FORM 10KSB

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                   For the Fiscal Year Ended December 31, 2001

                          Commission File No. 000-17746

                  SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
      --------------------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)


             Delaware                                   22-2824492
    ---------------------------                 ------------------------------
    (State or other jurisdiction of                 (IRS Employer ID No.)
    incorporation or organization)

    2875 S. Ocean Boulevard
    Palm Beach, Florida                                  33480
    -------------------------------                   -------------
    (Address of principal executive                    (Zip Code)
    offices)

    Registrant's telephone number,
    including area code:                             (561) 832-2700
                                                   --------------------

         Indicate by check mark whether the registrant(l) 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 [  ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and if 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 10KSB.

         Issuer's revenues for the most recent fiscal year were $262,065.



<PAGE>


         The aggregate market value of the voting stock held by non-affiliates
of the Registrant was approximately $5,349,142.10 on December 31, 2001 based
upon the latest published average bid and ask price on such date.

         The approximate number of shares outstanding of the Registrant's common
stock on December 31, 2001 was 829,326,599. The approximate number of "A"
Warrants outstanding as of December 31, 2001 was 7,227,280 convertible into
7,227,280 shares of common stock at $.20 per share. Each outstanding "A"
Warrant, upon exercise, will result in the issuance of one redeemable "B"
Warrant. As of December 31, 2001 there were approximately 272,720 "B" Warrants
outstanding exercisable into 272,720 shares of common stock at $.50 per share.

         Transitional Small Business Disclosure Format (check one): Yes   No: X

<PAGE>

PART I

         THE FOLLOWING INFORMATION HAS BEEN DERIVED FROM OUR FINANCIAL
STATEMENTS AND SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND
RELATED NOTES THERETO INCLUDED IN PART 1- ITEM 1 OF THIS 10-KSB. THE DISCUSSION
FOLLOWING CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR
IMPLIED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" IN THIS FORM 10-KSB.

Item 1.  Business

OVERVIEW:

         Safe Technologies International, Inc., a Delaware corporation ( the
'Company' or 'we') is a multi-faceted company which has in the immediate past
focused on e-commerce. As of December 31, 2001, the Company has two active
subsidiaries: Internet Associates International, Inc., a Nevada corporation
("IAI"), and Connect.ad, Inc., along with Connect.ad of Florida, Inc., and
Connect.ad Services, Inc., all Florida corporations (collectively,
"Connect.ad"). Unless the context otherwise requires, the term "Company" refers
to the Company, IAI and Connect.ad.

         During 2001, we continued to evolve away from the e-commerce platform.
While the Company experienced frustration in its efforts to acquire additional
operating businesses, we stayed with the plan of controlled,
fiscally-responsible growth, and so avoided the drastic economic fluctuations
experienced by other internet-based companies. We have confidence that our
existing internet and e-commerce wholly-owned subsidiaries will provide
important niche services for small to medium-sized businesses, and that our
subsidiaries' management is entrepreneurial and flexible enough to accommodate
additional market shifts, which we are certain will occur in this new,
burgeoning industry. We think of the internet as a tool, such as the fax, the
telephone, and the like, which every business needs, and our management believes
it is cheaper for companies to outsource internet specialized service than to
build an internet department within their own company. As a result, we are
confident that the Company will participate in this growing industry's market
potential.
<PAGE>

IAI

         Internet Associates is an internet marketing and web site development
firm involved in the development, marketing, and hosting of web sites, as well
as the training of web developers. IAI owns and maintains five internet servers,
located in Boca Raton, Florida, with direct, redundant T-1 connections to the
internet. The internet servers are equipped with secure e-commerce applications,
shopping cart facilities and database driven applications.

         IAI specializes in designing and developing quality "market-driven" web
sites to allow business customers to tap into the e-commerce platform, combining
innovative web design and programming with traditional marketing and advertising
elements especially designed to promote interactivity and volume response to
each customer web site. IAI works with a variety of clients in providing web
design services. The web design work that we provide through IAI for each client
is customized. Hence, the contract price varies depending upon the nature and
scope of the engagement. Also, we provide web marketing services through IAI.
IAI's web marketing services consist of search engine submissions, banner
advertising placement and promotion through alternative media. IAI currently
provides web hosting to over 600 customers.

         In 2001, IAI acquired the licensing rights for an important software
package. The software package is designed for small businesses wishing to use
one all-inclusive software that provides detailed e-commerce capabilities,
inventory control, data management, etc. IAI has found that by offering this
added value service they have been able to increase the monthly ISP Hosting
customer charges by $20-$25 per month.

Connect.ad

         As originally planned, Connect.ad was to offer internet hosting and web
site development services through the sale of franchised territories. In 2000,
while Connect.ad was in the process of finalizing certain state filings, in
compliance with state franchising laws, the internet markets' interest shifted
dramatically. With the continued downturn in 2001, small companies and
entrepreneurs who had been potential candidates for purchasing a franchise were
no longer interested in making an investment in an internet franchise. As a
result, the Company decided to consider other potential usages and/or
modifications for the franchise. The Company has been looking for the right
opportunity to modify the franchise to include not only the primary internet
marketing and advertising focus, but also a growing industry bricks-and-mortar
business. The Company is reviewing several possibilities.

                                       2
<PAGE>

ICI

         To increase shareholder value, on April 24, 2001, the Company entered
into a letter of intent to merge ICI with a European company, Pro:Con A/S. We
anticipated that the merger would close during 2001. However, Pro:Con A/S, as a
leading supplier of e-commerce, mid and back office solutions and neutral
ticketing to the travel and related airline industry, with offices in six
countries, was impacted not only by the economic slowdown, but also by a sudden
loss of customers after the terrorist attacks of September 11, 2001. Pro-Con A/S
has been reorganizing its business in order to stay the course in this rapidly
changing economy. At this time, the Company has been assured by Rene Moller,
Managing Director of Pro:Con A/S, that the reorganization is almost complete, at
which time the merger should move forward.

Proprietary Rights

         The Company regards its copyrights, trademarks, trade names, trade
secrets, web sites and domain names as valuable intellectual property. The
Company relies upon copyright and trademark law, trade secret protection and
confidentiality or license agreements with its employees, customers, partners
and others to protect its proprietary rights. Effective intellectual property
protection may not be available, however, in every country in which products and
media properties are distributed or made available through the internet.

         Until recently, the Company operated four e-commerce web sites under an
exclusive, no-cost arrangement with Barbara Tolley, a director of the Company
and the owner of the four internet domain names. During 2001, the Company ceased
operation of the four sites temporarily. Ms. Tolley has agreed that the Company
will retain its exclusive rights to the sites should the Company decide to
reactivate the operation of these sites in the future.

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 brick-and-mortar merchants, as
well as with thousands of web sites operated by individuals, the government and
educational institutions.

