UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10-KSB

———————

ýANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2007

¨TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

———————

Safe Technologies International, Inc.

(Name of small business issuer in its charter)

———————

Delaware	000-17746	22-2824492
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

123 NW 13 Street, Suite 30408, Boca Raton, FL 33432

(Address of Principal Executive Office) (Zip Code)

(561) 832-2700

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

———————

Securities registered pursuant to Section 12(b) of the Act:
Title of each class		Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.00001 per share
	(Title of Class)

———————

Check 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 ý    No ¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨    No ý

The issuer's revenues for its most recent fiscal year were $12,117.

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity, as of March 24, 2008, was approximately $139,052.

The number of shares outstanding of the issuer's common stock, as of March 20, 2008, was 932,631,602.

DOCUMENTS INCORPORATED BY REFERENCE

Transitional Small Business Disclosure Format (Check one): Yes ¨    No ý

PART I

ITEM 1.

BUSINESS

Business Development.  We were incorporated in Delaware on August 1, 1987 as Safe Aid Products Incorporated. On February 9, 1998, we acquired Intelligence Network International, Inc., pursuant to a reverse merger and changed our name to Safe Technologies International, Inc. After the merger, our business consisted of a broad range of internet and technology based services and products, operated through various subsidiaries.

From 1998 through 2001, we focused on developing and acquiring, as subsidiaries, companies operating in the e-commerce industry. Acquisitions included Internet Associates International, Inc. (“IAI”), which remains an active subsidiary, and three related companies known as Connect.ad, Inc., Connect.ad Services, Inc., and Connect.ad of South Florida, Inc., which are no longer active.  All acquisitions were purchased with our stock.  As competition intensified in the e-commerce industry, we turned our efforts toward acquisitions in other technological and related industries. We entered into several agreements with foreign consultants in order to increase the number of business candidates that might result in potential acquisitions.

In March 2002, we merged one of our wholly owned subsidiaries, Internet Commerce, Inc. ("ICI") with ProCon Systems, ApS, which provided information technologies services to the global travel industry. As a result of the merger, we owned eight percent of ProCon. However, ProCon’s funding commitment was not fulfilled, its business foundered, and we have written off our investment in ProCon.

In May 2002, we merged another of our wholly owned subsidiaries, Connect.Ad of South Florida, Inc., with Agenesis, Inc., which intended to create a public trading market for its business.  As a result of the merger, we owned eight percent of Agenesis. Pursuant to the Merger Agreement, Agenesis filed a Registration Statement to register the issuance of shares in the merger and the distribution to our shareholders of one half of our eight percent interest. However, during the last quarter of 2003, Agenesis notified us that they had decided not to proceed with their plans to become a publicly trading company. As a result, the other stockholders of Agenesis have returned to us 100% ownership of Agenesis.

In August 2003, we entered into a Stock Purchase Agreement with a Bruce Ross, dba Express Air, to acquire a 60% ownership interest in Express Air in return for common stock. Express Air operated a same-day air delivery service for time sensitive items in Southern California.  However, Express Air was not able to deliver to us the audited financial statements required under the Stock Purchase Agreement and, as a result, we did not complete the transaction.

On December 30, 2003, we entered into a Stock Purchase Agreement with Time Bytes LTD, a British company, for 60% ownership of Time Bytes and its affiliates, Time Bytes International, Inc., and Sports Profile LTD. Our purchase price was payable in common stock.  Time Bytes offered a unique DVD product containing specialized content that was researched, selected, and produced onto a DVD.  The transaction closed in January 2004, when we received their audited financial statements, and we made our initial stock payments to the sellers.  However, additional due diligence brought to light additional facts which we found to be unacceptable.  As a result, we terminated the acquisition, made no further payments and demanded the return of our initial payment.  We have received the return of only a portion of our initial payment.

Current Business.  We are now a holding company with one active and three inactive wholly-owned subsidiaries.  Our active subsidiary is Internet Associates International, Inc. (“IAI”).  IAI is a website hosting company.

We continue to be receptive to possible acquisition candidates, but have not yet been presented with an opportunity worthy of presenting for Board of Director and/or shareholder approval.

