<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to ___________
Commission file number
SENSE HOLDINGS, INC.
(Name of Small Business Issuer in Its Charter)
FLORIDA 82-0326560
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7300 WEST McNAB ROAD
TAMARAC, FLORIDA 33321
(Address of Principal Executive Offices)(Zip Code)
(954) 726-1422
(Issuer's Telephone Number, Including Area Code)
Check mark whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 6,406,142 shares of Common
Stock as of May 16, 2000.
<PAGE>
SENSE HOLDINGS, INC.
INDEX
Page
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - March 31, 2000 F-2
Statements of Operations (unaudited) for the
Three Months Ended March 31, 2000 and 1999 F-3
Statements of Cash Flows (unaudited) for the
three Months Ended March 31, 2000 and 1999 F-4
Notes to Financial Statements F-5
Item 2. Management's Discussion and Analysis or Plan of
Operation 6-7
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 8
Signatures 9
1
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 137,609
Accounts receivable 70,586
Inventories 8,611
Loans receivable - shareholders 21,088
Prepaid expenses 37,500
Other current assets 2,892
---------
TOTAL CURRENT ASSETS 278,286
PROPERTY AND EQUIPMENT, net 10,510
---------
$ 288,796
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 62,405
---------
TOTAL CURRENT LIABILITIES 62,405
---------
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value, 10,000,000
shares authorized; 6,072,142 shares issued
and outstanding 607,214
Additional paid-in capital 550,619
Accumulated deficit (931,442)
---------
TOTAL STOCKHOLDERS' EQUITY 226,391
---------
$ 288,796
=========
See notes to consolidated financial statements
F-2
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three For the Three
Months Ended Months Ended
March 31, March 31,
2000 1999
--------------------- -----------------
(unaudited) (unaudited)
Sales $ 10,791 $ -
Cost of goods sold 7,769 -
--------------------- ----------------
Gross Profit 3,022 -
OPERATING EXPENSES:
Depreciation 500 501
Rent 3,498 1,723
Research and development - 36,750
Non-cash compensation - 72,500
General and administrative 87,738 25,049
--------------------- ----------------
91,736 136,523
--------------------- ----------------
NET LOSS $ (88,714) $ (136,523)
===================== ================
Net loss per common share $ (0.01) $ (0.03)
===================== ================
Weighted Average
Number of shares outstanding 6,072,142 4,685,408
===================== ================
See notes to consolidated financial statements
F-3
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three For the Three
Months Ended Months Ended
March 31, March 31,
2000 1999
-------------- ---------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (88,714) $ (136,523)
-------------- ---------------
Adjustments to reconcile net loss to
net cash used in operations:
Depreciation 500 501
Non-cash compensation - 72,500
Changes in assets and liabilities:
Accounts receivable (10,791) -
Inventories 1,734 (13,479)
Other current assets - (18,750)
Accounts payable and accrued expenses (3,249) 7,721
-------------- ---------------
Total adjustments (11,806) 48,493
-------------- ---------------
NET CASH FLOWS USED IN OPERATIONS (100,520) (88,030)
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (2,704)
-------------- ---------------
NET CASH FLOWS USED IN INVESTING
ACTIVITIES - (2,704)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock
to be issued - (110,500)
Loans to shareholders (16,188) -
Proceeds from the sale of common stock - 60,000
Capital contribution - 141,200
-------------- ---------------
NET CASH FLOWS (USED IN) PROVIDED BY
FINANCING ACTIVITIES (16,188) 90,700
-------------- ---------------
NET DECREASE IN CASH (116,708) (34)
CASH - beginning of period 254,317 13,147
-------------- ---------------
CASH - end of period $ 137,609 $ 13,113
============== ===============
See notes to consolidated financial statements
F-4
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
-----------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required for annual financial statements. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes for the year ended December 31, 1999 included in the Form
10-KSB for the year then ended.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of March 31, 2000, and the results of operations and cash flows for
the three-month periods ended March 31, 2000 and 1999 have been included.
The results of operations for the three-month period ended March 31, 2000, are
not necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB as filed with the
Securities and Exchange Commission for the year ended December 31, 1999.
SUBSEQUENT EVENT:
In May 2000 the Company issued 334,000 shares of its common stock to various
consultants, in consideration for services rendered to the Company. Such shares
were valued at an aggregate of $334,000 or $1.00 per share.