         We believe that our ability to compete successfully in the internet
services market depends on a number of factors, including market presence; the
adequacy of our design team and customer and technical support services; the
capacity, reliability and security of our network infrastructure; our pricing
policy for services; our competitors and suppliers; our ability to support
existing and emerging industry standards; and industry and general economic
trends.

Employees

         As of December 15, 2001, the Company had four full-time employees and
six part-time employees. Of the employees, four are engaged in management
positions and two are in administrative positions.




                                       3
<PAGE>
History and Summary of Activity during Fiscal 2001, 2000 and 1999

         The Company was incorporated in Delaware on August 1, 1987 as Safe Aid
Products Incorporated. Our initial business purpose was to engage in research
and development regarding nasal and transdermal delivery of aspirin and other
drugs. Because of insufficient capital and insufficient market acceptance,
however, we were unsuccessful at executing this original business plan and
remained in the development stage. From 1993-1998, our principal business
objective was to find and merge with an operating company that would increase
shareholder value.

         On February 9, 1998, we completed a reverse merger with Intelligence
Network International, Inc., a Florida corporation ("INI"). Pursuant to the
terms of the merger agreement, we changed our name to Safe Technologies
International, Inc. As a result of the merger, we moved from the development
stage status to being a fully operating business. Our business as it existed
then consisted of a broad range of internet and technology based services and
products. We had two subsidiaries, Total Micro Computers, Inc. ("TMC") and GMG
Computers Consultants, Inc. d.b.a. Precision Imaging ("GMG"). TMC was a
wholesaler and retailer of custom designed and assembled computer systems and
related products and GMG was a digital pre-press company. In May, 1998, we also
formed a new subsidiary, Internet Commerce, Inc., a Florida corporation, to
house our various internet related activities.

         In December 1998, the Board of Directors decided to reverse our
acquisition of GMG. GMG's financial statements for the third quarter of 1998
were below expectations. On December 17, 1998, the Company, GMG and the former
GMG shareholders entered into a Reversion Agreement and Mutual General Release
Agreements in order to effectuate the reversal of the GMG acquisition. As part
of the Reversion Agreement, the former GMG shareholders returned their
14,000,000 shares of the Company's common stock to the Company for cancellation.

         During 1999, the Company made two acquisitions of Internet related
companies. On February 5, 1999, we completed the acquisition of IAI, an internet
marketing and web site development firm involved in the development, marketing
and hosting of web sites, and the training of web developers. The acquisition
price was based on the amount of IAI net profits for 1999, which ultimately
resulted in the exchange of all IAI shares for 25,000,000 shares of the
Company's common stock. The sale of the Company's stock by the former IAI
shareholders was limited for a period of three years.

         We closed on the acquisition of Connect.ad and its affiliated group of
companies as of September 30, 1999. We issued a total of 8,108,108 shares of the
Company's common stock in return for all of the Connect.ad stock. Connect.ad is
an internet marketing company franchisor. The former shareholders of Connect.ad
received an additional 3,822,394 shares of the Company's common stock because of
the terms of the Acquisition Agreement relating to the guaranteed stock price of
the Company.

         During 2000, the Company focused on developing its e-commerce web
sites, in order to take advantage of the market's interest in purchasing goods
and services online, as well as making one potential acquisition which did not
materialize.


                                       4
<PAGE>

         On April 24, 2001 the Company entered a letter of intent to merge ICI
with a European company, Pro:Con A/S. We anticipated that the merger would close
during 2001. However, the business of Pro:Con A/S, as a leading supplier of
e-commerce, mid and back office solutions and neutral ticketing to the travel
and related airline industry, with offices in six countries, was adversely
impacted by the events of September 11, 2001. Pro:Con A/S Management has been
reorganizing its business in order to stay the course in this rapidly changing
economy. At this time, the Company has been assured by Rene Moller, Managing
Director of Pro:Con A/S, that the reorganization is almost complete, at which
time the merger should move forward.

Item 2. Property

         The Company's principal executive office is located at 2875 Ocean
Boulevard, Palm Beach, Florida, where the Company leases approximately 1,000
square feet of office space. The Company has one year remaining on the lease, at
a monthly rent of $2,400. We relocated to our new space on February 20, 2001.
Prior to then, our address was 249 Peruvian Avenue, Suite FL, Palm Beach, FL
33480.

         In addition, IAI leases 1,000 feet of office space in Boca Raton,
Florida, at 123 N.W. 13th Street. The lease is structured with six-month renewal
periods. The monthly rent is $1,100. Connect.ad and ICI are located in the 2875
Ocean Boulevard, Palm Beach, Florida, offices.

Item 3.  Legal Proceedings

         A former shareholder of INI, prior to its merger into the Company, has
brought a lawsuit in Palm Beach County, Florida, against the Company and Barbara
Tolley, formerly the President of INI, claiming that he is entitled to more
shares in the Company than he received pursuant to the merger of INI into the
Company. The Company and Ms. Tolley deny the facts as asserted by the former
shareholder and are vigorously defending the lawsuit.

Item 4.  Submission of Matters to a Vote of Security Holders.

         No matters have been submitted to a vote by security holders.

                                       5
<PAGE>


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 and ask
prices, as reported by the National Quotation Bureau, Inc., for our common stock
for the calendar periods indicated.

                               Common Stock
                               ------------
                                   Bid            Asked
                   Period        High/Low       High/Low
                   ------       -----------    -----------
                    1999

                 lst Quarter    .48/.039       .265/.029
                 2nd Quarter    .182/.03       .087/.03125
                 3rd Quarter    .06/.016       .05/.017
                 4th Quarter    .07935/.013    .11/.0049

                    2000

                 lst Quarter    .55/.062       .56/.064
                 2nd Quarter    .2/.056        .205/.06
                 3rd Quarter    .075/.037      .08/.039
                 4th Quarter    .0415/.017     .043/.018

                    2001

                 1st Quarter    .054/.0165     .058/.01737
                 2nd Quarter    .027/.015      .028/.016
                 3rd Quarter    .021/.008      .023/.01
                 4th Quarter    .016/.0075     .02/.0085

         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 26, 2002 was
$.00925 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.

Common Stock and Warrants

         As of December 31, 2001, we had issued and outstanding 829,326,599
shares of our common stock, 7,227,280 Class A Warrants and 272,720 Class B
Warrants. Upon exercise, each Class A Warrant entitles the holder to purchase
one share of common stock for $.20 per share and to receive one redeemable Class
B Warrant. Upon exercise, each Class B Warrant entitles the holder to purchase
one share of common stock for $.50 per share. The exercise periods of the Class
A and Class B Warrants have been extended by the Board of Directors through
January 8, 2003. All of these numbers are adjusted to reflect the Company's
ten-for-one reverse stock split effected as of February 9, 1998.

Holders of Record

         As of December 31, 2001, there were approximately 13,492 shareholders
of record of our common stock, not including beneficial owners holding shares
through nominee name.

                                       6
<PAGE>

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 continue
to follow a policy of retaining earnings in order to finance the development of
our business.