Since July 2004, we have not been actively searching out business opportunities, because Universal Equity Holdings LLC, which purchased approximately 24% of our outstanding stock in July 2004, had been unable to transfer of record the shares that it purchased. Since this could have had a material effect on any shareholder vote which might have been required in connection with a business opportunity, we were waiting until this situation was rectified before resuming an active search for business opportunities.

In July 2007, our largest shareholder, Franklin Frank, and certain companies controlled by Mr. Frank, obtained a judgment against Universal Equity Holdings and its principal. Among other things, the judgment gives to Mr. Frank or his designee title to the shares purchased by Universal Equity Holdings. We expect title to those shares to be

1

transferred of record in the near future, which will then allow those shares to be voted. Once the shares have been transferred of record, we expect to resume our search for business opportunities.

Competition. The market for internet products and services is highly competitive. There are no substantial barriers to entry in these markets, and the Company expects that competition will continue to intensify. Internet commerce competes for customers and advertisers with other content providers, advertisers and traditional merchants, as well as with thousands of web sites operated by individuals, the government and educational institutions.  As a result, we are no longer focused on acquiring e-commerce related businesses.

Employees. We currently have no employees.  Our administrative functions are fulfilled through contractual services provided by our Secretary and acting Chief Executive Officer.

ITEM 2.

DESCRIPTION OF PROPERTY

Our executive offices are located at 123 NW 13 Street, Suite 30408, Boca Raton, FL 33432, where we lease approximately 700 square feet of office space. IAI currently shares our office space. We pay rent of approximately $426 per month.

ITEM 3.

LEGAL PROCEEDINGS

The company is not a party to any legal proceedings involving any claim against the company.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote by security holders during 2007.

2

PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock is traded in the over-the-counter market under the symbol "SFAD". The following table sets forth the high and low bid, as reported by Stockwatch, for our common stock for the calendar periods indicated.

Period	Bid High/Low
2006
1st Quarter	.0028/.0023
2nd Quarter	.0025/.0010
3rd Quarter	.0029/.0012
4th Quarter	.0023/.0012
2007
1st Quarter	.0014/.0011
2nd Quarter	.0014/.0010
3rd Quarter	.0012/.0006
4th Quarter	.0009/.0003

The average of the bid and ask price of our common stock in the over-the-counter market as of the most recent available date, March 20, 2008 was .0003 per share. The above quotations do not include retail mark-ups, mark-downs or commissions and represents prices between dealers and not necessarily actual transactions. The past performance of our securities is not necessarily indicative of future performance.

Holders of Record

As of March 20, 2008, we believe there were approximately 15,000 shareholders of record of our common stock, including beneficial owners holding shares through nominee name.

Dividend Policy

We have never paid cash dividends on our common stock. Payment of dividends will be within the sole discretion of our Board of Directors and will depend, among other factors, upon earnings, capital requirements and the operating and financial condition of the Company. At the present time, our anticipated financial capital requirements are such that we intend to retain any earnings in order to finance the development of our business.

Recent Sales of Unregistered Securities.

None

ITEM 6.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this annual filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.

3

Given these uncertainties, readers of this Form 10-KSB and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007 & 2006

For the years ended December 31, 2007 and 2006, the Company recorded revenues of $12,117 and $27,450 respectively. The decrease from 2006 to 2007 is due to declining revenues from IAI, our operating subsidiary, as a result of competitive pressures. Due to our decreasing operations, our operational costs decreased to $13,200 from $22,975 in 2006. Because our revenues decreased more than our expenses, we incurred a gross loss of $1,083 in 2007, compared to a gross profit of $4,475 in 2006.

Our sales and general and administrative expenses decreased to $84,610 in 2007, compared to $102,128 in 2006. As a result, our operating loss decreased to $85,693 from $97,653 in 2006.

Because our continuing operation is being funded by loans from a major shareholder, our interest expense has been increasing, to $172,091 from $137,593 in 2006.  The shareholder has been allowing interest to accrue, foregoing current payment, because of the limited funds available to the company.  Our net loss for 2007 was $257,784, compared to $235,246 in 2006.

