SENSE TECHNOLOGIES INC - FORM 10-K

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EXCEL - IDEA: XBRL DOCUMENT - SENSE TECHNOLOGIES INC	Financial_Report.xls
EX-31.1 - SENSE TECHNOLOGIES INC	ex31-1.htm
EX-32.1 - SENSE TECHNOLOGIES INC	ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

FOR THE YEAR ENDED FEBRUARY 29, 2012

o	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:

The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant as of August 31, 2011 was approximately $3,320,152. At August 29, 2012, there were 109,135,114 shares of common stock outstanding.

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		Page No.
PART I
Item 1.	Business	3
Item 2.	Properties	11
Item 3.	Legal Proceedings	11
Item 4	Submission of Matters to a Vote of Security Holders	11

PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6	Selected Financial Data	15
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 8	Financial Statements and Supplementary Data	22
	Balance Sheets – February 29, 2012 and February 28, 2011
	Statements of Operations- Years Ended February 29, 2012 and February 28, 2011
	Statements of Cash Flows- Years Ended February 29, 2012 and February 28, 2011
	Statement of Changes in Stockholders’ Deficit – Years Ended February 29, 2012 and February 28, 2011

Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41
Item 9A	Controls and Procedures	41
Item 9B	Other Information	42

PART III

Item 10	Directors, Executive Officers and Corporate Governance	43
Item 11	Executive Compensation	45
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46
Item 13	Certain Relationships and Related Transactions, and Director Independence	48
Item 14	Principal Accounting Fees and Services	48

PART IV

Item 15	Exhibits, Financial Statement Schedules	49

Signatures		50

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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.

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INDUSTRY OVERVIEW

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

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

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

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

OUR GUARDIAN ALERT PRODUCT

GUARDIAN ALERT ®

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

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

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

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

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

PRODUCTION OF OUR GUARDIAN ALERT ® DOPPLER AWARENESS SYSTEM

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

The display unit and the radar sensor components of our products are manufactured by Microwave Solutions Limited of Hertfordshire, England. Our cabling is available from a number of local sources. Assembly and packaging is done in North Carolina. We 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.

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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 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.

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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.

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.

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PRODUCTION OF OUR SCOPEOUT® PRODUCT

All of our manufacturing and engineering is being out-sourced to a firm located in Phoenix, Arizona. This has been dormant for the last year pending achieving an initial marketing success.

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.

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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.

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:

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

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

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:

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

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;

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;

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

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.

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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:

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

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

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.

During 2010, the Company re-negotiated the exclusive license agreement with the Scope Out® inventor. All prior minimum royalties were eliminated, and accordingly, the Company recorded $473,334 additional capital for a related party write-off.

Prepaid royalties payable under the new license are $5,000 per month for twelve months commencing September 1, 2010. The new agreement also calls for a 5% royalty with a $.75 per unit maximum “minimum royalty” to retain exclusivity with the following volumes:

End of calendar year containing the second anniversary:	30,000 units
End of calendar year containing the third anniversary:	60,000 units
End of calendar year containing the fourth anniversary:	110,000 units
End of calendar year containing the fifth anniversary and thereafter:	125,000 units

Such “calendar year” commencing the minimum royalties to retain exclusivity is the first year within which an Original Equipment Manufacturer (OEM) and/or Tier 1 manufacturer sub-licenses the Scope Out® product.

For any sub-licenses of the product, royalties are shared as follows:

OEM/Tier 1 Supplier Sub Licensor:	65% Sense Technologies
	35% Inventor

Any other Sub-Licensor:	50% Sense Technologies
	50% Inventor

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GOVERNMENTAL APPROVAL

Because our Guardian Alert product is an emitting device, we were required to obtain equipment authorization from the Federal Communications Commission (FCC) 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 no employees. We have hired two 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 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 2011.

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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 29, 2012	$	0.02	$	0.02
November30, 2011	$	0.03	$	0.03
August 31, 2011	$	0.04	$	0.04
May 31, 2011	$	0.04	$	0.04
February 28, 2011	$	0.05	$	0.02
November 30, 2010	$	0.06	$	0.02
August 31, 2010	$	0.06	$	0.03
May 31, 2010	$	0.07	$	0.02

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 29, 2012, there were 388 shareholders of record holding 100,818,448 shares of our common stock; as of August 29, 2012, there were 109,135,114 common shares outstanding.

DIVIDENDS

There are no dividend restrictions in the Company.

RECENT SALES OF UNREGISTERED SECURITIES

On March 4, 2011, 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.