Item 6.  Management's Discussion and Analysis or Plan of Operations.

RESULTS OF OPERATION(S)

         Comparison of the fiscal year ended December 31, 2001 ("2001") and
December 31, 2000 ("2000").

         Revenues were $262,065 for 2001 and were $471,946 for 2000,
representing a decrease of 44%. Approximately $0 of the 2001 revenues were
derived from ICI and $243,731 of the 2001 revenues were derived from IAI. The
balance of the 2001 revenues were from Connect.ad of South Fla., Inc. Much of
Connect.ad's revenues were a result of the forgiveness of debt by the Company.

         Cost of Sales were $51,479 in 2001 compared to $105,246 in 2000. The
decrease in Cost of Sales is a result reduced sales. Cost of Sales in 2001 were
$0 for ICI, $51,479 for IAI and $0 for Connect.ad of South Fla., Inc.

         Selling, general, and administrative expenses were $768,974 for 2001
compared to $3,246,241 for 2000. The decrease in selling, general, and
administrative expenses is a result of lower sales as well as significant cost
savings from a strategic refocus of organizational resources.

RISK FACTORS

         The company is engaged in providing support to those involved in
commerce on the Internet platform. This business involves many opportunities, as
well as significant risks, many of which are out of our control. Some of the
risks that we face are as follows:

         The viability of our customers is dependent upon their success in
e-commerce. The natured of e-commerce is continually developing. Customers who
are unable to evolve with the development of e-commerce may fail, and as a
result, we would lose a customer.

                                       7
<PAGE>

         We expect operating losses and negative cash flows.

         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. As we continue to deploy our
business plan, we expect to incur significant operating expenses particularly in
the sales, marketing and operations areas. These types of expenses will grow as
we expand the scope and reach of our operations. 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 will need to raise additional funds through the issuance of
equity, equity-related or debt securities. If we are unable to obtain additional
financing on reasonable terms to enable the development of our business plan, we
may never be able to completely implement our on-line strategy.

         The success of our business will depend on continued growth of on-line
commerce and the Internet.

         Our future revenues and profits depend upon the widespread acceptance
and use of the Internet and on-line services as a medium for commerce. Rapid
growth in the use of the Internet and on-line services is a recent phenomenon.
This growth may not continue. A sufficiently broad base of consumers may not
accept, or continue to use, the Internet as a medium of commerce. Demand for and
market acceptance of recently introduced products and services over the Internet
involves a high level of uncertainty.

         The internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic. Our
success will depend upon the development and maintenance of the Internet's
infrastructure to cope with this increased traffic. This will require a reliable
network backbone with the necessary speed, data capacity and security, and the
timely development of complementary products for providing reliable Internet
access and service. Major on-line service providers and the Internet itself have
experienced outages and other delays as a result of software and hardware
failures and could face such outages and delays in the future. Outages and
delays are likely to affect the level of Internet usage and processing of
transactions on our web sites. In addition, the Internet could lose its
viability because of delays in the development of adoption of new standards to
handle increased levels of activity or because of increased government
regulation. The adoption of new standards or government regulation may require
us to incur substantial compliance costs.

         Interruptions in service from third-parties could impair the quality of
our service.

         We will rely upon third-party computer systems and third-party service
providers, including Internet bandwidth providers. Any interruption in these
third-party services or a deterioration in their performance could impair the
quality of our service. If our arrangements with any of these third-parties were
to be terminated, we may not be able to find an alternative source of systems
support on a timely basis or on commercially reasonable terms.

         Our success depends upon the development and maintenance of superior
technology systems and infrastructure.

         In order to be successful, we must provide reliable, real-time access
to our systems for our customers and suppliers. As our operations grow in both
size and scope, domestically and internationally, we will need to continually
upgrade our systems and infrastructure to offer our customers and suppliers
enhanced products, services, features and functionality. The expansion of our
systems will require additional financial, operational and technical resource
expenditures before business volume might reach levels sufficient to yield
profitability, with no assurance that the volume of business will increase or
that profitability will be achieved. Consumers and suppliers will not tolerate a
service hampered by slow delivery times, unreliable service levels or
insufficient capacity, any of which could have a material adverse effect on our
business, operating results and financial condition.

                                       8
<PAGE>

         Our business is exposed to risks associated with on-line commerce
security and credit card fraud.

         Consumer concerns over the security of transactions conducted on the
internet or the privacy of users may inhibit the growth of the Internet and
on-line commerce. To transmit securely confidential information such as customer
credit card numbers, we will rely upon encryption and authentication technology.
Unanticipated events or developments could result in a compromise or breach of
integrity of our consumer transaction data. Our servers could also be vulnerable
to viruses transmitted over the Internet, which if not detected, could create a
service interruption.

         We may be subject to delays because of intentional, criminal third
party intervention.

         The events of September 11, 2001, demonstrated that no firm can be
completely secure from terrorist acts. Though we have taken several precautions
to prevent any disruptions from terrorist attacks, 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. In addition, a disruption could be the result of an
intentional attack on our computer systems. Disruptions could materially
adversely affect our revenues.

         Our business strategy of growth through business combinations leads to
unknown and unquantifiable risks.

         The company is attempting to expand it 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 disruption the Company's
ongoing business, the inability to retain key technical and managerial
personnel, the inability of management to maximize the financial and strategic
position of the Company through the successful integration of acquired
businesses, addition 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 the Company would be successful in overcoming these
risks or any other problems encountered in connection with such business
combinations, investments, joint ventures or other strategic alliances, or that
such transactions would not have a material adverse effect on the Company's
business, prospects, financial condition and results of operations.

                                       9
<PAGE>

         We depend upon the efforts of a few individuals and employees.

         Our success depends in large part upon the efforts of a few individuals
and our ability to attract, retain and motivate highly skilled employees. We
depend substantially on the services and performance of our senior management,
particularly Michael Posner, our President; Barbara L. Tolley, one of our
Directors; Michael Bhethana, our Chief Information Officer; and Brad L. Tolley,
our Secretary and Treasurer. These individuals may not be able to fulfill their
responsibilities adequately and may not remain with us. The loss of the services
of any executive officers or other key employees could hurt our business.

         We plan to growth into international markets.

         An element of the Company's future growth strategy is to increase the
distribution and sale of the Company's products into international markets. The
Company's existing and planned international operations are subject to political
and economic uncertainties, including, among other things, inflation , risk of
modification of existing arrangements with governmental authorities,
transportation, tariffs, export controls, government regulation, currency
exchange rate fluctuations, foreign exchange restrictions that limit the
repatriation of investments and earnings therefrom, changes in taxation,
hostilities or confiscation of property. Changes related to these matters could
have a material adverse effect on the Company.

FUTURE BUSINESS STRATEGY

         We believe that the Company, having survived the dot.com crash and
still being a vibrant participant in the internet industry, has benefitted from
a period of trial and error. The development of the internet to date has been
instructive. Several members of the Company's management, having been pioneers
in the internet industry, are also experienced business people.