LIQUIDITY/WORKING CAPITAL

At December 31, 2007, the company had total assets of $8,586, and a working capital deficit of $1,647,900, compared to a working capital deficit of $1,390,070 as of December 31, 2006. The increase in working capital deficit is the result of the losses we incurred in 2007, which were funded by loans from a major shareholder.

There can be no assurance that our financial condition will improve. We continue to evaluate our options for raising additional working capital, but in order to do so we must increase our base of business operations.  Meanwhile, we are dependant upon funding from one of our major shareholders to meet expenses.

NET OPERATING LOSS CARRY-FORWARDS

We have net operating loss carry-forwards of approximately $7,080,000 with the latest expiring $257,000, $282,000, $236,000, $418,000 and $368,000 at December 31, 2022, 2021, 2020, 2019 and 2018, respectively.  The Company has established a one hundred percent (100%) valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.

GOING CONCERN

We are the subject of a "going concern" audit opinion. Such qualification was issued because we have incurred continuing losses from operations. As of December 31, 2007, we had negative working capital of $1,647,900, which raises substantial doubt about our ability to continue as a going concern.

In addition, there is no assurance that we will be able to successfully raise the funds necessary to fund operations through any means available. Further, there is no assurance that we will be able to successfully grow operations even if we are successful in acquiring the funds necessary, which may have a material impact on our financial position and results of operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

4

RISK FACTORS

Our operating subsidiary, IAI, is engaged in providing support to those involved in commerce on the Internet platform.  The viability of IAI’s customers is dependent upon their success in e-commerce. Customers unable to compete in e-commerce may fail, and as a result, we would lose a customer.

We expect to continue to incur net losses and negative cash flows for the foreseeable future, and there can be no assurance that we will ever achieve profitability or generate positive cash flows. We expect to incur significant operating expenses as we search for suitable businesses in which to become involved. If our revenues do not grow as expected, or if our actual expenses exceed our budgeted expenses, there could be a material adverse effect on our business, operating results and financial condition. We may need to raise additional funds through the issuance of equity, equity-related or debt securities.

Our business strategy of growth through business combinations leads to unknown and unquantifiable risks. We are attempting to expand our operations and market presence by entering into business combinations, investments, joint ventures or other strategic alliances with third parties. Any such transaction would be accompanied by risks commonly encountered in such transactions, which could include, among others, the difficulty of assimilating the operations, technology and personnel of the combined companies, the potential for disruption of ongoing business, the inability to retain key technical and managerial personnel, the inability of management to maximize our financial and strategic position through the successful integration of acquired businesses, additional expenses associated with amortization of acquired intangible assets, the maintenance of uniform standards, control and policies and the impairment of relationships with existing employees and customers. There can be no assurance that we will be successful in overcoming these risks or any other problems encountered in connection with such business combinations, investments, joint ventures or other strategic alliances.

Our success depends in large part upon the efforts of the few individuals who serve on our Board and as management, none of whom are full time employees. These individuals may not be able to fulfill their responsibilities adequately and may not remain with us. The loss of the services of any of our directors and officers could hurt our business.

Our shares are classified as “penny stock,” which will make it more difficult to sell than exchange-traded stock.  Our common stock is subject to the Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers that sell such securities to other than established customers or accredited investors.  For purposes of the rule, the phrase “accredited investors” means, in general terms, institutions with assets exceeding $5,000,000 or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, combined with a spouse’s income, exceeds $300,000).  For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale.  Consequently, the rule may affect the ability of purchasers of our securities to buy or sell in any market that may develop.

In addition, the Securities and Exchange Commission has adopted a number of rules to regulate “penny stocks”.  A “penny stock” is any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934, as amended.  The rules may further affect the ability of owners of our shares to sell their securities in any market that may develop for them.  Shareholders should be aware that, according to the Securities and Exchange Commission Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.  Such patterns include:

·

control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

·

manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

·

“boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

·

excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

5

·

the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Concentration of ownership may reduce the control by other shareholders.  Our two largest shareholders own approximately 50% of our voting stock.  As a result, other investors in our common stock may not have much influence on corporate decision-making.

