SENSE TECHNOLOGIES INC - FORM 10-Q - September 26, 2014

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended May 31, 2014
 
OR
   
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period From                           to                          

Commission File Number: 000-29990
 
SENSE TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

British Columbia
  
90010141
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
2535 N. Carleton Avenue
Grand Island, Nebraska
  
 
68803
(Address of principal executive offices)
  
(Zip Code)
  
(308) 381-1355
(Registrant’s telephone number, including area code)
 
None
(Former name, former address and former fiscal year, if changed since last report)
 
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o      No x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
     
Large accelerated filer  ¨
  
Accelerated filer  ¨
Non-accelerated filer       ¨
  
Smaller reporting company   x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨       No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding at September 16, 2014
Common Stock
  
118,393,450 shares

 
TABLE OF CONTENTS
Sense Technologies Inc. Form 10-Q
 
PART I-FINANCIAL INFORMATION
1
     
ITEM 1.
1
 
2
 
3
 
4
 
5
 
6
     
ITEM 2.
16
ITEM 3.
18
ITEM 4T.
18
     
PART II-OTHER INFORMATION
19
     
ITEM 1.
19
ITEM 1A.
19
ITEM 2.
19
ITEM 3.
19
ITEM 4.
19
ITEM 5.
19
ITEM 6.
19
     
20
 

PART I-FINANCIAL INFORMATION
Item 1. Financial Statements.
 



 
SENSE TECHNOLOGIES INC.
INTERIM FINANCIAL STATEMENTS
May 31, 2014
(Stated in US Dollars)
( Unaudited )
 
 
 
 
 



 
Page 1
 
SENSE TECHNOLOGIES, INC.
BALANCE SHEETS
As of May 31, 2014 and February 28, 2014
(Stated in US Dollars)

   
May 31
    
February 28
  
   
2014
    
2014
  
   
(Unaudited)
        
             
ASSETS
Current
            
Accounts Receivable
  
$
10,109
    
$
8,500
  
Prepaids
    
13,780
      
22,297
  
Total Current Assets
    
23,889
      
30,797
  
Deposit
    
800
      
800
  
Equipment – Net of accumulated depreciation of $136,891 and $134,952 at May 31, 2014 and February 28, 2014, respectively
    
5,816
      
7,755
  
Intangible assets
    
51
      
51
  
Total Assets
  
$
30,556
    
$
39,403
  
                 
LIABILITIES
Current
  
Bank overdraft
  
$
16,525
    
$
14,022
  
Accounts payable
    
551,972
      
564,291
  
Accounts payable-related party
    
35,884
      
35,884
  
Accrued expenses
    
1,187,669
      
1,162,273
  
Accrued expenses-related party
    
70,811
      
70,811
  
Royalty payable – related party
    
480,000
      
480,000
  
Notes payable, current portion
    
342,880
      
551,954
  
Notes payable, current portion – default
    
423,000
      
263,000
  
Notes payable – related party
    
103,281
      
108,877
  
Notes payable-related party - default
    
439,590
      
439,590
  
Advances payable – related entity
    
54,396
      
103,521
  
Dividends payable
    
368,996
      
361,098
  
Convertible promissory notes payable - default
    
584,447
      
584,447
  
Total Current Liabilities
    
4,659,451
      
4,739,768
  
                 
STOCKHOLDERS' DEFICIENCY
   
Class A preferred shares, without par value, redeemable at $1 per  share 20,000,000 shares authorized, 315,914 shares  issued at May 31, 2014 (February 28, 2014: 315,914)
    
315,914
      
315,914
  
Common stock, without par value 150,000,000 shares authorized, 109,893,448 shares issued at May 31, 2014 (February 28, 2014: 109,893,448)
    
15,068,392
      
15,068,392
  
Common stock payable
    
349,889
      
184,889
  
Deficit
    
(20,363,090
)
    
(20,269,560
)
Total Stockholders’ Deficiency
    
(4,628,895
)
    
(4,700,365
)
    Total Liabilities and Stockholders’ Deficiency
  
$
30,556
    
$
39,403
  
 
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
 
 
Page 2

SENSE TECHNOLOGIES INC.
STATEMENTS OF LOSSES
For the three months ended May 31, 2014 and 2013
(Stated in US Dollars)
(Unaudited)