         The Company's future business strategy is first to continue to add
experienced management personnel whose business philosophies are strongly
weighted toward earnings and value; and second, to evaluate, acquire, and
administer additional operating companies in growth industries which can operate
as individual profit centers, while benefitting and using the experienced
administration provided them under the Company's corporate umbrella.

         The most important new aspect of our business strategy is to acquire
minority interests in operating companies by merging them into one of our wholly
owned subsidiaries. We expect this to strengthen the Company's balance sheet
without incurring debt. Ultimately, as the stock retained by the Company is
sold, we expect the Company's cash position to be significantly improved.

Item 7.  Financial Statements

         Independent Auditor's Report................................F-1
         Consolidated Financial Statements
                  Balance Sheets.....................................F-2, F-3
                  Statements of Operations.......................... F-4
                  Statements of Changes in Stockholders Equity...... F-05 - F-10
                  Statements of Cash Flows.......................... F-11
         Notes to Consolidated Financial Statements................. F-12 - F-20

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 2001.

                                       10
<PAGE>

PART III

Item 9.  Directors, Executive Officers and Significant Employees

         The executive officers and directors of the Company during 2001 were as
follows:

         Name                     Age     Position Held with Registrant
         ------------------    --------   -----------------------------
         Charles N. Martus        80      Director
         Jack W. Tolley           79      Director
         Barbara L. Tolley        65      Director
         Robert L. Alexander      59      Director
         Michael Posner           41      President
         Brad L. Tolley           37      Secretary and Treasurer
         Michael Bhathena         35      Vice President and Chief Information
                                              Officer
         Randi Swatt              43      President of IAI

         Charles N. Martus has served as a Director of the Company since
February 9, 1998. Mr. Martus is a graduate of Dartmouth College, Hanover, New
Hampshire in 1944, and attended Amos Tuck School. Mr. Martus was a principal in
a gourmet food operation in Manhattan from 1946 until 1990. During the past ten
years, Mr. Martus has been retired.

         Jack W. Tolley has served as a Director of the Company since February
9, 1998. Mr. Tolley is a graduate of Dartmouth College, Hanover, New Hampshire
in 1947, and attended Cornell University in Ithaca, New York. Mr. Tolley founded
J.W. Tolley & Associates in 1953, a national marketing and advertising agency
and served as President until 1975. Mr. Tolley was a Director and consultant to
Westchester Ltd., Inc. until 1982. Mr. Tolley has been pursuing a career as an
artist and painter of Southwestern American art and as an author of several
books on Florida and immigration for foreign nationals. Mr. Tolley is the
husband of Barbara L. Tolley and the father of Brad L. Tolley.

         Barbara L. Tolley has served as Chief Executive Officer and a Director
of the Company since February 9, 1998. Ms. Tolley received her BA from Ohio
State University in 1959. In 1975, she founded Westchester Ltd., Inc., a
privately held company specializing in international marketing and advertising
in which she held the office of President until 1989. Ms. Tolley founded
Property Intelligence, LTD, in 1990, an international real estate marketing and
consulting company. Ms. Tolley founded Property Intelligence International,
Inc., (PII), in 1992, a Real Estate online business information and database
service in collaboration with AT&T's Business Services. Since 1996, Ms. Tolley
has been one of the majority stockholders in Villas International Realty, Inc.,
an international holiday rental agency. Ms. Tolley is the wife of Jack W. Tolley
and the mother of Brad L. Tolley.

                                       12
<PAGE>

         Robert L. Alexander has served as a Director of the Company since
February 9, 1998. Mr. Alexander has been in management with Fortune 500
companies, and has had start up responsibility with privately held corporations
during his career. Mr. Alexander was President of International Communications
Systems (ICS) from 1991 to 1993. He was President of United Communications
Systems (USC) from 1993-1994, a telephone reseller company in select markets.
Mr. Alexander founded his own company, Comstar International, Inc., master
distributor contracts with GE Capital Communications Services in 1994. He was
recruited by Systems Communications, Inc., as CEO responsible for operations of
communications companies acquired and merged into the public company. Since
April 1997, Mr. Alexander has been President of International Teledata
Corporation, responsible for its transition from a privately held company to a
public company.

         Michael Posner has been President of the Company since August, 2000.
Mr. Posner is a shareholder in the law firm of Ward, Damon & Posner where he has
been since 1989. He is a member of the Florida Bar. Mr. Posner received his
Juris Doctor in 1985 from the University of Florida.

         Brad Tolley is a graduate of Phillips Academy in Andover, Massachusetts
in 1982, and attended Rollins College in Winter Park, Florida. He was employed
by Westchester Ltd., Inc., as an Account Executive from 1985 to 1989. From
1990-1992, Mr. Tolley was employed by a wholly-owned subsidiary of Dresdner Bank
in Germany. Mr. Tolley has worked with high net individuals and companies in the
past such as Barnett Bank of Florida and Goldome Bank of New York. Mr. Tolley
has more than fifteen years experience in venture capital and finance placement.
He continues to cultivate these relationships and network with new ones for
information and growth. Currently, Mr. Tolley is President of Tolley
Investments, Inc., a privately held company.

         Michael Bhathena has served as the Chief Information Officer of the
Company since February 9, 1998. Mr. Bhathena holds a B.A. in Computing &
Statistics and a masters degree in computing science, from the University of
Kent in Great Britain. Mr. Bhathena served as an assistant trader and then in
the finance department at the Hong Kong & Shanghai Banking Corporation's (HSBC)
City of London Offices from 1986-1988. Mr. Bhathena served as a voice and data
communications executive for the Infocheck Group, Ltd. from 1992-93, a pioneer
in providing on-line credit information to British companies. Mr. Bhathena was
employed and served as President of PII Ltd., United Kingdom, which is an
affiliate of PII, one of the Internet Companies, from 1993-1995.

         Randi Swatt has served as President of the Company's IAI subsidiary
since January, 1999. Prior to IAI, she was President of CGI Marketing, Inc. From
1994-1996, she owned and operated Magazine Marketing, Inc. Prior to 1994, she
was the Vice President of Marketing for Halsey Publishing Co, Inc. Fort
Lauderdale, FL. Halsey published many of the largest in-flight magazines,
including Delta Air Lines' in-flight publication, SKY Magazine. Randi Swatt is a
speaker and trainer on the topics of marketing and internet business
development.