Our issuance of additional shares may have the effect of diluting the interest of shareholders.  In connection with any acquisition, we may issue additional shares. Any additional issuances of common stock by us from our authorized but unissued shares will have the effect of diluting the percentage interest of existing shareholders.

We do not anticipate paying dividends to common stockholders in the foreseeable future, which makes investment in our stock speculative or risky.  We have not paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future.  The board of directors has sole authority to declare dividends payable to our stockholders.  The fact that we have not and do not plan to pay dividends indicates that we must use all of our funds generated by operations for reinvestment in our operating activities.

It is possible that we may make one or more acquisitions in the international market.  Any such acquisitions would expose us to political and economic uncertainties, including, among other things, inflation , governmental instability, transportation, tariffs, export controls, government regulation, currency exchange rate fluctuations, foreign exchange restrictions that limit the repatriation of  investments and earnings, changes in taxation, hostilities or confiscation of property. Changes related to these matters could have a material adverse effect on the Company.

We may be subject to delays because of intentional, criminal third party intervention. Though we have taken several precautions to prevent any disruptions from terrorist attacks and hackers, we cannot guarantee that our operations are completely invulnerable. A disruption can occur from numerous sources, including damage to the company property, damage to one of our vendors, suppliers or customers, or damages to third parties such that it restricts the flow of commerce. Disruptions could materially adversely affect our revenues.

6

ITEM 7.

FINANCIAL STATEMENTS

7

SAFE TECHNOLOGIES INTERNATIONAL, INC.

FINANCIAL STATEMENTS

December 31, 2007

TABLE OF CONTENTS

December 31, 2007

Page

Financial Statements

Auditors’ Report

8

Balance Sheets

9

Statements of Operations

10

Statement of Stockholders’ Equity (Deficit)

11

Statements of Cash Flows

12

Notes to Financial Statements

13-15

8

Baum & Company, P.A.

1515 University Dr. Suite 226

Coral Springs FL 33071

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Safe Technologies International Inc.

We have audited the accompanying consolidated balance sheets of Safe Technologies International Inc. as of December 31, 2007 and 2006, and the related statements of operations, stockholders' deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on the financial statements based on our audit.  

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Safe Technologies International  Inc. as of  December 31, 2007 and 2006  and the related consolidated results of operations, stockholders’ deficiency and cash flows for the years then ended in conformity with United States generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements the Company has experience a loss in 2007 and 2006 and since inception.  The Company’s financial position and operating results raise substantial doubts about its ability to continue a going concern.  Management’s plans concerning these 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/ Baum & Company PA

Coral Springs, Florida

March 28, 2008

9

Safe Technologies International, Inc.

Consolidated Balance Sheets

December 31,  2007 and December 31, 2006

	December 31,		December 31,
	2007		2006
ASSETS
CURRENT ASSETS
Cash	$	6,777	$	9,948
Accounts receivable, net of allowance for doubtful accounts of
$2,500 and $1,500 at December 31, 2007 and December 31, 2006 respectively		870		4,003
Total current assets		7,647		13,951
PROPERTY AND EQUIPMENT
Furniture, fixtures, and equipment		5,644		6,801
Less: Accumulated depreciation		(5,644)		(6,801)
Total property and equipment		—		—
OTHER ASSETS
Deposits		939		893
Total other assets		939		893
Total Assets	$	8,586	$	14,844
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses		186,038		146,787
Notes and loans payable		1,468,309		1,255,934
Deferred revenue		1,200		1,300
Total current liabilites		1,655,547		1,404,021
Total liabilites		1,655,547		1,404,021
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.00001 par value, 999,999,000 shares authorized;		9,326		9,326
932,631,602 shares issued and outstanding at
December 31, 2007 and December 31, 2006, respectively
Additional paid-in capital		7,441,803		7,441,803
Subscriptions received		12,000		12,000
Retained earnings (deficit)		(9,110,090)		(8,852,306)
Total stockholders' equity (deficit)		(1,646,961)		(1,389,177)
Total Liabilities and Stockholders' Equity (Deficit)	$	8,586	$	14,844

The accompanying notes are an integral part of the financial statements

10

Safe Technologies International, Inc.