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On March 16, 2011, 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 March 31, 2011, one investor under Rule 506 of Regulation D, subscribed for 600,000 common shares at a price of $.03 per share for total proceeds to the Company of $18,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On April 4, 2011, 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 April 25, 2011, one investor under Rule 506 of Regulation D, subscribed for 400,000 common shares at a price of $.03 per share for total proceeds to the Company of $12,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On May 12, 2011, 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 May 19, 2011, 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 May 24, 2011, 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 June 3, 2011, 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 June 10, 2011, 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 August 6, 2011, another investor under Rule 506 of Regulation D, subscribed for 666,667 common shares at a price of $.03 per share for total proceeds to the Company of $20,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On August 31, 2011, 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 September 12, 2011, one investor under Rule 506 of Regulation D, subscribed for 200,000 common shares at a price of $.03 per share for total proceeds to the Company of 6,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On October 7, 2011, one investor under Rule 506 of Regulation D, subscribed for 666,667 common shares at a price of $.03 per share for total proceeds to the Company of $20,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On October 7, 2011, 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 October 7, 2011, one investor under Rule 506 of Regulation D, subscribed for 166,666 common shares at a price of $.03 per share for total proceeds to the Company of $5,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

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On November 4, 2011, 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 November 21, 2011, another investor under Rule 506 of Regulation D, subscribed for 250,000 common shares at a price of $.03 per share for total proceeds to the Company of $7,500. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On December 1, 2011, one investor under Rule 506 of Regulation D, subscribed for 333,334 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 December 1, 2011, one investor under Rule 506 of Regulation D, subscribed for 166,667 common shares at a price of $.03 per share for total proceeds to the Company of 5,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On December 30, 2011, one investor under Rule 506 of Regulation D, subscribed for 250,000 common shares at a price of $.03 per share for total proceeds to the Company of $7,500. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On January 18, 2012, one investor under Rule 506 of Regulation D, subscribed for 200,000 common shares at a price of $.03 per share for total proceeds to the Company of $6,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On January 23, 2012, one investor under Rule 506 of Regulation D, subscribed for 250,000 common shares at a price of $.03 per share for total proceeds to the Company of $7,500. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On January 26, 2012, one investor under Rule 506 of Regulation D, subscribed for 250,000 common shares at a price of $.03 per share for total proceeds to the Company of $7,500. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On January 31, 2012, one investor under Rule 506 of Regulation D, subscribed for 266,666 common shares at a price of $.03 per share for total proceeds to the Company of $8,000. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On February 3, 2012, one investor under Rule 506 of Regulation D, subscribed for 250,000 common shares at a price of $.03 per share for total proceeds to the Company of $7,500. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On February 24, 2012, one investor under Rule 506 of Regulation D, subscribed for 250,000 common shares at a price of $.03 per share for total proceeds to the Company of $7,500. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

On February 29, 2012, one investor under Rule 506 of Regulation D, subscribed for 250,000 common shares at a price of $.03 per share for total proceeds to the Company of $7,500. The shares are restricted pursuant to Rule 144 promulgated under the U.S. Securities Act of 1933.

All of these shares have been issued.

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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 29, 2012 and our audited Financial Statements and notes thereto for the period ended February 28, 2011.

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 29, 2012 as compared to the period ended February 28, 2011.

	2012		2011
Sales - Guardian Alert		168,791		235,228
Sales - Scope Out		-		-
Total Sales		168,791		235,228

Sales for the period ended February 29, 2012 decreased by 28%. The sales decrease was primarily attributable to our sales related to the Guardian Alert line of product sold in Europe, and the economic conditions there caused our major distributor to sell less units. Guardian Alert unit revenues for the years ended February 28, 2011 and February 28, 2010 were $235,228 and $141,550, respectively, an increase of 166%. This increase was largely due to our increased marketing efforts. ScopeOut® unit revenues for the years ended February 28, 2011 and February 28, 2010 were $nil and $1,190, respectively, a decrease of 100%. 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.

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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.

Direct Cost
	2012		2011
Scope Out Direct Costs
Cost of sales		-		-
Manufacturing expenses		-		-
Research and development		-		-
Commissions		-		-
Royalties - related party		60,000		104,680
Write - off of inventory		-		-
Total Scope Out Direct Costs		60,000		104,680

Guardian Alert Direct Costs
Cost of sales		-		-
Manufacturing expenses		59,100		83,561
Research and development		12,000		-
Commissions		52,078		55,854
Royalties - related party		7,622		-
Write – off of inventory		189,888		58,174
Total Guardian Alert Direct Costs		320,688		197,589

Total Direct Costs		380,688		302,269

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. During the year ended February 29, 2012 and February 28, 2011, the Company wrote off inventory not accounted for during inventory observation.

Direct costs for the period ended February 29, 2012 increased by 26%. Sense Technologies incurred direct costs of $380,688 and $302,269 for the years ended February 29, 2012 and February 28, 2011, respectively.

Direct costs related to ScopeOut® were $60,000 and $104,680 for the years ended February 29, 2012 and February 28, 2011, respectively, an decrease of 43%. The decrease is primarily attributable to the decrease in royalties paid.

Direct costs related to Guardian Alert were $320,688 and $197,589 for the years ended February 29, 2012 and February 28, 2011, respectively. This change represents an increase of 162%. The increase is primarily from assembly costs and inventory write-off related to Guardian Alert. Manufacturing expenses incurred were $59,100 and $83,561 for the years ended February 29, 2012 and February 28, 2011, respectively. This decrease is attributed to the expenses incurred in 2012 related to the assembly components of the Guardian Alert product line and reduced sales.

