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 June 30, 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 share of Common Stock as of
August 7, 2000.
<PAGE>
SENSE HOLDINGS, INC.
INDEX
Page
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - June 30, 2000 (unaudited) 2
Statements of Operations (unaudited)for the
Three Months and Six Months
Ended June 30, 2000 and 1999 3
Statements of Cash Flow (unaudited) for the
Six Months Ended June 30, 2000 and 1999 4
Notes to Financial Statements 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
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SENSE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 74,465
Accounts receivable 40,324
Inventories 23,781
Loans receivable - shareholders 13,088
Prepaid expenses 37,500
Other current assets 2,977
------------------
TOTAL CURRENT ASSETS 192,135
PROPERTY AND EQUIPMENT, net 10,010
------------------
$ 202,145
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 23,636
Advances 50,000
------------------
TOTAL CURRENT LIABILITIES 73,636
------------------
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value, 15,000,000 shares
authorized; 6,406,142 shares issued and outstanding 640,614
Additional paid-in capital 854,559
Accumulated deficit (1,366,664)
------------------
TOTAL STOCKHOLDERS' EQUITY 128,509
------------------
$ 202,145
==================
See notes to consolidated financial statements
2
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SENSE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------------- --------------- -------------- --------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Sales $ - $ - $ 10,791 $ -
Cost of goods sold - - 7,769 -
-------------- --------------- -------------- --------------
Gross Profit - - 3,022 -
OPERATING EXPENSES:
Depreciation 500 349 1,000 850
Rent 3,498 2,066 6,996 3,789
Research and development - 10,357 - 47,107
Non-cash compensation 337,340 - 337,340 72,500
General and administrative 93,884 133,173 181,622 158,222
-------------- --------------- -------------- --------------
435,222 145,945 526,958 282,468
-------------- --------------- -------------- --------------
NET LOSS $ (435,222) $ (145,945) $ (523,936) $ (282,468)
============== =============== ============== ==============
Net loss per common share $ (0.07) $ (0.03) $ (0.08) $ (0.06)
============== =============== ============== ==============
Weighted Average
Number of shares outstanding 6,294,809 5,179,319 6,183,475 4,932,364
============== =============== ============== ==============
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
SENSE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (523,936) $ (282,468)
---------------- ----------------
Adjustments to reconcile net loss to
net cash used in operations:
Depreciation 1,000 850
Non-cash compensation 337,340 -
Changes in assets and liabilities:
Accounts receivable 19,471 -
Inventories (13,436) (33,709)
Other current assets (85) (37,500)
Accounts payable and accrued expenses (42,018) 18,043
---------------- ----------------
Total adjustments 302,272 (52,316)
---------------- ----------------
NET CASH USED IN OPERATIONS (221,664) (334,784)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (4,340)
---------------- ----------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES - (4,340)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances 50,000 -
Loans to shareholders (8,188) -
Proceeds from the sale of common stock - 853,125
---------------- ----------------
NET CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES 41,812 853,125
---------------- ----------------
NET DECREASE IN CASH (179,852) 514,001
CASH - beginning of period 254,317 13,147
---------------- ----------------
CASH - end of period $ 74,465 $ 527,148
================ ================
</TABLE>
See notes to consolidated financial statements
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 June 30, 2000, and the results of operations and cash flows for
the three-month periods ended June 30, 2000 and 1999 and six-month periods ended
June 30, 2000 and 1999 have been included.
The results of operations for the six-month period ended June 30, 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.
ADVANCES:
The Company received a $50,000 noninterest bearing advance from a potential
investor. This advance is due upon the termination of any future relationship
between the Company and the investor, such relationship can be terminated at the
discretion of the Company.
STOCKHOLDERS' EQUITY:
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 $337,340 or $1.01 per share.
On May 31, 2000, the Company amended its articles of incorporation to increase
the number of common shares it is authorized to issue from 10,000,000 to
15,000,000.
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 - June 30, 1999 (unaudited)
We generated no revenues during the six months ended June 30, 1999.
Operating expenses were $282,468 for the six months ended June 30, 1999 and
$145,945 for the quarter then ended. 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
$158,222, primarily attributable to salaries and advertising cost of
approximately $104,000, professional fees of approximately $36,000, and research
and development expenses of $10,000, consisting of software purchased for use in
the production of security systems and computer programming salaries.
Results of Operations - January 1, 2000 - June 30, 2000 (unaudited)
For the six months ended June 30, 2000, we generated revenues of
$10,791. The cost of goods sold was $7,769 resulting in a gross profit of $3,022
for the six months ended. No revenues were generated for the quarter ended June
30, 2000 Operating expenses were $526,958 for the six months ended and $435,222
for the quarter then ended. These expenses consisted mainly of noncash
compensation charges of $337,340, for shares of the Company's common stock
issued for services. Additionally, general and administrative expenses of
$181,622 for the six months ended June 30, 2000 and $93,884 for the quarter
ended, are primarily attributable to salaries and professional fees.
Liquidity, Capital Resources and Plan of Operations
We have financed our growth and cash requirements through capital
contributions from existing shareholders. Except for an advance from a
propective investor, 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 six months ended June 30, 2000 was
approximately $221,000 attributable primarily to the net loss of approximately
$524,000 and noncash compensation expenses of approximately $337,000 and
increases in inventories and other assets of $13,000, and decreases in accounts
receivable of $19,000 and accounts payable and accrued expenses of $42,000. Cash
used in financing activities during the period was approximately $8,000 which
was due to loans given to shareholders. Total cash decreased by approximately
$180,000 during the six months ended.
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
6
<PAGE>
revenue on its sales during the six months ended June 30, 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.
Based upon purchase orders we have received, anticipated future
product sales and cash on hand, we believe that it will be necessary to raise
additional capital in order to meet our cash flow needs over the next twelve
months. Additionally, 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 commom
stock to various consultants, inconsideration for services
rendered to the Company. Such shares were valued at an aggregate of
$337,340 or $1.01 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
June 30, 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: August 7, 2000 /s/Dore Scott Perler
Chief Executive Officer, President and Director
(Principal Executive Officer and
Principal Accounting Officer)
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