Consolidated Statements of Operations

for the years  ended December 31, 2007 and 2006

	2007		2006
REVENUES
Sales, net of customer returns	$	12,117	$	27,450
Net sales		12,117		27,450
COST OF OPERATIONS
Cost of operations		13,200		22,975
Total cost of operations		13,200		22,975
Gross Profit (Loss)		(1,083)		4,475
OPERATING EXPENSES
Selling, general and adminstrative expenses		84,610		102,128
Total operating expenses		84,610		102,128
Operating income (loss)		(85,693)		(97,653)
OTHER INCOME (EXPENSE)
Interest expense		(172,091)		(137,593)
Total other income (expense)		(172,091)		(137,593)
Loss before provision for income taxes		(257,784)		(235,246)
Income taxes		—		—
Net income (loss)	$	(257,784)	$	(235,246)
Net income (loss) per common share, basic	$	(0)	$	(0)
Weighted average number of common shares outstanding		932,631,602		932,631,602

The accompanying notes are an integral part of the financial statements

11

Safe Technologies International, Inc.

Consolidated Statements of Stockholders' Equity (Deficit)

December 31, 2007

	Number of       Shares	Common       Stock	Additional Paid-In   Capital	Subs.     Received	Accumulated Deficit
BALANCE, December 31, 2005	932,631,602	9,326	7,441,803	12,000	(8,617,060)
Net loss					(235,246)
BALANCE, December 31, 2006	932,631,602	9,326	7,441,803	12,000	(8,852,306)
Net loss for  Twelve  months					(257,784)
BALANCE, December 31, 2007	932,631,602	$  9,326	$ 7,441,803	$ 12,000	$(9,110,090)

The accompanying notes are an integral part of the financial statements

12

Safe Technologies International, Inc.

Consolidated Statements of Cash Flows

For the years  Ended December 31,  2007 and 2006

	2007		2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(257,784)	$	(235,246)
Adjustments to reconcile net (loss) to net cash provided by
operating activities:
Bad debt expense		5,670		7,686
Changes in operating assets and liabilites:
(Increase) decrease in accounts receivable		2,083		741
(Increase) decrease in other assets		(46)		2,330
Increase (decrease) in accounts payable and accrued expenses		6,415		(21,260)
Increase (decrease) in accrued interest		172,091		129,906
Increase (decrease) in deferred revenue		(100)		(1,503)
Net cash provided (used) by operating activities		(71,671)		(117,346)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided (used) by investing activities		—		—
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in shareholders loans		68,500		123,000
Net cash provided (used) by financing activities		68,500		123,000
Net increase (decrease) in cash		(3,171)		5,654
CASH and equivalents, beginning of period		9,948		4,294
CASH and equivalents, end of period		6,777		$     9,948
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Payment of taxes in cash	$	—	$	—
Expenses paid with common stock	$	—	$	—
Payment of interest in cash	$	—	$	—

The accompanying notes are an integral part of the financial statements

13

Safe Technologies International, Inc.

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

The Company was incorporated under the laws of the State of Delaware on May 21, 1987 as Safe Aid Products, Inc.  On February 9, 1998, the Company changed its name to Safe Technologies International, Inc.  Safe Technologies International, Inc. (Safe Tech) is a multi-faceted company specializing in Internet services and products.

a) Principles of consolidation.-

The consolidated financial statements include the accounts of Safe Technologies International, Inc. and its subsidiaries, Total Micro Computers, Inc., Connect.ad, Inc., Connect.ad Services, Inc. and Internet Associates International, Inc.  All material inter-company transactions and balances have been eliminated in the consolidated financial statements.

b) Use of estimates.-

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States.  In preparing the financial statements, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the balance sheets and statements of operations for the years then ended.  Actual results may differ from these estimates.  Estimates are used when accounting for allowance for bad debts, collectibility of accounts receivable, amounts due to service providers, depreciation, litigation contingencies, among others.