                                       13
<PAGE>

Item 10.  Executive Compensation

Summary Compensation Table

         The following table sets forth the aggregate compensation paid to
Barbara L. Tolley, as the Company's Chief Executive Officer (the "Named
Executive Officer") by the Company. None of the other executive officers of the
Company received compensation in excess of $100,000 during the fiscal years
ended December 31, 2001, 2000, or 1999. Except as set forth in the table below,
no bonuses or other compensation were paid during the fiscal year ended December
31, 2001.
<TABLE>
<CAPTION>

                                                         Annual Compensation
                                                         -------------------
                                                           Fiscal                          Other Annual
  Name of Principal      Position                           Year   Salary        Bonus     Compensation
  -----------------      --------                           ----   ------        -----     ------------

<S>                       <C>                               <C>      <C>           <C>       <C>
Barbara L. Tolley,       Chief Executive Officer (2)        2001     0(1)          0         0
                                                            2000     0(1)          0         $125,000(4)
                                                            1999     0(1)          0         $120,000(3)
</TABLE>

(1) Ms. Tolley joined the Company as its Chief Executive Officer on February 9,
1998. Under her employment agreement, Ms. Tolley was entitled to receive an
annual salary of $120,000 in 1998, 1999 and 2000. Because of the Company's
financial condition, however, Ms. Tolley elected not to receive her salary in
fiscal 2001, 2000, 1999 and 1998.

(2) The Company and Ms. Tolley agreed not to renew her employment contract as
CEO in 2001. Ms. Tolley continues on the Board of Directors as well as
administering the executive functions of the Company.

(3) The Board of Directors granted Ms. Tolley an aggregate of 11,000,000 stock
awards pursuant to the Company's 1998 Incentive Stock Plan and the Year 2000
Stock Award Plan. The awards were granted as of December 31, 1999 at a value of
$.045.

(4) The Board of Directors granted Ms. Tolley 2,000,000 stock awards pursuant to
the Company's Y2000 Incentive Stock Plan. The awards were granted as of December
31, 2000 at a value of $0.045.

Options Granted to the Named Executive Officer During Fiscal 2001

         The Company did not grant any options to the Named Executive Officer
during the fiscal year ended December 31, 2001. As noted in the Summary
Compensation Table, however, the Named Executive Officer received stock awards
in lieu of compensation for services rendered through February 2001.

Aggregated Option Exercises and Fiscal Year-End Option Value Tables

         As of December 31, 2001, Ms. Tolley did not own any options to purchase
shares of the Company's common stock. As noted in the Summary Compensation
Table, however, the Named Executive Officer has received stock awards in lieu of
compensation.

Employment Agreement

         The Company entered into an employment agreement with Barbara Tolley,
as Chief Executive Officer, effective as of February 9, 1998. The term of the
agreement was for two years, with an option exercisable by Ms. Tolley to extend
the employment agreement for an additional year. Ms. Tolley elected to renew her
contract through February 9, 2001. The Company and Ms. Tolley agreed not to
renew her employment contract as Chief Executive Officer in 2001. Ms. Tolley
continues on the Company's Board of Directors, as well as administering the
executive functions of the company.

         As disclosed in the Summary Compensation table, Mrs. Tolley did not
receive her annual salary or any of the other benefits to which she was entitled
to under the employment agreement in fiscal 2001, 2000, and 1999. Ms. Tolley,
however, did receive stock awards during 1998, 1999 and 2000.

                                       14
<PAGE>

         Ms. Tolley received an aggregate of 30,000,000 shares of restricted
common stock as payment for deferred salary, bonus and benefits, for the years
1998, 1999, 2000 and up to and including February, 2001.

1998 Incentive Stock Plan and Year 2000 Stock Award Plan

         In April 1998, the Company adopted a stock option plan called the "Safe
Technologies International, Inc. -1998 Incentive Stock Plan". (the "Incentive
Stock Plan"). The Incentive Stock Plan is intended to provide incentives to, and
awards for, certain eligible employees, officers, directors and consultants who
have contributed and will continue to contribute to the success of the Company.

         The Incentive Stock Plan provides for the granting of nonstatutory
stock options, restricted stock grants and stock awards. The Company has
reserved up to 45,000,000 shares of common stock under the Incentive Stock Plan,
consisting of a maximum of 30,000,000 restricted stock grants and 15,000,000
stock awards. The 1998 Stock Plan is administered by the Compensation Committee
of the Board of Directors.

         In December 1999, the Company adopted a stock option plan called the
"Safe Technologies International, Inc. - Year 2000 Stock Award Plan " (the "Year
2000 Stock Award Plan"). The Year 2000 Stock Award Plan is intended to provide
incentives to, and awards for, certain eligible employees, officers, directors
and consultants who have contributed and will continue to contribute to the
success of the Company. The Year 2000 Stock Plan provides for the granting of up
to 30 million stock awards. The Year 2000 Stock Award Plan is administered by
the Compensation Committee of the Board of Directors.

         Under both plans, the Company awarded 3,000,000 shares during 2001,
14,450,000 shares during 2000, 18,770,7674 shares during 1999, and 7,325,000
shares during 1998 to its officers, directors and consultants.

Director Compensation

         Directors receive no compensation for services rendered as members of
the Company's Board of Directors. Charles Martus, Jack Tolley,and Robert
Alexander however, who are directors of the Company, and provided consulting
services to the Company outside of the scope of their duties as directors
received stock awards in the amount of 200,000 shares each in 2000. No
compensation has been made to Directors for 2001, to date.

                                       15
<PAGE>

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 will be 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, 2001. An asterisk indicates beneficial ownership
of less than 1% of the outstanding Safe Aid Common Stock after the Merger.
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, 2875 S. Ocean Blvd., Palm Beach, Florida
33480. As of December 31, 2001, there were issued and outstanding 829,326,599
shares of the Company's common stock.

     Name of                                                 Percent of Class
Beneficial Owner               Amount and Nature         Of Beneficial Ownership
----------------               -----------------         -----------------------

Ruth Deutsch (2)               225,870,657                        27.24%
Shareholder

Franklin Frank (3)             225,870,657                        27.24%
Shareholder

Brad L. Tolley(1)              253,050,000                        30.51%
Secretary, Treasurer

Barbara L. Tolley (1)          248,100,000                        29.92%
Director

Jack W. Tolley                     800,000                         *
Director

Charles N. Martus                  400,000                         *
Director

Michael Posner                   3,000,000                         *
President

Michael Bhathena                 1,100,000                         *
Chief Information Officer

All Officers and Directors     484,220,657                        58.25%
and 5% beneficial owners
as a group (4)


* Indicates less than 1% of the class

(1) Includes 247,300,000 shares held by the Lang Family Trust. Barbara Tolley
and Brad Tolley are the co-trustees and beneficiaries of the trust.

(2) Includes 34,000,000 shares held by LVDB, Inc., a corporation controlled by
Franklin Frank, Ms. Deutsch's husband, 34,000,000 shares by Franklin Frank,
4,000,000 shares by Lenore Hardy, and 2,000,000 shares owned by Charles Frank.
Ms. Deutsch disclaims any beneficial interest in the shares held by her husband.

(3) Includes 34,000,000 shares held by LVDB, Inc., a corporation controlled by
Mr. Frank, 34,000,000 shares by Franklin Frank, 4,000,000 shares by Lenore
Hardy, and 2,000,000 shares owned by Charles Frank. Also includes 151,870,650
shares held by Ruth Deutsch, Mr. Frank's wife. Mr. Frank disclaims any
beneficial interest in the shares held by his wife.