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Selling, General, and Administrative
	2012		2011
Advertising and marketing	$	2,876	$	1,639
Bad debt expense		2,532		-
Consulting fees		139,172		46,200
Contract labor		12,000		12,000
Depreciation		11,038		11,038
Filing fees		10,792		5,428
Insurance		27,132		26,733
Bank charges		3,570		3,047
Legal and accounting		32,834		58,603
Wages/Management fees		-		30,950
Office and miscellaneous		10,805		19,200
Rent		14,744		8,700
Shareholder information and printing		-		28
Tax penalties		11,986		11,986
Telephone and utilities		632		496
Transfer agent fees		10,331		12,482
Travel and automotive		7,915		10,030
Total	$	298,359	$	258,560

Sense Technologies, Inc. had selling, general and administrative expenses of $298,359 for the year ended February 29, 2012, compared to selling, general and administrative expenses of $258,560 for the year ended February 28, 2011, an increase in selling, general and administrative expenses of $39,799 from the prior period. The increase of 15% was mainly due to the increase of consulting fees for the Guardian Alert.

Advertising and marketing fees increased during this fiscal year, $2,876 and $1,639 for the years ended February 29, 2012 and February 28, 2011, respectively.

Consulting fees increased from $46,200 for the year ended February 28, 2011 to $139,172 for the year ended February 29, 2012, an increase of 301%. The increase was a result of an increase in consulting related to the ScopeOut® products, specifically, for efforts to promote the product to the DOT and NHTSA as it evaluates products for the Cameron Gulbransen Law.

Bank charges increased slightly in the year ended February 29, 2012 to $3,570 from $3,047 in the year ended February 28, 2011.

Office and miscellaneous fees were $10,805 and $19,200 for the years ended February 29, 2012 and February 28, 2011, respectively. The decrease of 44% was due to decrease in shipping and lower supply costs.

Rent expenses increased to $14,744 in the fiscal year February 29, 2012 from $8,700 in the year ended February 28, 2011. The increase of 69% was a result of the Company’s default on a lease in Phoenix and rent payments to satisfy that obligation.

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

Office and Miscellaneous Expenses:		2012		2011
Postage and Delivery	$	5,446	$	6,600
Foreign Exchange		-		504
Dues and subscriptions		-		295
Licenses and Permits		158		157
Freight & Delivery		3,893		1,035
Office Supplies		314		763
Supplies		392		1,745
Payroll Taxes		-		866
Printing and Reproduction Costs		-		1,528
General Miscellaneous		602		651
Total	$	10,805	$	19,200

Travel and Automotive Expenses:
Guardian Alert Travel	$	7,915	$	10,030
ScopeOut Travel		-		-
Total	$	7,915	$	10,030

Our travel costs have been focused on the Guardian Alert® product as opposed to the ScopeOut® in the year ended February 29, 2012 and February 28, 2011.

Following summarizes the overall operations results:

					Increase			% Increase
	2012		2011		(Decrease)			(Decrease)

Sales	$	168,791	$	235,228	$	(66,437	)		(28	) %
Direct Costs	$	380,688	$	302,269	$	78,419			26	%
General and Administrative expenses	$	298,359	$	258,560	$	39,799			15	%
Net Loss from Operations	$	510,256	$	302,269

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We had a loss from operations of $510,256 for year ended February 29, 2012, compared to a loss from operations of $325,601 for the year ended February 28, 2011, an increase in loss from operations of $184,655 from the prior year. The increase in the loss from operations was primarily attributable to the decrease in sales.

LIQUIDITY AND CAPITAL RESOURCES

Our cash position at February 29, 2012 was $nil as compared to $750 at February 28, 2011. This slight decrease was due to the net of our use of cash in operating and investing activities and cash provided by financing activities.

Our net loss of $904,744 for fiscal year 2012 included non-cash charges of $45,000 for consulting fees through issuance of common stock options, for $20,000 debt discount through issuance of common stock options, bad debt expense of $2,532 for uncollectible account and depreciation of $11,038. Our net loss of $514,349 for fiscal year 2011 includes non-cash charges of $19,626 for management fees to a Director through the issuance of common stock options and for depreciation expense of $11,038. Non-cash working capital changes included decreases in accounts receivable and advances payable and increases in prepaid expenses, accounts payable and accrued expenses. The net cash used in operating activities for fiscal 2012 was $499,423 as compared to $262,367 for fiscal year 2011.

We have generated only limited revenues to date, have a deficit of $18,774,341 as of February 29, 2012, compared to $17,979,597 as of February 28, 2011. If we are unable to raise adequate working capital for fiscal 2012, 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 2013, 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 $499,423 during fiscal year 2012, compared to $262,367 during fiscal 2011. The increase in cash used in fiscal 2012 was primarily due to the following factors:

(i)	Purchase of new inventory
(ii)	Consulting fees

The Company is in arrears with respect to nine notes payable totaling $604,447. 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 2012 and 2011.