c) Revenue recognition.-

Revenues of Safe Technologies International, Inc. are recognized at the time the services are rendered to customers.  Services are rendered when the Company’s representatives receive the customer’s requests and completes the customer’s orders. Quarterly hosting fees are charged in advance, and recognized as earned.

d) Net loss per share, basic.-

Net income per share is computed by dividing the net income by the weighted average number of shares outstanding during the period.  Net income per share, diluted, is not presented as no potentially dilutive securities are outstanding.

e) Cash equivalents.-

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents, accounts receivable and accounts payable are short-term in nature and the net values at which they are recorded are considered to be reasonable estimates of their fair values.  The carrying values of notes payable are deemed to be reasonable estimates of their fair values.

f) Concentration risks.-

The Company’s sources of revenue and accounts receivable are comprised primarily of customers in the Internet industry.  The Company requires no collateral from its customers.

g) Advertising.-

Advertising costs, which are included in selling, general and administrative expenses, are expensed as costs are incurred.  

h) Deferred revenue.-

Deferred income arises in the normal course of business from advance payments for services.

i) Fixed assets.-

14

Fixed assets are recorded at cost.  Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets of generally five or ten years.  Expenditures for maintenance and repairs are charged to operations as incurred.  Fixed assets were fully depreciated for the year ended December 31, 2007

j) Intangible assets.-

The Company continually evaluates the carrying value of goodwill and other intangible assets to determine whether there are any impairment losses.  If indicators of impairment are present in intangible assets used in operations and future cash flows are not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in the period identified.

(2) Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company’s financial position and operating  results raise substantial doubt about the Company’s ability to continue as a going concern, as reflected by: the net loss of $257,784  for the twelve months ended December 31, 2007, $235,246  for the year December 31, 2006, and the total cumulative loss of approximately $9,110,090. The ability of the Company to continue as a going concern is dependent upon developing sales and obtaining additional capital and financing.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

(3) Income Taxes

Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes.  The Company had net operating loss carry-forwards for income tax purposes at December 31, 2006 of approximately $7,080,000 with the latest expiring $257,000, $272,000, $236,000, $418,000 and $368,000, at December 31, 2022, 2021, 2000, 2019 and 2018, respectively.  The Company has established a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.

The differences between Federal income tax rates and the effective income tax rates are:

	December 31, 2007	December 31, 2006
Statutory federal income tax rate	34%	34%
Valuation allowance	(34)	(34)
Effective tax rate	—	—

(4) Stockholders’ Equity

The Company has authorized 999,999,000 shares of $.00001 par value common stock, with 932,631,602 shares issued and outstanding. Rights and privileges of the preferred stock are to be determined by the Board of Directors prior to issuance.

(5) Commitments and Contingencies

The Company rents office space in Boca Raton, Florida under an annual lease that commenced in October 2005. The total rent for 2007 was $5,412.  Future lease expenses are approximately $5,700 in 2008.

(6) Short-Term Debt

At December 31, 2007 and December 31, 2006, total short-term debt consisted of the following:

	December 31, 2007		December 31, 2006
12% Notes and Loans payable to a shareholder and related affiliates, unsecured, and due upon demand.  Upon default, the notes become due immediately at an interest rate of 18%.	$	1,463,309	$	1,255,934
Total short-term notes	$	1,463,309	$	1,255,934

15

Interest expense for 2007 was $172,091 and $137,593 for the year ended December 31, 2007.  All the balances were unpaid and accrued.  The 2006 accrued interest balance was added to the principle balance as of January 1, 2007.

(7) Recent Accounting Pronouncements

In May 2007, the FASB issued FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 (“the FSP”), which provides guidance for determining whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits.  Under the FSP, a tax position could be effectively settled on completion of examination by a taxing authority is the entity does not intend to appeal or litigate the result and it is remote that the taxing authority would examine or re-examine the tax position.  The Company does not expect that this interpretation will have a material impact on its financial statements.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,” which replaces SFAS No. 141, “Business Combinations,” which establishes how an acquiring company recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed (including intangibles) and any non-controlling interests in the acquired entity.  SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  The Company does not expect that this interpretation will have a material impact on its financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.”  SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary.  It also amends certain of ARB 51’s consolidation procedures for consistency with the requirements of SFAS No. 141(R).  SFAS No. 160 is effective for fiscal years beginning December 15, 2008.  The Company does not expect that this interpretation will have a material impact on its financial statements.