   
For the three months ended
  
   
May 31,
    
May 31,
  
   
2014
    
2013
  
                 
Sales
  
$
55,036
    
$
152,224
  
                 
Direct Costs
    
47,857
      
249,114
  
                 
Gross Profit (Loss)
    
7,179
      
(96,890
)
                 
Operating Expenses
                
Consulting fees
    
13,000
      
10,500
  
Contract labor
    
3,000
      
3,000
  
Depreciation
    
1,939
      
2,359
  
Filing fees
    
200
      
1,866
  
Insurance
    
8,517
      
7,616
  
Bank charges
    
358
      
455
  
Legal and accounting
    
6,000
      
8,836
  
Office and miscellaneous
    
4,140
      
5,146
  
Rent
    
3,409
      
4,338
  
Telephone and utilities
    
374
      
176
  
Transfer agent fees
    
2,984
      
390
  
Travel and automotive
    
4,617
      
12,892
  
     
48,538
      
57,574
  
Net operating loss
    
(41,359
)
    
(154,464
)
                 
Other Income and (Expenses)
                
Interest Expense
    
(44,273
)
    
(46,053
)
                 
 Net loss
    
(85,632
)
    
(200,517
 ) 
                 
Preferred dividends, paid or accrued
    
7,898
      
7,898
  
                 
Net loss attributable to common stockholders
  
$
(93,530
)
  
$
(208,415
)
                 
Basic and diluted loss per share
  
$
(0.00
)
  
$
(0.00
)
                 
Weighted average number of shares outstanding
    
109,893,448
      
102,768,448
  

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
 
 
Page 3

SENSE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
For the three months ended May 31, 2014 and 2013
(Stated in US Dollars)
(Unaudited)

   
2014
    
2013
  
Operating Activities
            
Net loss for the period
  
$
(85,632
)
  
$
(200,517
)
Adjustments to reconcile net loss to net cash used in
Operating activities:
                
Depreciation
    
1,939
      
2,359
  
Changes in non-cash working capital balances related to operations:
                
Accounts Receivable
    
(1,609
)
    
17,639
  
Prepaids
    
8,517
      
7,616
  
Accounts payable
    
(9,816
)
    
124,269
  
Accrued expenses
    
25,396
      
32,074
  
Advances payable
    
(49,125
)
    
7,000
  
Net cash used in operating activities
    
(110,330
)
    
(9,560
)
Financing Activities
                
Borrowing on notes payable
    
10,000
      
-
  
Repayment on notes payable
    
(64,670
)
    
(20,519
)
Repayment on bank indebtedness
    
-
      
(3,076
)
Proceeds from common stock issued for cash
    
165,000
      
-
  
Net cash provided (used) by financing activities
    
110,330
      
(23,595
)
                 
Increase (decrease) in cash during the period
    
-
      
(33,155
)
                 
Cash, beginning of period
    
-
      
69,022
  
                 
Cash, end of period
  
$
-
    
$
35,867
  
                 
Supplemental Disclosures of Cash Flow Information:
                
                 
Cash Paid for Interest
  
$
4,862
    
$
15,190
  
Accrual of Preferred Stock Dividend
  
$
7,898
    
$
7,898
  

SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
 
 
Page 4
 
SENSE TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIENCY
As of the period ended May 31, 2014
(Stated in US Dollars)

   
Common Stock
    
Preferred Stock
    
Common
              
   
Issued
          
Issued
          
Stock
    
Accumulated
        
   
Shares
    
Amount
    
Shares
    
Amount
    
Payable
    
Deficit
    
Total
  
                                           
Balance, February 28, 2013
    
102,768,448
    
$
14,868,018
      
315,914
    
$
315,914
    
$
154,889
    
$
(19,484,755
)
  
$
(4,145,934
)
Common stock issued for cash
    
4,900,000
      
147,000
      
-
      
-
      
-
      
-
      
147,000
  
Common stock issued for subscription
    
1,200,000
      
36,000
      
-
      
-
      
(36,000
)
    
-
      
-
  
Common stock issued as inducement
    
1,025,000
      
17,374
      
-
      
-
      
-
      
-
      
17,374
  
Common shares subscribed
    
-
      
-
      
-
      
-
      
66,000
      
-
      
66,000
  
Dividends
    
-
      
-
      
-
      
-
      
-
      
(31,591
)
    