NET CASH PROVIDED BY FINANCING ACTIVITIES

Net cash provided by financing activities was $498,673 during fiscal year 2012 compared to net cash provided of $262,408 during fiscal year 2011.

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During fiscal year 2012, we received $326,000 through subscriptions to private placements of our common shares for which shares were issued and $52,500 through subscriptions to private placements of our common shares for which the shares were issued subsequent to February 29, 2012. In the fiscal 2011, we had received $319,000 through subscriptions to private placements of our common shares for which shares were issued.

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 $40,000 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, 2013, as detailed below.

General and administrative	$	300,000
Debt repayment		100,000
General Working Capital (1)		600,000
TOTAL	$	1,000,000

(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, 2013, 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 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.

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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 29, 2012 and February 28, 2011 and the related statements of operations, stockholders’ deficit 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements of Sense Technologies, Inc. referred to above present fairly, in all material respects, the financial position of Sense Technologies, Inc. as of February 29, 2012 and February 28, 2011, and the results of its operations and cash flows for the periods described above 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 suffered a net loss from operations and has and has negative cash flows from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also 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

September 3, 2012

www.mkacpas.com

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SENSE TECHNOLOGIES, INC.

BALANCE SHEETS

As of February 29, 2012 and February 28, 2011

(Stated in US Dollars)

	February 29			February 28
	2012			2011
ASSETS
Current
Cash	$	-		$	750
Accounts Receivable		1,956			1,134
Accounts Receivable–Related Party		-			2,532
Inventory		-			171,365
Prepaids		8,914			11,131
Total Current Assets		10,870			186,912
Deposit		800			800
Prepaid royalties, non-current		57,698			-
Equipment – Net of accumulated depreciation of $115,384 and $104,346 at February 29, 2012 and February 28, 2011, respectively		27,323			38,361
Intangible assets		51			51
Total Assets	$	96,742		$	226,124

LIABILITIES
Current
Bank overdraft	$	192		$	8,485
Accounts payable		308,341			341,932
Accounts payable-related party		36,528			43,950
Accrued expenses		1,282,073			1,176,935
Accrued expenses-related party		70,811			70,811
Notes payable, current portion		606,051			461,380
Notes payable-related party		412,090			386,590
Advances payable – related entity		3,117			67,850
Dividends payable		297,915			266,323
Convertible promissory notes payable		584,447			584,447
Total Current Liabilities		3,601,565			3,408,703

Notes payable, long-term		139,000			-
Total Liabilities		3,740,565			3,408,703

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 29, 2012 (February 28, 2011: 315,914)		315,914			315,914
Common stock, without par value unlimited shares authorized, 100,818,448 shares issued at February 29, 2012 (February 28, 2011: 87,951,781)		14,783,215			14,392,215
Common stock payable		141,389			88,889
Deficit		(18,884,341	)		(17,979,597	)
Total Stockholders’ Deficiency		(3,643,823	)		(3,182,579	)
Total Liabilities and Stockholders’ Deficiency	$	96,742		$	226,124

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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SENSE TECHNOLOGIES INC.

STATEMENTS OF OPERATIONS

For the years ended February 29, 2012 and February 28, 2011

(Stated in US Dollars)

	For the years ended
	February 29,			February 28,
	2012			2011
Sales	$	168,791		$	235,228

Direct Costs		380,688			302,269

Gross Profit		(211,897	)		(67,041	)

Operating Expenses
Advertising and marketing		2,876			1,639
Bad debt expense		2,532			-
Consulting fees		139,172			46,200
Contract labor		12,000			12,000
Depreciation		11,038			11,038
Filing fees		10,792			5,428
Insurance		27,132			26,733
Bank charges		3,570			3,047
Legal and accounting		32,834			58,603
Wages		-			30,950
Office and miscellaneous		10,805			19,200
Rent		14,744			8,700
Shareholder information and printing		-			28
Tax penalties		11,986			11,986
Telephone and utilities		632			496
Transfer agent fees		10,331			12,482
Travel and automotive		7,915			10,030
		298,359			258,560
Net operating loss		(510,256	)		(325,601	)

Other Income and (Expenses)
Impairment of prepaid royalty		(189,000	)		-
Interest Expense		(173,897	)		(188,748	)
		(362,897	)		(188,748	)

Net loss		(873,153	)		(514,349	)

Preferred dividends, paid or accrued		31,591			31,591

Net loss attributable to common stockholders	$	(904,744	)	$	(545,940	)

Basic and diluted loss per share	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding		92,9389,391			73,966,641

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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SENSE TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS

For the years ended February 29, 2012 and February 28, 2011

(Stated in US Dollars)