16

ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no disagreements with Accountants on Accounting and Financial Disclosure in 2007.

ITEM 8A.

CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information, including financial information, required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time frames specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its chief executive officer, who is currently serving as the Company's principal financial officer, to allow timely decisions regarding required disclosure based closely on the definition of disclosure controls and procedures in  Rule 13a-15(f). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control, objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of the end of the period covered by this report, based on an evaluation of the Company’s controls and procedures, the Company's chief executive officer and principal financial officer concluded that the Company's disclosure controls and procedures, including those pertaining to financial disclosure, were effective.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

There have been no significant changes in the Company's internal controls, or in other factors that could significantly affect the internal controls, during the last fiscal quarter.

17

PART III

ITEM 9.

DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

The executive officers and directors of the Company are listed below.  Each director was appointed for a term of one year and until their successor is duly elected.

Name	Age	Position Held with Registrant
Valda Reinbergs	56	Director, Secretary
Randi Swatt	48	Director, acting Chief Executive Officer
Bruce E. Taylor	53	Director
Glenn Wistey		Director

Valda Reinbergs has served as a Director and Secretary of the Company since November 12, 2004. Ms. Reinbergs provides accounting services, on an independent basis, to various small companies.

Randi Swatt has served as a Director and acting Chief Executive Officer of the Company since August 13, 2004. Ms. Swatt is owner of EC Affiliates LLC, a consultant to sales and marketing organizations.  From March 2002 until November 2003, Ms. Swatt was Chief Operating Officer of The Chabrra Group, which provided operational and management services for commonly owned companies.  From February 2004 through July 2004 Ms. Swatt was a Director of Internet Logistix, GmhB located in Germany.   From May 2003 through February 2004, Ms. Swatt was a Director of Chhabra International, Ltd., located in Dublin Ireland. Ms. Swatt was President of Internet Associates International, Inc., a web site development and hosting company, from its inception in 1998 until her resignation in March 2002.  Internet Associates International was acquired by us in February 1999.

Bruce E. Taylor has served as a Director since August 2004.  From 1996 to 1999, when the company was sold, Mr. Taylor was President of Telesys, Inc., a consultant to telecommunications companies.  Since then, Mr. Taylor has been an independent business consultant, primarily to the telecommunications industry.

Glenn Wistey has been a Director since August 2004.  We have lost contact with Mr. Wistey and, as a result, we are considering recommending shareholder action to remove him from the Board.

AUDIT COMMITTEE AND CODE OF ETHICS

We have not formally appointed an audit committee, and the entire Board of Directors currently serves the function of an audit committee.  Because of the small number of persons involved in management of the Company, we do not have an audit committee financial expert serving on our Board.  We have not yet adopted a code of ethics applicable to our chief executive officer and chief financial officer, or persons performing those functions, because of the small number of persons involved in management of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Our directors and executive officers, and beneficial owners of more than ten percent of our stock, are required by Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to report to the SEC their transactions in, and beneficial ownership of, our common stock, including any grants of options to purchase common stock.  

None of our directors have yet filed with the SEC the Form 3 required of them as a director.  To our knowledge, none of them have bought or sold any of our stock since their appointment as directors.

ITEM 10.

EXECUTIVE COMPENSATION

The following table sets forth all compensation paid or earned for services rendered to the Company in all capacities during the years ended December 31, 2007, 2006 and 2005, by our acting Chief Executive Officer (the "Named Officers").  No other executive officer received total annual salary, bonus and other compensation in excess of $100,000 in those periods.

18

		Annual Compensation
Name And Principal Position	Year	Salary ($)	Bonus ($)	Other Annual Compensation ($)
Randi Swatt (acting CEO)	2007 2006 2005	0 0 0	0 0 0	0 0 10,425 (1)

———————

(1)

Represents 6,950,000 shares of restricted common stock, valued at $.0015 per share.

