based on the foregoing review and discussions, the board has concluded that the audited financial statements should be included in our Annual Report on Form 10-K for the year ended February 28, 2010 filed with the SEC.



COMPENSATION COMMITTEE

The Compensation Committee reviews and approves the compensation of Sense's officers, reviews and administers Sense's stock option plans for employees and makes recommendations to the Board of Directors regarding such matters. The functions of the Compensation Committee are performed by the Board of Directors. The members of the Compensation Committee are Robert Doviak and James R. Iman.


NOMINATING COMMITTEE

No Nominating Committee has been appointed. Nominations of directors are made by the board of directors. The Directors are of the view that the present management structure does not warrant the appointment of a Nominating Committee.




Sense Technologies 10 K February 28, 2009

Page 37




ITEM 11.


EXECUTIVE COMPENSATION


The following table sets forth all information concerning the total compensation of Sense’s president, chief executive officer, chief financial officer, and the three other most highly compensated officers during the last fiscal year (the “Named Executive Officers”) for services rendered to Sense Technologies, Inc. in all capacities for the year ended February 28, 2010.


SUMMARY COMPENSATION TABLE


Name and Principal

Position

Year

Salary

($)

Bonus

($)

Stock Awards

($)

Option Awards

($)

Nonequity incentive plan compensation

($)

Nonqualified deferred compensation earnings

($)

All other compens-

ation

($)

Total

($)

Bruce Schreiner,

President, Chief Executive Officer, Chief Financial Officer

2009


2010

None


None

None


None

None


None

None


None

 None


None

None


None

None


None

None


None


OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED LAST TWO FINANCIAL YEARS


The particulars of unexercised options, stock that has not vested and equity incentive plan awards for our named executive officers and directors are set out in the following table:


  

Options Awards

Stock Awards

Name

Number of Securities Underlying Unexercised

 Options

 (#)

 Exercisable

Number of Securities Underlying Unexercised Options

 (#)

 Unexercisable

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options

 (#)

Option Exercise Price

 ($)

Option Expiration

 Date

Number of Shares or Units of Stock That Have Not Vested

 (#)

Market Value of Shares or Units of Stock That Have Not Vested

 ($)

Equity Incentive Plan Awards:

 Number of Unearned

 Shares, Units or Other Rights That Have Not Vested

 (#)

Equity Incentive Plan Awards:

 Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested

 ($)

Bruce Schreiner, President, CEO and Director

Nil

Nil

Nil

Nil

Nil

Nil

N/A

N/A

N/A

Robert Doviak,

Director

500,000


500,000

Nil


Nil

Nil


Nil

$0.03


$0.05

December 31, 2014

December

31, 2012

N/A


N/A

N/A


N/A

N/A


N/A

N/A


N/A

James Iman, Director

500,000


500,000

Nil


Nil

Nil


Nil

$0.03


$0.05

December 31, 2014

December

31, 2012

N/A


N/A

N/A


N/A

N/A


N/A

N/A


N/A




Sense Technologies 10 K February 28, 2009

Page 38



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


There were no stock options exercised during the Company’s fiscal year ended February 28, 2009.


TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS


There are currently no employment contracts in place with the Directors and Officers of Sense. .


COMPENSATION OF DIRECTORS


There are no standard arrangements pursuant to which directors of Sense are compensated for services provided as a Director or members of committees of the Board of Directors. Two of the Directors of Sense Robert Doviak and James Iman, each received options to purchase 500,000 shares of common stock of Sense Technologies for $.03 for a five year period, until December 31, 2014, for compensation for the year ended February 28, 2010, and $.05 for a five year period, until December 31, 2012 as compensation for the year ended February 29, 2008 for services provided as a Director or member of a committee of the Board of Directors.   They received no cash compensation.  Value of the options granted to these two directors during the year ended February 28, 2010 was zero, and for the year ended February 29, 2008 amounted to $37,400 each.  The stock options were accounted for under the provisions of SFAS 123(R), which requires recognition of the fair value of equity-based compensation. The fair value of stock options was estimated using a Black-Scholes option valuation model. This methodology requires the use of subjective assumptions in implementing SFAS 123(R), including expected stock price volatility and the estimated life of each award.  

 

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


Securities Authorized for Issuance Under Equity Compensation Plans


The following table sets forth information respecting our compensation plans as at February 28, 2010 under which shares of our common stock are authorized to be issued.


Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

(a)

Weighted-average exercise price of outstanding options, warrants and rights

(b)

Equity compensation plans approved by security holders


1.000,000

1,000,000


 $.05

$.03

Total

2,000,000

$.04


On June 13, 2010 there were 72,704,650 shares of our common stock (the "Common Stock"), issued and outstanding, each share carrying the right to one vote, and 315,916 Class A” Preferred Shares.  The Class “A” Preferred Shares are non-voting.


The following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of June 13, 2010, by


(i)

each person or entity known by Sense to beneficially own more than 5% of the Common Stock;

(ii)

 each Director of Sense;

(iii)

each of the named Executive Officers of Sense; and

(iv)

all Directors and Executive Officers as a group.  