	2012			2011
Operating Activities
Net loss for the period	$	(873,153	)	$	(514,349	)
Adjustments to reconcile net loss to net cash used in Operating activities:
Depreciation		11,038			11,038
Bad debt expense		2,532			-
Impairment of prepaid royalties		189,000			-
Common shares issued for debt discount		20,000			-
Common shares issued for services		45,000			19,626
Common shares issued for reduction in note payable and accrued interest		-			213,414
Changes in non-cash working capital balances related to operations:
Accounts Receivable		(822	)		5,900
Inventory		171,365			(171,365	)
Prepaids		(55,481	)		(2,157	)
Deposits		-			(800	)
Accounts payable		(49,307	)		96,029
Accrued expenses		105,138			31,552
Advances payable		(64,733	)		48,745
Net cash used in operating activities		(499,423	)		(262,367	)
Financing Activities
Borrowing on notes payable		163,036			42,775
Repayment on notes payable		(34,470	)		(99,367	)
Repayment on bank indebtedness		(8,393	)		-
Proceeds from common stock issued for cash		326,000			319,000
Proceeds from common share subscriptions		52,500			-
Net cash provided by financing activities		498,673			262,408

Increase in cash during the period		(750	)		41

Cash, beginning of period		750			709

Cash, end of period	$	-		$	750

Supplemental Disclosures of Cash Flow Information:

Accrual of Preferred Stock Dividend	$	31,591		$	31,591
Forgiveness of Related Party Accrual	$	-		$	602,907
Note Payable Issued for Prepaid Royalty	$	189,000		$	-

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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SENSE TECHNOLOGIES, INC.

STATEMENT OF STOCKHOLDERS’ DEFICIENCY

For the years ended February 29, 2012 and February 28, 2011

(Stated in US Dollars)

	Common Stock				Preferred Stock				Common
	Issued				Issued				Stock			Accumulated
	Shares		Amount		Shares		Amount		Payable			Deficit			Total

Balance, February 28, 2010		66,804,651	$	13,135,268		315,914	$	315,914	$	190,889		$	(17,433,657	)	$	(3,791,586	)
Common share subscriptions		-		-		-		-		224,000			-			224,000
Common stock issued		21,147,130		634,414		-		-		(326,000	)					308,414
Write-off of related party gain on conversion of debt				71,138		-		-		-			-			71,138
Forgiveness of related party royalties		-		523,335		-		-		-			-			523,335
Write-off gain on forgiveness of related party accounts payable		-		8,434		-		-		-			-			8,434
Dividends		-		-		-		-		-			(31,591	)		(31,591	)
Options Issued to Directors		-		19,626		-		-		-			-			19,626
Net income (loss) for the period		-		-		-		-		-			(514,349	)		(514,349	)
Balance, February 28, 2011		87,951,781		14,392,215		315,914		315,914		88,889			(17,979,597	)		(3,182,579	)
Common stock issued for cash		10,866,667		326,000		-		-		-			-			326,000
Common stock issued for services		1,500,000		45,000		-		-		-			-			45,000
Common stock issued for debt discount		500,000		20,000		-		-		-			-			20,000
Common stock subscribed		-						-		52,500			-			52,500
Dividends		-				-		-		-			(31,591	)		(31,591	)

Net income (loss) for the period		-				-		-		-			(873,153	)		(873,153	)
Balance, February 29, 2012		100,818,448	$	14,783,215		315,914	$	315,914	$	141,389		$	(18,884,341	)	$	(3,643,823	)

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS

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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 29, 2012 and February 28 2011, 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 29, 2012 or February 28, 2011.

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 its 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 2012 and 2011 was zero and zero, respectfully. The net Accounts Receivable is $1,956 and $3,666 at February 29, 2012 and February 28, 2011, respectively. Balances due from related parties are classified as such on the balance sheet.

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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. Inventory was expensed at year-end as the Company did not have title or access.

Prepaid Royalties

Prepaid royalties consist of guaranteed royalties the company has paid but for which sales have not yet been completed. Royalty expense that will not be recognized in the next year is classified as long-term. On December 31, 2011, the Company issued a promissory note for $189,000 for guaranteed royalty payments due under the licensing agreement. Due to limited cash flows to insure the payment of this note, an impairment equal to the promissory note has been recorded.

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.

Intangible Assets

The Company’s intangible assets are comprised of licenses fees. Licensing fees 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.

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(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 29, 2012, potentially dilutive common shares relating to options, convertible promissory notes payable and convertible preferred shares outstanding totaling 4,957,199 (2011 – 4,957,199) 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.

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.

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The following schedule summaries the gross value of assets and liabilities that are measured and recognized at fair value on a non-recurring basis at February 29, 2012.

Fair Value Measurements at February 29, 2012
	Level 1		Level 2		Level 3
Convertible promissory notes payable	$	-	$	-	$	584,447

Fair Value Measurements at February 28, 2011
	Level 1		Level 2		Level 3
Convertible promissory notes payable	$	-	$	-	$	584,447

There were no gains or losses in fair value during the years ended February 29, 2012 or February 28, 2011.