Options Granted and Options Exercised During 2007

The Company did not grant any options during the fiscal year ended December 31, 2007. None of the Company's directors or executive officers own any options to purchase shares of the Company's common stock.

ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the number of shares of the Company's Common Stock that are beneficially owned by (i) each executive officer of the Company, (ii) each director of the Company and (iii) each shareholder of the Company who owns more than 5% of the Company's Common Stock as of December 31, 2007. An asterisk indicates beneficial ownership of less than 1% of the Company's outstanding stock. Except as otherwise indicated, each of the shareholders listed below has voting and investment power over the shares beneficial owned and the address of each beneficial owner is c/o the Company at 123 NW 13 Street, Suite 30408, Boca Raton, FL 33432. As of December 31, 2007, there were issued and outstanding 932,631,602 shares of the Company's common stock.

Name and Address of Beneficial Owner	Shares Beneficially Owned	Percent of Class
Ruth Deutsch 123 NW 13 Street, Suite 30408 Boca Raton, FL 33432 Shareholder	450,870,657(1)	48.3
Franklin Frank 123 NW 13 Street, Suite 30408 Boca Raton, FL 33432 Shareholder	450,870,657(1)	48.3
Valda Reinbergs 123 NW 13 Street, Suite 30408 Boca Raton, FL 33432 Director and Secretary	8,264,161(2)	31
Randi Swatt 123 NW 13 Street, Suite 30408 Boca Raton, FL 33432 Director and acting CEO	9,990,370	1.1
Bruce E. Taylor 523 Michigan Ave. Lakeland, FL 33801 Director	0	31
Glenn Wistey Address unknown	0(3)	31
All Officers and Directors as a group (4 persons)	18,254,531	2.0

———————

(1)

Includes 34,000,000 shares held by LVDB, Inc., a corporation controlled by Franklin Frank, Ms. Deutsch's husband, 34,000,000 shares held by Franklin Frank, 225,000,000 shares beneficially owned by Mr. Frank pending transfer to Mr. Frank or an entity designated by him, 4,000,000 shares by Lenore Hardy, Mr. Frank's daughter, and 2,000,000 shares owned by Charles Frank, Mr. Frank's son. Ms. Deutsch disclaims any beneficial interest in the shares held by her husband.

19

(2)

Represents shares held by Ms. Reinbergs’ husband.

(3)

This information is presented to the best of our knowledge, since we have not been able to contact Mr. Wistey.

ITEM 12.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Franklin Frank and/or entities controlled by him have lent us money from time to time in order to fund our operations.  In addition, Mr. Frank and/or affiliates purchased two notes given by us to former officers for loans to us.  The total amount we now owe to Mr. Frank and/or affiliates is $1,640,400as of December 31, 2007.

ITEM 13.

EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibit Index

31.1

Rule 13a-14(a)/15d-14(a) Certification – acting Chief Executive Officer

31.2

Rule 13a-14(a)/15d-14(a) Certification – acting Chief Financial Officer

32

Section 1350 Certifications

(b) Reports on Form 8-K

The Company filed no Reports on Form 8-K during the quarter ended December 31, 2007.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

The aggregate fees billed to the Company for professional services rendered for the audit of the Company's annual financial statements, review of the Company's quarterly financial statements, and other services normally provided in connection with statutory and regulatory filings or engagements was $24,000 in 2006 and $25,000 in 2007.

TAX FEES

The aggregate fees billed to the Company for professional services rendered for completion of the Company's tax returns was $850 in 2006 and $925 in 2007.

20

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.

Date: March 31, 2008

SAFE TECHNOLOGIES INTERNATIONAL, INC.
By:	/s/RANDI SWATT
	Randi Swatt,
	acting Chief Executive Officer

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

Signature	Title	Date
/s/RANDI SWATT	Director, acting Chief Executive Officer	March 31, 2008
Randi Swatt	and acting Chief Financial Officer (principal executive officer and principal financial officer)
/s/VALDA REINBERGS	Director	March 31, 2008
Valda Reinbergs
	Director	March 31, 2008
Bruce E. Taylor

21