(31,591
)
Net income (loss) for the period
    
-
      
-
      
-
      
-
      
-
      
(753,214
)
    
(753,214
)
Balance, February 28, 2014
    
109,893,448
      
15,068,392
      
315,914
      
315,914
      
184,889
      
(20,269,560
)
    
(4,700,365
)
Common shares subscribed
    
-
      
-
      
-
      
-
      
165,000
      
-
      
165,000
  
Dividends
    
-
      
-
      
-
      
-
      
-
      
(7,898
)
    
(7,898
)
Net income (loss) for the period
    
-
      
-
      
-
      
-
      
-
      
(85,632
)
    
(85,632
)
Balance, May 31, 2014 (unaudited)
    
109,893,448
    
$
15,068,392
      
315,914
    
$
315,914
    
$
349,889
    
$
(20,363,090
)
  
$
(4,628,895
)
 
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
 
 
Page 5

SENSE TECHNOLOGIES, INC.
 NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its obligations and commitments in the normal course of operations. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

While the information presented in the accompanying three months to May 31, 2014 financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these interim unaudited financial statements be read in conjunction with the Company’s audited financial statements for the year ended February 28, 2014.

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 June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-10: Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation , to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations.
 
 
Page 6
 
In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.
 
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
 
-  
Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and
-  
Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
 
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.
 
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.
 
NOTE 2 – GOING CONCERN
 
At May 31, 2014, the Company had not yet achieved profitable operations, had an accumulated deficit of $20,363,090 (February 28, 2014 - $20,269,560) since its inception and incurred a net loss of $85,632 (2013 - $ 200,517) for the three months ended May 31, 2014 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, 2015 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 – PREPAID EXPENSES
 
As of May 31, 2014, included in prepaid expenses is $13,780 (February 28, 2014: $22,297) for an insurance premium for the directors of the Company financed through Flatiron Capital.  Insurance policy is from August 23, 2013 to August 23, 2014.
 
 
Page 7
 
NOTE 4 – EQUIPMENT
 
The following is a summary of this category, including estimated useful lives of the assets:
 
   
May 31,
2014
    
February 28,
2014
  
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
     (136,891 )     (134,952 )
Total
   $ 5,816     $ 7,755  
 
NOTE 5 – INTANGIBLES
 
Intangible assets are comprised as follows:
 
  
  
May 31,
2014
    
February 28,
2014
  
Guardian Alert License
   $ 50     $ 50  
Scope Out Mirror License
     1       1  
Net carrying cost
   $ 51     $ 51  
 
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 May 31, 2014, the royalty payable - related party to the Guardian Alert License was $480,000 (2013: $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.
 
 
Page 8
 
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.
 
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 quarter ended May 31, 2014, the Company accrued $nil (2013: $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 May 31, 2014, 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.
 
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
 
No royalties are currently accrued as we have not yet reached the end of the calendar year containing the second anniversary.
 
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
 
 
Page 9
 
The following table presents the changes in the accrued royalties – related party balance from May 31, 2014 to February 28, 2014:
 
Guardian Alert
  
May 31,
2014
    
February 28,
2014
  
Beginning balance
     480,000       480,000  
Accrued
     -       -  
Paid
     -       -  
Total Guardian Alert
     480,000       480,000  
Scope Out
                
Beginning balance
     -       -  
Accrued
     -       -  
      -       -  
Total Accrued Royalties
     480,000       480,000  
 
NOTE 6 – ACCRUED EXPENSES/ACCRUED EXPENSES – RELATED PARTY
 
Other liabilities and accrued expenses consisted of the following:
 
  
  
May 31,
    
February 28,
  
   
2014
    
2014
  
Bank overdraft
   $ 16,525     $ 14,022  
Accounts payable
     551,972       564,291  
Accounts payable – related party
     35,884       35,884  
Accrued royalties payable – Guardian Alert
     480,000       480,000  
                 
Detail of Accrued Expenses:
                
Accrued interest payable
     927,729       893,035  
Accrued non-resident withholding taxes, including accrued interest
     173,388       173,388  
Credit card
     2,668       3,054  
Commissions Payable
     40,849       48,679  
Accrued taxes payable
     43,035       44,117  
  Total accrued expenses
   $ 1,187,669     $ 1,162,273  
                 
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 May 31, 2014, included in the trade payables is $33,495 (February 28, 2014: $33,495) and $2,389 (February 28, 2014: $2,389) 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 (February 28, 2014: $480,000) owing to stockholders of the Company in respect of royalties payable and $53,694 (February 28, 2014: $53,694) owing to the former president of the Company in respect of unpaid wages.
 