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 September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on March 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on January 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

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In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. The Company does not expect that the guidance effective in future periods will have a material impact on its financial statements.

NOTE 2 – GOING CONCERN

At February 29, 2012, the Company had not yet achieved profitable operations, had an accumulated deficit of $18,884,341 (2011 - $17,979,597) since its inception and incurred a net loss of $873,153 (2011 - $ 514,349) 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, 2013 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 29, 2012			February 28 2011
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		(115,384	)		(104,346	)
Total	$	27,323			38,361

NOTE 4 – INTANGIBLES

Intangible assets are comprised as follows:

	February 29, 2012		February 28, 2011
Guardian Alert License	$	50	$	50

Scope Out Mirror License		1		1
Net carrying cost	$	51	$	51

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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 29, 2012, the royalty payable - related party to the Guardian Alert License was $480,000 (2011: $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, 2012, the Company accrued $nil (2011: $nil) 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, 2011, the Company has accrued $59,929 as interest payable. The Company had been unable to make this payment timely, causing the license to revert to non-exclusive.

During 2010, the Company re-negotiated the exclusive license agreement with the Scope Out® inventor. All prior minimum royalties were eliminated, and accordingly, the Company recorded $602,907 additional capital for a related party write-off.

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End of calendar year containing the second anniversary:	30,000 units
End of calendar year containing the third anniversary:	60,000 units
End of calendar year containing the fourth anniversary:	110,000 units
End of calendar year containing the fifth anniversary and thereafter:	125,000 units

No royalties are currently accrued as we have not yet reached the end of the calendar year containing the second anniversary.

For any sub-licenses of the product, royalties are shared as follows:

OEM/Tier 1 Supplier Sub Licensor:	65% Sense Technologies
	35% Inventor

Any other Sub-Licensor:	50% Sense Technologies
	50% Inventor

The following table presents the changes in the accrued royalties – related party balance from February 29, 2012 to February 28, 2011:

Guardian Alert	February 29, 2012		February 28, 2011
Beginning balance		480,000		480,000
Accrued		-		-
Paid		-		-
Total Guardian Alert		480,000		480,000
Scope Out
Beginning balance		-		473,334
Accrued		-		-
Write – off		-		(473,334	)
		-		-
Total Accrued Royalties		480,000		480,000

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NOTE 5 – ACCRUED EXPENSES/ACCRUED EXPENSES – RELATED PARTY

Other liabilities and accrued expenses consisted of the following:

	February 29,		February 28,
	2012		2011
Bank overdraft	$	192	$	8,435
Accounts payable		308,341		341,932
Accounts payable – related party		36,528		43,950
Detail of Accrued Expenses:
Lease Settlement		-		45,065
Accrued royalties payable Guardian Alert		480,000		480,000
Accrued interest payable		588,327		453,568
Accrued non-resident withholding taxes, including accrued interest		153,220		143,136
Credit card		8,975		4,119
Commissions Payable		2,934		-
Accrued taxes payable		48,617		51,047
Total accrued expenses	$	1,282,073	$	1,176,935

Detail of Accrued Expense – Related party:
Accrued payroll – related party		53,694		53,694
Other accrued liabilities – related party		17,117		17,117
Total accrued expenses – related party	$	70,811	$	70,811

As of February 29 2012, included in the trade payables is $33,495 (2011: $33,495) and $3,033 (2011: $10,455) 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 (2011: $480,000) owing to stockholders of the Company in respect of royalties payable and $53,694 (2011: $53,694) owing to the former president of the Company in respect of unpaid wages.

At February 29, 2012, advances payable of $3,117 (2011: $67,850) are due to a company controlled by a director of the Company.

At February 29, 2012, promissory notes payable of $412,090 (2011: $386,950) 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 nine notes payable totaling $604,447.

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NOTE 6 – 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:

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

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

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

During 2010, the Company re-negotiated the exclusive license agreement with the Scope Out® inventor. All prior minimum royalties were eliminated, and accordingly, the Company recorded $602,907 additional capital for a related party write-off.

End of calendar year containing the second anniversary:	30,000 units
End of calendar year containing the third anniversary:	60,000 units
End of calendar year containing the fourth anniversary:	110,000 units
End of calendar year containing the fifth anniversary and thereafter:	125,000 units

No royalties are currently accrued as we have not yet reached the end of the calendar year containing the second anniversary.

For any sub-licenses of the product, royalties are shared as follows:

OEM/Tier 1 Supplier Sub Licensor:	65% Sense Technologies
	35% Inventor

Any other Sub-Licensor:	50% Sense Technologies
	50% Inventor

The current royalties accrued for Scope Out royalties are $nil as of February 29, 2012 and February 28, 2011.

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

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

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

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, 2011 and February 28, 2010, respectively.