F-5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with the
financial statements of the Company and the notes thereto appearing elsewhere.
RESULTS OF OPERATIONS - JANUARY 1, 1999 - MARCH 31, 1999 (unaudited)
We generated no revenues during the first quarter ended March 31, 1999.
Operating expenses were $136,523 for the quarter ended March 31, 1999. These
expenses consisted mainly of noncash compensation charges of $72,500, for shares
of the Company's common stock issued for services. Additionally, general and
administrative expenses totaled $25,049, primarily attributable to salaries and
advertising cost of approximately $14,000, and professional fees of
approximately $4,000. Research and development expenses of $36,750, consists of
software purchased for use in the production of security systems and computer
programming salaries.
RESULTS OF OPERATIONS - JANUARY 1, 2000 - MARCH 31, 2000 (unaudited)
For the quarter ended March 31, 2000, we generated revenues of $10,791. The cost
of goods sold was $7,769 resulting in a gross profit of $3,022 and gross profit
percentage of 72% for the quarter ended. Operating expenses were $91,736 for the
quarter ended. These expenses consisted mainly of general and administrative
expenses of $87,738 primarily attributable to salaries and professional fees.
The increase in our operating expenses of $27,713 from the same quarter in the
preceding year, excluding noncash charges, is due to the commencement of
payments of officers salaries and salary payments for a larger technical staff.
LIQUIDITY, CAPITAL RESOURCES AND PLAN OF OPERATIONS
We have financed our growth and cash requirements through capital contributions
from existing shareholders. We do not have any credit facilities from financial
institutions or private lenders. We do not currently have any material
commitments for capital expenditures.
Cash used in operations for the quarter ended March 31, 2000 was approximately
$101,000 attributable primarily to the net loss of approximately $89,000,
increases in accounts receivable of $11,000, and decreases in accounts payable
and accrued expenses of $3,200. Cash used in financing activities during the
period was approximately $16,000 which was due to loans to shareholders. Total
cash decreased by approximately $117,000 during the quarter.
Since our inception, we have been engaged in research and development activities
relating to our first generation of biometric security products. We commenced
delivery of these products in the third quarter of fiscal 1999 and have been
generating revenues since the fourth quarter of fiscal 1999. We have completed
development of a second generation product, and have recognized revenue on its
sales during the quarter ended March 31, 2000. We will also continue to make
enhancements to our second generation product so that it will support a larger
database, and enable us to market CheckPrint T/A to larger companies, resulting
in a greater profit margin to us.
6
<PAGE>
Based upon purchase orders we have received, anticipated future product sales
and cash on hand, we do not believe that we will be required to raise additional
capital in order to meet our cash flow needs over the next twelve months.
However, in order to remain competitive in the marketplace, we must develop new
products and enhance our existing products. Should revenues not reach projected
levels or should unforeseen events arise, we may be required to secure
additional funds to meet our operating needs sooner than anticipated. Additional
funding may not be available to us on acceptable terms.
7
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
-----------------
Not applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
In May 2000 the Company issued 334,000 shares of its common
stock to various consultants, in consideration for services
rendered to the Company. Such shares were valued at an
aggregate of $334,000 or $1.00 per share.
Item 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not applicable
Item 5. OTHER INFORMATION
-----------------
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits:
Number Description
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 2000.
8
<PAGE>
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.
SENSE HOLDINGS, INC. AND SUBSIDIARY
Date: May 15, 2000 /s/Dore Scott Perler
Chief Executive Officer, President and Director
(Principal Executive Officer and
Principal Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 1093903
<NAME> SENSE HOLDINGS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 137,609
<SECURITIES> 0
<RECEIVABLES> 91,674
<ALLOWANCES> 0
<INVENTORY> 8,611
<CURRENT-ASSETS> 278,286
<PP&E> 13,795
<DEPRECIATION> 3,285
<TOTAL-ASSETS> 288,796
<CURRENT-LIABILITIES> 62,405
<BONDS> 0
0
0
<COMMON> 607,214
<OTHER-SE> (380,823)
<TOTAL-LIABILITY-AND-EQUITY> 288,796
<SALES> 10,791
<TOTAL-REVENUES> 10,791
<CGS> 7,769
<TOTAL-COSTS> 7,769
<OTHER-EXPENSES> 91,736
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (88,714)
<INCOME-TAX> 0
<INCOME-CONTINUING> (88,714)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (88,714)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