At May 31, 2014, advances payable of $54,396 (February 28, 2014: $103,521) are due to a company controlled by a director of the Company.  
 
 
Page 10

At May 31, 2014, promissory notes payable of $439,590 (February 28, 2014:  $439,590) 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 fifteen notes payable totaling $1,447,037.

NOTE 7 – ROYALTIES PAYABLE

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

 
a)
30,000 units per year beginning in years 1-2
 
b)
60,000 units per year beginning in years 3-4
 
c)
100,000 units per year beginning in years 5 and above.

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.

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

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

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
 
The current royalties accrued for Scope Out royalties are $nil as of May 31, 2014 and February 28, 2014.
 
Pursuant to the Guardian Alert licenses, we are required to make royalty payments to the licensors and meet sales targets as follows:
 
 
a)
$6.00(US) per unit on the first one million units sold;
 
b)
thereafter, the greater of $4.00(US) per unit sold or 6% of the wholesale selling price on units sold; and
 
c)
50% of any fees paid to Sense in consideration for tooling, redesign, technical or aesthetic development or, should the licensors receive a similar fee, the licensors will pay 50% to Sense.

In order to retain the exclusive right to this license we incurred minimum royalty fees. Because we were unable to pay these fees, we accrued the royalties as a payable. Royalties accruals were ceased in 2004 and rights of exclusivity were forfeited. Royalties payable to Guardian Alert are $480,000 and $480,000 as of May 31, 2014 and February 28, 2014, respectively.
 
 
Page 11

NOTE 8 – NOTES PAYABLE, CONVERTIBLE NOTES PAYABLE, AND NOTES PAYABLE – RELATED PARTY
 
    May 31,    
February 28,
  
  
  
 2014
    
2014
  
Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment terms between August 2012 and July, 2012. In default.
   $  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.  In default.
     439,590       439,590  
Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due January 12, 2012.  In default.
     10,000       10,000  
Promissory notes payable, unsecured, bearing interest at the rate of 12% per annum with repayment due March 30, 2012.  In default.
     10,000       10,000  
Finance agreement on directors and officers liability policy,secured by the unearned insurance premium, bearing interest at 7.75%, maturing June 23, 2014.  This agreement is repayable in monthly principal and interest payments of $1,814.
     216       7,312  
Finance agreement on directors and officers liability policy, bearing interest at 7.75% per annum, no maturity date.
     6,530       8,508  
Promissory note payable, unsecured, bearing interest at the rate of 5.25% per annum, no maturity date.
     110,000       100,000  
Promissory note payable, unsecured, bearing interest at the rate of 12.0% per annum, no maturity date.
     100,000       100,000  
Promissory note payable, unsecured, bearing interest at the rate of 6% per annum, maturing June 1, 2014.
     99,134       99,134  
Promissory note payable, unsecured, bearing interest at the rate of 6% per annum, maturing January 31, 2014.  In default.
     50,000       100,000  
Promissory note payable, unsecured, bearing interest at the rate of 7% per annum, maturing October 16, 2013. In default.
     50,000       50,000  
Promissory note payable, unsecured, bearing interest at the rate of 7% per annum, maturing August 19, 2014.
     75,000       75,000  
Promissory note payable, personally guaranteed by a director of the Company, bearing interest at 4.0% per annum and maturing August 27, 2018.
     103,281       108,877  
Promissory note payable, unsecured, bearing interest at the rate of 7% per annum, maturing July 20, 2014.
     10,000       10,000  
Promissory note payable, no stated interest or maturity date
     2,000       2,000  
  
     1,308,751       1,363,421  
 
 
Page 12
 
The Company is in arrears with respect to six of the above notes payable totaling $802,590.
 
Convertible notes payable:
 
  
May 31,
2014
    
February 29,
2014
  
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 demand for payment at the rate of one common share for each $0.29 of principal and interest owed. As of February 28, 2014 and February 28, 2013, these notes were in default.
   $ 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 nine convertible notes payable totaling $584,447.