(4) The shares beneficially owned by Barbara L. Tolley and Jack W. Tolley, and
the shares beneficially owned by Ruth Deutsch and Franklin Frank, are counted
only once to avoid a misleading total.



                                       16
<PAGE>

Item 12.  Certain Relationships and Related Party Transactions

         During 1999, 25,000,000 shares of SFAD enured to the benefit of
Franklin L. Frank as a finders fee for his role in sourcing the origination of
the Company's acquisition of IAI. The IAI Acquisition Agreement called for Mr.
Frank to receive 6,000,000 shares of Common Stock, as Finders Fee. Mr. Frank has
received, to date, 375,000 shares of Common Stock, related to this transaction,
in July 26, 2000.

Item 13.  Exhibits and Reports on Form 8-K

         (a)      Exhibit Index

         2.1 Merger Agreement dated August 29, 1997 between Safe Aid Products
Incorporated, Inc. and Intelligence Network International, Inc. (filed as an
Exhibit to the Company's definitive proxy statement filed December 31, 1997 and
incorporated herein by this reference).

         2.2 Extension Agreement dated between Safe Aid Products Incorporated,
Inc. and Intelligence Network International, Inc. (filed as an Exhibit to the
Company's Annual Report on Form 10-KSB for 1998 filed March 31, 1999 and
incorporated herein by this reference).

         2.3 Acquisition Agreement dated February 5, 1998 by and between the
Company and Randi Swatt, John Reinbergs and David Fox, as the sole shareholders
of Internet Associates International, Inc (filed as an Exhibit to the Company's
Annual Report on Form 10-KSB for 1998 filed March 31, 1999 and incorporated
herein by this reference).

         2.4 Reversion Agreement, dated as of December 17, 1998, by and among
the Company, GMG, Gary Bart, Gail Bart and Dean Constantine (filed as Exhibit
2.1 to the Company's Form 8-K dated December 31, 1998 and incorporated herein by
this reference).

         3.1 Certificate of Incorporation and Amendment to the Company's
Certificate of Incorporation (filed as an Exhibit to the Company's Registration
Statement on Form S-18 filed February 18, 1988 and incorporated herein by this
reference).

         3.2 Amendment to the Company's Certificate of Incorporation filed with
the Delaware Secretary of State on February 6, 1998 (filed as an Exhibit to the
Company's definitive proxy statement filed December 31, 1997 and incorporated
herein by this reference).

         3.3 Bylaws (filed as an Exhibit to Company's registration statement on
Form S-18 filed February 18, 1988).

         4.1 Amended Form of Underwriters' Unit Purchase Warrant (filed as an
Exhibit to the Amendment No. 2 to the Company's Registration Statement on Form
S-18 filed April 11, 1988 and incorporated herein by this reference).

         4.2 Amended Form of Class A and Class B Common Stock Purchase Warrant
(filed as an Exhibit to Amendment No. 2 to the Company's Registration Statement
on Form S-18 filed April 11, 1988 and incorporated herein by this reference).

         4.3 Amended Form of Warrant Agreement (filed as an Exhibit to Amendment
No. 2 to the Company's Registration Statement on Form S-18 filed on April 11,
1988 and incorporated herein by this reference).

                                       17
<PAGE>

         4.4 Specimen Stock Certificate (filed as an Exhibit to Amendment No. 2
to the Company's Registration Statement on Form S-18 filed on April 11, 1988 and
incorporated herein by this reference).

         10.2 Employment Agreement dated February 5, 1998 between the Company
and Randi Swatt (filed as an Exhibit to the Company's Annual Report on Form
10-KSB for 1998 filed March 31, 1999 and incorporated herein by this reference).

         10.4 Mutual General Release Agreement dated December 17,1998 by and
among GMG, Gary Bart, Gail Bart, Dean Constantine and the Company (filed as
Exhibit 2.2 to the Company's Form 8-K dated December 31, 1998 and filed as an
Exhibit to the Company's Annual Report on Form 10-KSB for 1998 filed March 31,
1999 and incorporated herein by this reference).

         10.5 Safe Technologies International, Inc. - 1998 Stock Incentive Plan
(filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1998 and filed as an Exhibit to the Company's Annual
Report on Form 10-KSB for 1998 filed March 31, 1999).

         10.6 Acquisition Agreement dated September 30, 1999 by and between the
Company and John D. Colodny and Ruth Ann Saunders (filed as Exhibit 10.6 to the
Company's annual report on Form 10-KSB for the year ended December 31, 1999).

         10.7 Year 2000 Stock Award Plan (filed as an Exhibit 10 to the
Company's Registration Statement in Form S-8 filed on December 7, 1999 and
incorporated herein by this reference).

         16.1 Letter on Change in Certifying Accountant (filed as Exhibit 99.1
to the Company's Report on Form 8-K dated March 9, 1999 and filed as an Exhibit
to the Company's Annual Report on Form 10-KSB for 1998 filed March 31, 1999).

         16.2 Letter on Change in Certifying Accountants (filed as Exhibit 99.1
to the Company's Report on Form 8-K/A dated December 18, 2000.

         21.1 Subsidiaries of the Company (filed as Exhibit 21.1 to the
Company's annual report on Form 10KSB/A for the year ended December 31, 1999).

         23.1 Consent of Michaelson & Co. P.A. (filed herewith electronically).


         (b)      Reports on Form 8-K.

The Company filed six reports on Form 8-K during the fourth quarter ended
December 31, 2001.

(i)   The Company filed a report on Form 8K on February 21, 2001
(ii)  The Company filed a report on Form 8K on March 8, 2001
(iii) The Company filed a report on Form 8K on March 15, 2001
(iv)  The Company filed a report on Form 8K on May 1, 2001
(v)   The Company filed a report on Form 8K on May 24, 2001
(vi)  The Company filed a report on Form 8K on November 27, 2001

                                       18
<PAGE>

SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant caused this Amendment No. 1 to the Company's Annual Report on Form
10-KSB to be signed on its behalf by the undersigned, thereunto duly authorized.

SAFE TECHNOLOGIES INTERNATIONALS, INC.

By:  /s/ Michael  Posner
       -----------------
      Michael Posner
      President

Date:    March 26, 2002

         In accordance with the Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.