Sense Technologies 10 K February 28, 2009

Page 39



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


Name and Address of

Beneficial Owner

Amount of Beneficial Ownership [1]

Percent of Class [2]

Lowell Martinson

2805 W Frye

Chandler, AZ  85226

4,000,000

5.50%

Bruce E. Schreiner, Director

3535 Grassridge Drive

Grand Island, Nebraska  68803

3,684,838

5.07%

James Iman, Director

2601 Ridgmar Plaza

Suite 201

Fort Worth TX  76116

1,150,000

1.58%

Robert Doviak

13237 Montfort Drive

Dallas TX  75240

1,099,350

1.50%

All directors and officers as a group (3 persons)

5,925,188

8.15%

[1)

Based upon information furnished to Sense by the Directors, Executive Officers or beneficial holders, or obtained from the stock transfer agent of Sense, or obtained from insider reports.

(2)

Based upon a total of 72,704,650 shares of common stock currently issued and outstanding, and includes in each case any stock underlying immediately exercisable stock options granted to each person listed.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


TRANSACTIONS WITH MANAGEMENT AND OTHERS


During the year ended February 28, 2010, we incurred interest charges in the amount of $48,715 on promissory notes payable to the Schroeder & Schreiner P.C. 401(K) Profit Sharing Plan administered by Bruce Schreiner.


ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES


The audit of our financial statements as at February 28, 2009 and February 28, 2010 and for the years then ended was carried out by M&K CPAS, PLLC.  The fees for services provided to us in each of the fiscal years ended February 28, 2009 and February 28, 2010 were as follows:


Fees

2009

2010

Audit fees

$48,000

$33,650

Audit related fees

Nil

Nil

Tax fees

Nil

Nil

All other fees

Nil

Nil




Sense Technologies 10 K February 28, 2009

Page 40



Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors


We do not use M&K CPAS, PLLC for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage M&K CPAS, PLLC to provide compliance outsourcing services.


Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before M&K CPAS, PLLC is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

approved by our audit committee (which consists of our entire board of directors); or

entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors' responsibilities to management.


The board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.


The board of directors has considered the nature and amount of fees billed by M&K CPAS, PLLC and believes that the provision of services for activities unrelated to the audit is compatible with maintaining M&K CPAS, PLLC’s independence.



PART IV


Item 15.  EXHIBITS


Exhibit No.

Description of Exhibit

Manner of Filing

3.1

The Articles of Continuance

Incorporated by reference as Exhibit 3.1 to the Company’s Form 10-K, filed with the SEC on May 24, 2002 (“2002 Form 10-K”)

3.2

By-Laws

Incorporated by reference as Exhibit 3.2 to the 2002 Form 10-K

3.3

Articles of Amendment

Incorporated by reference to as Appendix A to the Company’s Schedule 14A – Definitive Proxy Statement, filed with the SEC on June 17, 2002 (“Schedule 14A”)

10.1

Amended Stock Option Agreement dated October 2, 2001 between Bruce E. Schreiner and the Company.

Incorporated by reference as Exhibit 10.1 to the 2002 Form 10-K

10.2

Two (2) Amended Stock Option Agreements both dated October 2, 2001 between Cynthia L. Schroeder and the Company.

Incorporated by reference as Exhibit 10.2 to the 2002 Form 10-K

10.3

2002 Stock Option Plan

Incorporated by reference as Appendix B to the 2002 Schedule 14A

10.4

License agreement with Palowmar Industries, LLC and Lowell Martinson, inventor respecting the ScopeOut® product.

Incorporated by reference as Exhibit 10.4 to the 2006 Form 10-K

23.1

Consent of BDO Dunwoody LLP, Accountants

Incorporated by reference as Exhibit 23.1 to the 2008 Form 10-K

31.1

Rule 13a-14(a)/15d-14(a)  Certification

Filed herewith

32.1

Section 1350 Certification

Filed herewith




Sense Technologies 10 K February 28, 2009

Page 41




SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on June 16, 2010.


SENSE TECHNOLOGIES INC.


By:  /s/ Bruce E. Schreiner

Bruce E. Schreiner

President, Chief Executive Officer,

Chief Financial Officer and Director


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


By:       

Title:     

Date:


/s/ Bruce E. Schreiner   

Chief Executive Officer, President    

June 16, 2010

Bruce E. Schreiner  

Director and Chief Financial Officer



/s/ James R. Iman    

Director  

June 16, 2010

James R. Iman



/s/ Bob Doviak      

Director, Secretary     

June 16, 2010

Bob Doviak

 



Sense Technologies 10 K February 28, 2009

Page 42





Exhibit 31.1


CERTIFICATION


 PURSUANT TO RULE 13a-14(a) OR 15d-14(a)

 OF THE U.S. SECURITIES EXCHANGE ACT OF 1934


I, Bruce E. Schreiner, certify that:


1.  I have reviewed this report for the fiscal year ended February 28, 2010 of Sense Technologies Inc.


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


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


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


a)

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

b)

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

c)

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

d)

disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


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

a)

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

b)

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



By: “Bruce E. Schreiner”

Bruce E. Schreiner

Dated:  June 16, 2010      

President and Principal Financial Officer





Sense Technologies 10 K February 28, 2009

Page 43






Exhibit 32.1


CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AND RULE 13a-14(b) OR RULE 15d-14(b)

OF THE U.S. SECURITIES EXCHANGE ACT OF 1934



In connection with the Annual Report of Sense Technologies Inc. (the "Company") on Form 10-K for the fiscal year ended February 28, 2010 as filed with the Securities and Exchange Commission (the "Report"), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, and Rule 13a-14(b), that to his knowledge:


1.

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


2.

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




Dated:  June 16, 2010

By:Bruce E. Schreiner”

Bruce E. Schreiner

President and Principal Financial Officer






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