Future minimum note payments as of May 31, 2014 are as follows:
 
Years Ending February 28,      
2015   $ 1,893,198  
2016     -  
Thereafter     -  
 
NOTE 9 – PREFERRED STOCK

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

Dividends on preferred shares are payable annually on July 31 of each year. During the quarter ended May 31, 2014, the Company accrued dividends payable of $7,898 (February 28, 2014: $31,591). Dividends are currently accruing and total $368,996.

NOTE 10 – COMMON STOCK

a)           Common stock issued for cash

During the quarter ended May 31, 2014, the Company received $165,000 of common stock subscribed in common stock payable for 5,500,000 shares

During the year ended February 28, 2014, the Company issued 4,900,000 shares of common stock for cash proceeds of $147,000.

The Company issued promissory notes with stock granted as an incentive.  The stock was valued with relative fair value of common stock compared to fair market value of debt, common stock valued with closing price on date of agreement at $0.02. $17,374 recorded as a debt discount.  As the debt was due on demand, the discount was fully expensed in the second quarter ended August 31, 2013.   The Company issued 1,025,000 shares during the quarter ended November 30, 2013 for this inducement.

The Company issued 1,200,000 shares of common stock for cash proceeds of $36,000 which was received in prior years and record as Common Stock Payable.

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 May 31, 2014 and February 28, 2014.
 
 
Page 13

 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.
 
   
May 31, 2014
  
   
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, May 31, 2014
    
3,000,000
    
$
0.04
  
 
   
February 28, 2014
  
 
  
Options
    
Weighted
Average
Exercise
Price
  
Outstanding and exercisable at beginning of the year
    
3,000,000
    
$
0.04
  
Expired during the year
    
(1,000,000
)
    
(0.05
)
Issued during the year
    
1,000,000
      
0.03
  
Outstanding and exercisable, February 28, 2014
    
3,000,000
    
$
0.04
  

At May 31, 2014, 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
           
  
 
3,000,000
    
$
0.03
    
December 31, 2014
 
Warrants

As of May 31, 2014 and February 28, 2014, the Company had no outstanding warrants.

NOTE 11 – RELATED PARTY TRANSACTIONS

The Company incurred the following items with directors and companies with common directors and shareholders:

  
  
May 31,
  
  
  
2014
    
2013
  
Interest expense
  
$
13,188
    
$
12,363
  
 
 
Page 14
 
As of May 31, 2014, included in accounts payable is $33,495 (February 28, 2014: $33,495) owing to an accounting firm in which a director of the Company is a partner and $2,389 (February 28, 2014: $2,389) to a shareholder with respect to unpaid fees and interest on promissory notes, $480,000 (February 28, 2014: $480,000) owing to shareholders of the Company in respect of royalties payable with no interest accruing, and $53,694 (February 28, 2014: $53,694) owing to the former president of the Company in respect of unpaid wages.

As of May 31, 2014, included in advances payable is $54,396 (February 28, 2014: $103,521) owed to a company controlled by a director.

As of May 31, 2014, promissory notes payable of $439,590 (February 28, 2014: $439,590 is due to a profit-sharing and retirement plan administered by a director of the Company.  Terms are:

Date Due:
  
Amount
  
December, 2012
  
$
216,372
  
December, 2012   
    
168,218
  
April, 2012    
    
15,000
  
August, 2012
    
12,500
  
November, 2013
    
27,500
  
Total
  
$
439,590
  
 
All bear interest at 12% per annum.

As of May 31, 2014, promissory note payable of $103,281 (February 28, 2014: $108,877) is personally guaranteed by a related party of the director of the company.
 
NOTE 12 – CONCENTRATIONS AND CONTINGENCIES

Concentrations

Approximately 99% of the Company’s revenues are obtained from two (2) customers. 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 three months ended May 31, 2014, one (1) customer accounted for approximately 98% of revenue. For the three months ended May 31, 2013, there was three (3) customers that accounted for 98% of sales 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 May 31, 2014 and May 31, 2013 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
 
NOTE 13 – SUBSEQUENT EVENTS
 
Management has evaluated subsequent events through September 18, 2014, the date of which the financial statements were available to be issued.