NOTE 7 – NOTES PAYABLE, CONVERTIBLE NOTES PAYABLE, AND NOTES PAYABLE – RELATED PARTY

	February 29,			February 28,
	2012			2011
Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment terms between August 2012 and July, 2012.	$	243,000		$	243,000
Promissory notes payable to related party, unsecured, bearing interest at the rate of 12% per annum with repayment due December 15, 2012.		412,090			384,590
Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due January 12, 2012		10,000			10,000
Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due March 30, 2012		10,000			10,000
Promissory note payable, personally guaranteed by a director of the Company, bearing interest at 5.5% per annum and maturing May 11, 2016.		85,607			94,000
Finance agreement on directors and officers liability policy, bearing interest at 7.45%, maturing August 23, 2012. This agreement is repayable in monthly principal and interest payments of $1,443.		5,444			4,380
Promissory note payable, unsecured, bearing interest at the rate of 5.25% per annum, no maturity date.		100,000			100,000
Promissory note payable, unsecured, bearing interest at the rate of 12.0% per annum, no maturity date.		100,000			-
Promissory note payable, unsecured, bearing interest at the rate of 6% per annum, maturing June 1, 2014.		189,000			-
Promissory note payable, no stated interest or maturity date		2,000			2,000
		1,157,141			847,970
Less: current portion		(918,141	)		(847,970	)
Long-term portion	$	139,000		$	-

The Company is in arrears with respect to two notes payable totaling $20,000.

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Convertible notes payable:	February 29, 2012		February 28, 2011
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 29, 2012 and February 28, 2011, 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

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

Future minimum note payments as of February 29, 2012 are as follows:

	Years Ending February 28,
	2013	$1,602,588
	2014	120,000
	2015	19,000
	Thereafter	-

NOTE 8 – 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 29, 2012, the Company accrued dividends payable of $31,591 (2011: $31,591). Dividends are currently accruing and total $297,915.

NOTE 9 – COMMON STOCK

a) Common stock issued for cash

During the year ended February 29, 2012, the company issued 10,866,667 shares of common stock for cash proceeds of $326,000.

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b) Common stock 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 Payable as of February 29, 2012 and February 28, 2011.

During the year ended February 29, 2012, the Company issued 500,000 common shares to secure a promissory note. The fair value of each common share was $0.04 based on the closing trading price on the issue date and was recorded as debt discount of $20,000. The Company issued 1,500,000 common shares for consulting services. The fair value of each common share was $0.03 based on the closing trading price on the issue date and was recorded as consulting expense of $45,000.

c) Common stock issued for repayment of note payable

During the year ended February 28, 2011, the company issued 7,113,796 shares of common stock for reduction in note payable – related party and accrued interest of $213,414. Stock was recorded at fair market value equal to the amount of debt reduction, thus no gain or loss was recorded.

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.

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, 2012
	Options		Weighted Average Exercise Price
Outstanding and exercisable at beginning of the year		3,000,000	$	0.04
Issued during the year		-		-
Outstanding and exercisable, February 28, 2011		3,000,000	$	0.04

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	February 28, 2011
	Options		Weighted Average Exercise Price
Outstanding and exercisable at beginning of the year		2,000,000	$	0.04
Issued during the year		1,000,000		0.03
Outstanding and exercisable, February 28, 2011		3,000,000	$	0.04

The weighted average remaining contractual life of the share purchase options at February 29, 2012 is 4 years (February 28, 2011: 4 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. For the year ended February 28, 2011, the Company granted a total of 1,000,000 options expiring on December 31, 2015 to a director 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 $0.03 per share, $19,626 was recognized as management fee in the year ended February 28, 2011. The fair value of the options was estimated using the Black-Scholes option pricing model with the following assumptions:

	2012			2011
Expected dividend yield		0.0	%		0.0	%

Expected volatility		306.11	%		306.11	%

Risk-free interest rate		1.07	%		1.07	%

Expected term in years		2.5			2.5

At February 29, 2012, 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:

		Exercise
Number		Price		Expiry Date

	1,000,000	$	0.05	December 31, 2012
	1,000.000	$	0.03	December 31, 2014
	1,000,000	$	0.03	December 31, 2015

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Warrants

As of February 29, 2012 and February 28, 2011, the Company had no outstanding warrants.

NOTE 10 - LEASE

The Company has a commercial lease for real estate. Rent expense for years ended February 29, 2012 and 2011 was $14,744 and $8,700, respectively. The terms of the lease range from October 1, 2010 through October 31, 2012.

Future minimum lease payments under this agreement as of February 29, 2012 are as follows:

	Years Ending February 28,
	2013	$7,440
	Thereafter	-

NOTE 11 – 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 29,			February 28
	2012			2011
		(35.00	%)		(35.00	%)
Net operating loss carryforwards	$	2,913,043		$	2,673,589
Valuation allowance for deferred tax assets		(2,913,043	)		(2,673,589	)
Net deferred tax assets	$	-		$	-

As of February 29, 2012, the Company had net operating loss carryforwards of approximately $8,322,981 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 29, 2012 and February 28, 2011.

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 statute of limitation. The Company currently has no tax years under examination.