By: /s/ Michael Posner
       ---------------------------
      Michael Posner
      President

Date:    March 26, 2002

By: /s/Barbara L. Tolley
       ---------------------------
      Barbara L. Tolley
      Director

Date:    March 26, 2002

By: /s/ Brad Tolley
      ----------------------------
       Brad Tolley
       Chief Financial Officer

Date:    March 26, 2002

By: /s/ Charles N. Martus
      ----------------------------
       Charles N. Martus
       Director

Date:    March 26, 2002

By: /s/ Jack W. Tolley
       ---------------------------
      Jack W. Tolley
      Director

Date:    March 26, 2002

By: /s/ Robert L. Alexander
      ----------------------------
       Robert L. Alexander
       Director

Date:    March 26, 2002


                                       19

<PAGE>



                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                                  CONSOLIDATED
                              FINANCIAL STATEMENTS

                           DECEMBER 30, 2001 AND 2000


<PAGE>


                                TABLE OF CONTENTS




                                                                    Page
                                                                    ----

Independent Auditor's Report                                        F-1

Consolidated Financial Statements:

         Balance Sheets                                             F-2 - F-3

         Statements of Operations                                   F-4

         Statement of Changes in Stockholders' Equity               F-5 - F-9

         Statements of Cash Flows                                   F-10

Notes to Consolidated Financial Statements                          F-11 - F-18

<PAGE>


INDEPENDENT AUDITOR'S REPORT
----------------------------


To the Board of Directors and Shareholders
Safe Technologies International, Inc.
    And Subsidiaries
Palm Beach, Florida

We have audited the accompanying consolidated balance sheets of Safe
Technologies International, Inc., a Delaware corporation, and subsidiaries, as
of December 31, 2001 and 2000 and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits provide 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. and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 9 to the
consolidated financial statements, the Company incurred significant losses in
2001 and is completely reliant on the Internet industry for its operations.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
Note 9. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


/s/  MICHAELSON & CO., P.A.
---------------------------

March 14, 2002


                                      F-1
<PAGE>


                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)

<TABLE>
<CAPTION>


                                                                             2001       2000
                                                                           --------   --------
<S>                                                                        <C>        <C>
ASSETS

CURRENT ASSETS
--------------
  Cash                                                                     $ 23,742   $ 40,702
  Accounts Receivable (net of allowance for doubtful accounts                 9,518     24,895
     of $17,781 and $18,881 at December 31, 2001 and 2000, respectively)
  Other current assets                                                           --    120,000
                                                                           --------   --------

         TOTAL CURRENT ASSETS                                                33,260    185,597

PROPERTY & EQUIPMENT
--------------------
  Fixed assets (net of accumulated depreciation of $114,145 and
     $70,015 at December 31, 2001 and 2000, respectively)                   104,061    129,300

OTHER ASSETS
------------
  Deposits                                                                    9,201     12,889
  Goodwill, copyrights and trademarks (net of accumulated                   394,161    426,747
     amortization of $241,390 and $208,762 at December 31, 2001
     and 2000, respectively)
                                                                           --------   --------

         TOTAL OTHER ASSETS                                                 403,362    439,636
                                                                           --------   --------

TOTAL ASSETS                                                               $540,683   $754,533
                                                                           ========   ========
</TABLE>




          See Accompanying Notes to Consolidated Financial Statements


                                      F-2
<PAGE>
                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


<TABLE>
<CAPTION>


                                                                         2001          2000
                                                                     -----------    -----------

<S>                                                                  <C>            <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
-------------------
  Accounts Payable                                                   $    69,248    $    72,050
  Accrued Expenses                                                        73,733         42,042
  Notes Payable                                                          402,091        386,002
  Deferred Income                                                          4,515          4,515
  Lease Payable, current portion                                              --          1,700
                                                                     -----------    -----------

                      TOTAL LIABILITIES                                  549,587        506,309
                                                                     -----------    -----------

SHAREHOLDERS' EQUITY
--------------------
  Common Stock, par value $0.00001, 999,999,000 shares authorized,         8,293          8,056
     829,326,599 and 805,605,299 shares issued and outstanding
          as of December 31, 2001 and 2000, respectively
  Additional Paid-in Capital                                           6,930,864      6,599,060
  Accumulated Deficit                                                 (6,948,061)    (6,358,892)
                                                                     -----------    -----------

                    TOTAL SHAREHOLDERS' EQUITY                            (8,904)       248,224
                                                                     -----------    -----------

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                          $   540,683    $   754,533
                                                                     ===========    ===========
</TABLE>



          See Accompanying Notes to Consolidated Financial Statements




                                      F-3
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


                                                         2001           2000
                                                     -----------    -----------
REVENUE
  Sales, Net of Customer Returns                     $   262,065    $   471,946

EXPENSES
  Cost of Goods Sold                                      51,479        105,246
                                                     -----------    -----------

               GROSS PROFIT                              210,586        366,700
                                                     -----------    -----------
  Selling, General and Administrative Expenses:
     Advertising and Promotion                             6,152          5,972
     Bad Debt Expense                                     29,015         80,963
     Consulting Expense                                  122,000      2,555,015
     Depreciation and Amortization Expense                76,758         91,089
     Management Fees                                          --         25,000
     Salaries and Benefits                               193,500        106,370
     Subcontract Labor                                     2,700             --
     Legal and Professional Services                     209,623        175,911
     Telephone Expense                                    31,395         57,419
     Travel and Entertainment Expense                         --          4,805
     Equipment Lease                                         427         16,138
     Proxy and Broker Services                             3,340          4,675
     Postage                                                 969          1,783
     Licenses, Fees & Permits                              2,373          3,221
     Office Expense                                       26,050          7,537
     Rent                                                 47,869         35,257
     Other Expenses                                       16,803         75,086
                                                     -----------    -----------

     TOTAL SELLING, GENERAL & ADMINISTRATIVE
            EXPENSES                                     768,974      3,246,241
                                                     -----------    -----------

OTHER INCOME & (EXPENSES)
   Interest Income                                            --             --
   Impairment of Long-Lived Asset                             --        117,911
   Interest Expense                                       30,781         18,697
                                                     -----------    -----------

NET  (LOSS)                                          $  (589,169)   $(3,016,149)
                                                     ===========    ===========

NET  (LOSS) PER SHARE                                $   (0.0007)   $   (0.0037)
                                                     ===========    ===========


           See Accompanying Notes to Consolidated Financial Statements




                                      F-4
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)
<TABLE>
<CAPTION>

                                                              Common Stock         Capital      Paid In   Accumulated
                                                           Shares       Amount    Subscribed    Capital     Deficit        TOTAL
                                                        -----------  -----------  ----------- ----------- -----------   -----------
<S>                                                     <C>          <C>          <C>         <C>         <C>           <C>
Balance, December 31, 1999                              746,200,414  $     7,462  $    40,000 $ 3,714,589 $(3,342,742)  $   419,309

Issuance of shares of common stock to an officer as       1,000,000           10           --      49,990          --        50,000
  compensation for services provided, January 13,
  2000 ($0.05 per share)

Issuance of shares of common stock as reimbursement         300,000            3           --      14,997          --        15,000
  for expenses, January 13, 2000 ($0.05 per share)

Issuance of shares of common stock to an officer as       2,000,000           20           --      99,980          --       100,000
  compensation for services provided, January 13,
  2000 ($0.05 per share)

Issuance of shares of common stock to an officer as      30,000,000          300           --   1,499,700          --     1,500,000
  compensation for services provided, February 9,
  2000 ($0.05 per share)