Subsequent to May 31, 2014, the company issued 8,500,002 shares of common stock for cash proceeds of $255,000.
 
 
Page 15
 
Management’s Discussion And Analysis
Sense Technologies Inc. Form 10-Q
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto for the period ended May 31, 2014 and our Financial Statements and notes thereto for the period ended May 31, 2013.

1.           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, market and sublicense 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.  This product is manufactured in China through an outsourced vendor.

2.           Results of Operations

For the three month period ended May 31, 2014 as compared to the three month period ended May 31, 2013.

   
For the three months ended
  
   
May 31, 2014
    
May 31, 2013
  
Sales
  
-
    
-
  
Sales Guardian Alert
    
55,036
      
152,224
  
Sales Scope Out
    
-
      
-
  
     
55,036
      
152,224
  

Sales for the quarter ended May 31, 2014 decreased by 64% from $152,224 to $55,036 due to decreased demand for Guardian Alert. Revenue is recognized by management only upon receipt of an actual purchase order from a customer, and the related invoicing to the company or, in the absence of a purchase order (i.e., verbal order), the actual invoicing to the customer, when the products are shipped and collection is reasonably assured.

We continued to market both products.  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.

   
For the Three months ended May 31,
  
   
2014
    
2013
  
Direct Cost
            
Scope Out Direct Costs
  
-
    
-
  
Cost of sales
    
-
      
-
  
Manufacturing expenses
    
-
      
-
  
Research and development
    
-
      
-
  
Commissions
    
-
      
- 
  
Royalties - related party
    
15,000
      
15,000
  
Total Scope Out Direct Costs
    
15,000
      
15,000
  
                 
Guardian Alert Direct Costs
                
Cost of sales
    
-
      
-
  
Manufacturing expenses
    
11,257
      
196,424
  
Research and development
    
16,500
      
7,500
  
Commissions
    
5,100
      
30,190
  
Royalties
    
-
      
-
  
Total Guardian Alert Direct Costs
    
32,857
      
234,114
  
Total Direct Costs
    
47,857
      
249,114
  

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.

Direct costs related to Scope Out® were $15,000 and $15,000 for the three month periods ended May 31, 2014 and 2013, respectively.
 
 
Page 16

Direct costs related to Guardian Alert were $32,857 and $234,114 for the three month period ending May 31, 2014 and 2013, respectively. This change represents a decrease of 86%. Commission expenses were $5,100 and $30,190 for the three month period ended May 31, 2014 and 2013, respectively. Commission expense decreased 83% due to a decrease in commissioned sales.  Manufacturing expenses were $11,257 and $196,424 for the three month period ended May 31, 2014 and 2013, respectively.  Manufacturing expenses in Direct Costs for the Guardian Alert® for the three months ended in 2014 and 2013 represents assembly costs for the sales achieved for the same period.

Selling, General, and Administrative
  
   
   
For the three months ended
  
   
May 31, 2014
    
May 31, 2013
  
Consulting fees
    
13,000
      
10,500
  
Contract labor
    
3,000
      
3,000
  
Depreciation
    
1,939
      
2,359
  
Filing fees
    
200
      
1,866
  
Insurance
    
8,517
      
7,616
  
Bank charges
    
358
      
455
  
Legal and accounting
    
6,000
      
8,836
  
Office and miscellaneous
    
4,140
      
5,146
  
Rent
    
3,409
      
4,338
  
Telephone and utilities
    
374
      
176
  
Transfer agent fees
    
2,984
      
390
  
Travel and automotive
    
4,617
      
12,892
  
Interest expense
    
44,273
      
46,053
  
Total
    
92,811
      
103,627
  

Sense Technologies, Inc. had selling, general and administrative expenses of $92,811 for the three month period ended May 31, 2014 compared to selling, general and administrative expenses of $103,627 for the three month period ended May 31, 2013, a decrease in selling, general and administrative expenses of 10% from the prior period. 

Consulting fees increased from $10,500 for the three month period ended May 31, 2013 to $13,000 for the three month period ended May 31, 2014. The increase was a result of consulting related to Guardian Alert product sales.