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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, 2012. 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 12 – LAWSUIT SETTLEMENT

In August 2009 the company settled litigation related to breach of lease and past due rent for $73,065. Prior to February 29, 2012 the company paid $73,065 of this judgment. The balance was paid as of February 29, 2012.

The holders of unsecured convertible promissory notes bearing interest at 10% per annum have matured and the holders have received default judgments against the Company. The notes are convertible into common shares of the Company at the rate of one common share for each $5.40 of principal and interest owed. As of February 29, 2012, the notes have not been converted.

NOTE 13 - CONCENTRATIONS AND CONTINGENCIES

Concentrations

Approximately 90% 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 29, 2012, two (2) customers accounted for approximately 76% of revenue. For the year ended February 28, 2011 these two (2) customers accounted for 90% of revenue.

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 29, 2012 and February 28, 2011 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:

A 5% royalty with a $.75 per unit maximum “minimum royalty” to retain exclusivity with the following volumes:

End of calendar year containing the second anniversary: 30,000 units

End of calendar year containing the third anniversary: 60,000 units

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NOTE 14 – SUBSEQUENT EVENTS

Management has evaluated subsequent events through September 3, 2012, the date of which the financial statements were available to be issued.

Subsequent to year end, 8,316,666 shares of common stock were subscribed and issued for $249,500.

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, 2010 and February 28, 2011.

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, 2011, 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.

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, 2012.

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, 2012 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.

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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, 2011, 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 29, 2012, 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 29, 2012 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 2012 assessment of the effectiveness of our internal control over financial reporting.

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, 2011 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

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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 August 29, 2012, 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	57	Director, President, CEO, & CFO	August 10, 1993
James R. Iman	66	Director	June 21, 2004
Robert Doviak	52	Director	November 15, 2007
Brian Bangs	34	Director	August 16, 2010

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.

BRIAN BANGS, Director. Mr. Bangs received a Bachelor’s of Science in Business Administration Degree with an emphasis in accounting from the University of Nebraska-Lincoln in 1999 and a Master’s of Professional Accountancy Degree from the University of Nebraska-Lincoln in 2000. Mr. Bangs is presently a partner in Bangs & Stewart, CPAs, LLC that he co-founded in 2000.

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.

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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, Brian Bangs 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, 2011; (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, 2011 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.

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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, 2011.

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	2010 2011	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

N/A

Robert Doviak,

Director

500,000

Nil

0.03

0.05

December 31, 2014

December 31, 2012

N/A

James Iman, Director

500,000

Nil

0.03

0.05

December 31, 2014

December 31, 2012

N/A

Brian Bangs, Director

1,000,000

Nil

0.03

December 31, 2014

N/A

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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 29, 2012.

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.

Director, Brian Bangs received options to purchase 1,000,000 shares of common stock of Sense Technologies for $.03 a five year period, until December 31, 2014 as compensation for the year ended February 28, 2011 for services provided as a Director or member of a committee of the Board of Directors. He received no cash compensation. Value of the options granted this director during the year ended February 28, 2011 was $19,626. 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. See Note 10 to our February 28, 2011 financial statements.

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 2,000,000	$ $	.05 .03
Total		3,000,000	$	.04

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On July 25, 2011, there were 92,285,115 shares of our common stock (the "Common Stock"), issued and outstanding, each share carrying the right to one vote, and 315,914 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 July 25, 2011, by

(i)

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

(ii)

each Director of Sense;

(iii)

each of the named Executive Officers of Sense; and

(iv)	all Directors and Executive Officers as a group.

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

Name and Address of Beneficial Owner	Amount of Beneficial Ownership [1]	Percent of Class [2]
Bruce E. Schreiner, Director 3535 Grassridge Drive Grand Island, Nebraska 68803	7,698,634	7.05%
James Iman, Director 2601 Ridgmar Plaza Suite 201 Fort Worth TX 76116	1,150,000	0.11%
Robert Doviak 13237 Montfort Drive Dallas TX 75240	1,099,350	0.11%
Brian Bangs 116 E 9th Street Wood River, NE 68883	1,500,00	0.14%
All directors and officers as a group (4 persons)	11,447,984	10.49%

(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 109,135,114 shares of common stock currently issued and outstanding.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS WITH MANAGEMENT AND OTHERS

During the year ended February 29, 2012, we incurred interest charges in the amount of $48,513 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 29, 2012 and February 28, 2011 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 29, 2012 and February 28, 2011 were as follows:

Fees	2012		2011
Audit fees	$	33,650	$	33,650
Audit related fees	Nil		Nil
Tax fees	Nil		Nil
All other fees	Nil		Nil

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.

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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

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on September 14, 2012.

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
Bruce E. Schreiner	Chief Executive Officer, President Director and Chief Financial Officer	September 14, 2012

/s/ James R. Iman
James R. Iman	Director	September 14, 2012

/s/ Bob Doviak
Bob Doviak	Director, Secretary	September 14, 2012

/s/ Brian Bangs
Brian Bangs	Director	September 14, 2012

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