The Company determined that prior expenses for marketing and advertising costs related to the sales plan for ScopeOut® were not producing results. Management believed it was in the best interest of the company to discontinue these costs. The Company is concentrating on Guardian Alert® sales based on market interest, and in doing so as cost-efficiently as possible, the Company has replaced those costs with a “little-to-no cost” effort of asking existing fleet-customers to refer the Guardian Alert® products to other fleets.  Additionally, the company is paying more in commissions, as previously stated, because of the efforts to incentivize the sales of the Guardian Alert® to fleets.

Legal and accounting fees decreased from $8,836 in the three month period ended May 31, 2013 to $6,000 for the three month period ended May 31, 2014.
 
Following summarizes the overall operations results for the three month period ended May 31:
 
               
Increase
    
%  Increase
  
   
2014
    
2013
    
( Decrease)
    
(decrease)
  
                         
Sales
    
55,036
      
152,224
      
(97,188
)
    
(63.85
)
Direct Costs
    
47,857
      
249,114
      
(201,257
)
    
(80.79
)
General and Administrative expenses
    
92,811
      
103,627
      
(10,816
)
    
(10.43
)
Net Loss
    
(85,632
)
    
(200,517
)
    
(114,885
)
    
(57.29
)
Basic and Diluted Loss per share
    
(.00
)
    
(.00
)
                

We had a loss from operations of $85,632 for three month period ended May 31, 2014, compared to a loss from operations of $200,517 for the three month period ended May 31, 2013, a decrease in loss from operations of $114,885 from the prior year.
 
 
Page 17

Liquidity and Capital Resources

Our cash position at May 31, 2014 was $nil as compared to $Nil at February 28, 2014. This was due to our use of cash in operating and investing activities and cash provided by financing activities as described below.

We have a working capital deficit of 4,628,895 and 4,700,365 as of May 31, 2014 and February 28, 2014, respectively. If we are unable to raise adequate working capital for fiscal 2015, 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 2015, 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 $110,330 in 2014, compared to $9,560 in 2013. The increase in cash used in 2014 was largely due to the decrease in advances payable.
 
Net cash provided by financing activities

Net cash provided by financing activities was $110,330 in 2014 compared to net cash used of $23,595 in 2013.

In 2014, we received $165,000 through subscriptions to our common shares.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
 
Not applicable.

Item 4. Controls and Procedures.
 
Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including its chief executive officer (who is also acting in the capacity as the principal accounting officer), of the effectiveness of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Company’s principal executive officer and principal financial officer has concluded that, as of the end of the period covered in this report, the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
The Company, including its principal executive officer and principal financial officer, does not expect that its disclosure controls and procedures or its internal controls will prevent all error or 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. Due to 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, have been detected. To address the material weaknesses, the Company performed additional analysis and other post-closing procedures in an effort to ensure its consolidated financial statements included in this quarterly report have been prepared in accordance with generally accepted accounting principles. Accordingly, the Company believes that the financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented.

The Company’s internal conclusion related to its disclosure and procedural controls is due to the number and magnitude or changes to its draft 10Q recommended by the Company’s independent auditor.

The Company plans to continue working with competent outside professionals to help it with quarterly reporting and if its business plan is successful additional improvements in the Company’s accounting department will be made.

Changes in Internal Control over Financial Reporting

In addition, the Company with the participation of its chief executive officers have determined that no change in our internal control over financial reporting occurred during or subsequent to the quarter ended May 31, 2014 that has materially affected, or is (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 
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PART II-OTHER INFORMATION

Item 1. Legal Proceedings.
 
None.

Item 1A. Risk Factors.
 
There were no material changes in our risk factors from our Form 10-K for the year ended February 28, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
There were no unregistered sales of equity securities during the quarter ended May 31, 2014.

Item 3. Defaults Upon Senior Securities.
 
None.

Item 4. Mine Safety Disclosures.
 
Not applicable.

Item 5. Other Information.
 
Sense Technologies has entered an agreement with a global company to market the Guardian Alert® under a registered trade name.
 
Item 6. Exhibits.
 
31.1
32.1
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
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
     
 
SENSE TECHNOLOGIES INC.
  
     
     
September 26, 2014
/s/ BRUCE E. SCHREINER
  
 
Bruce E. Schreiner
  
 
Chief Executive Officer, President, Director, Chief Financial Officer and Principal Accounting Officer
  
 
 
 
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SENSE TECHNOLOGIES INC Reports