Issuance of shares of common stock to an officer as       3,000,000           30           --     149,970          --       150,000
  compensation for services provided, February 15,
  2000 ($0.05 per share)

Issuance of shares of common stock for technology           324,003            3           --      19,997          --        20,000
  services valued at $0.0617 per share, May 31, 2000

Issuance of shares of common stock for legal services       500,000            5           --      39,045          --        39,050
  valued at $0.0781 per share, June 9, 2000
                                                        -----------  -----------  ----------- ----------- -----------   -----------

               Sub-total                                783,324,417  $     7,833  $    40,000 $ 5,588,268 $(3,342,742)  $ 2,293,359
</TABLE>



           See Accompanying Notes to Consolidated Financial Statements




                                      F-5
<PAGE>


                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)
<TABLE>
<CAPTION>

                                                              Common Stock          Capital    Paid In     Accumulated
                                                           Shares       Amount    Subscribed   Capital       Deficit        TOTAL
                                                         ----------- -----------  ----------- -----------  -----------   -----------
<S>                                                      <C>         <C>          <C>         <C>          <C>           <C>
                 Sub-Total                               783,324,417 $     7,833  $    40,000 $ 5,588,268  $(3,342,742)  $ 2,293,359

Issuance of shares of common stock, June 9, 2000,            500,000           5           --      74,995           --        75,000
  in exchange for cash to Ruth Deutsch (Franklin L
  Frank) ($0.15 per share)

Issuance of shares of common stock to an unrelated           150,000           2           --      11,713           --        11,715
  party for service bonus valued at $0.0781 per share,
  June 14, 2000

Issuance of shares of common stock for consulting            200,000           2           --      11,998           --        12,000
  services, June 14, 2000 ($0.06 per share)

Issuance of shares of common stock to an officer as          500,000           5           --      29,995           --        30,000
  compensation for services, June 14, 2000 ($0.06
  per share)

Issuance of shares of common stock for consulting            200,000           2           --      11,998           --        12,000
  services, June 14, 2000 ($0.06 per share)

Issuance of shares of common stock to an officer as       12,000,000         120           --     599,880           --       600,000
  compensation for services provided from February 9,
  1998 through June 30, 2000 ($0.05 per share)
                                                         ----------- -----------  ----------- -----------  -----------   -----------

                Sub-Total                                796,874,417 $     7,969  $    40,000 $ 6,328,847   $(3,342,742) $ 3,034,074
</TABLE>


           See Accompanying Notes to Consolidated Financial Statements


                                      F-6
<PAGE>


                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)
<TABLE>
<CAPTION>

                                                               Common Stock       Capital       Paid In   Accumulated
                                                          Shares        Amount   Subscribed     Capital     Deficit        TOTAL
                                                        -----------  ----------- -----------  -----------  -----------  -----------
<S>                                                     <C>          <C>         <C>          <C>          <C>          <C>
                 Sub-Total                              796,874,417  $     7,969 $    40,000  $ 6,328,847  $(3,342,742) $ 3,034,074

Issuance of shares of common stock for acquisition          375,000            4          --       22,496           --       22,500
  services, July 26, 2000 ($0.06 per share)

Issuance of shares of common stock to an officer          2,000,000           20          --      119,980           --      120,000
  as compensation for services, August 15, 2000
  ($0.06 per share)

Issuance of shares of common stock for consulting           450,000            4          --       37,796           --       37,800
  services, August 26, 2000 ($0.084 per share)

Issuance of shares of common stock for legal services       500,000            5          --       19,995           --       20,000
  on October 6, 2000 ($0.04 per share)

Issuance of shares of common stock to an officer            500,000            5          --       19,995           --       20,000
  as compensation for services, November 17, 2000
  ($0.04 per share)

Issuance of shares of common stock to an officer            500,000            5          --        9,995           --       10,000
  as compensation for services, December 20, 2000
  ($0.02 per share)

Issuance of shares of common stock in exchange for        4,405,882           44     (40,000)      39,956           --           --
  capital subscribed in 1998, December 31, 2000
                                                        -----------  ----------- -----------  -----------  -----------  -----------

                Sub-Total                               805,605,299  $     8,056 $        --  $ 6,599,060  $(3,342,742) $ 3,264,374
</TABLE>

           See Accompanying Notes to Consolidated Financial Statements


                                      F-7
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)
<TABLE>
<CAPTION>

                                                                  Common Stock      Capital      Paid In  Accumulated
                                                              Shares     Amount    Subscribed    Capital    Deficit       TOTAL
                                                           ----------- ----------- ----------- ----------- -----------  -----------
<S>                                                        <C>         <C>         <C>         <C>         <C>          <C>
                 Sub-Total                                 805,605,299 $     8,056 $        -- $ 6,599,060 $(3,342,742) $ 3,264,374

Net loss, December 31, 2000                                         --          --          --          --  (3,016,149)  (3,016,149)
                                                           ----------- ----------- ----------- ----------- -----------  -----------

Balance, December 31, 2000                                 805,605,299       8,056          --   6,599,060  (6,358,891)     248,225

Issuance of shares of common stock for legal                 1,000,000          10          --      19,990          --       20,000
  services, January 3, 2001 ($0.02 per share)

Issuance of additional shares of common stock                4,204,634          42          --          --          --           42
  based on terms of "Connect.ad, Inc." acquisition
  agreement, January 15, 2001

Issuance of shares of common stock in exchange               1,666,667          17          --      49,983          --       50,000
  for capital subscribed, February 15, 2001

Capital subscribed, per agreements dated May 31, 2001               --          --      32,000          --          --       32,000

Issuance of shares of common stock for legal                 1,000,000          10          --      19,990          --       20,000
  services, June 18, 2001 ($0.02 per share)

Issuance of shares of common stock to an officer as          5,000,000          50          --      99,950          --      100,000
  compensation for services, July 3, 2001 ($0.02 per share)
                                                           ----------- ----------- ----------- ----------- -----------  -----------

               Sub-Total                                   818,476,600 $     8,185 $    32,000 $ 6,788,973 $(6,358,891) $   470,267
</TABLE>


           See Accompanying Notes to Consolidated Financial Statements



                                      F-8
<PAGE>


                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)
<TABLE>
<CAPTION>


                                                                 Common Stock        Capital      Paid In   Accumulated
                                                              Shares       Amount   Subscribed    Capital     Deficit       TOTAL
                                                            ----------- ----------- ----------- ----------- -----------  -----------
<S>                                                         <C>         <C>         <C>         <C>         <C>          <C>
                 Sub-Total                                  818,476,600 $     8,185 $    32,000 $ 6,788,973 $(6,358,891) $   470,267

Issuance of shares of common stock to an officer as             750,000           8          --      14,992          --       15,000
  reimbursement for expenses, July 3, 2001 ($0.02 per share)

Issuance of shares of common stock to an officer as             350,000           3          --       6,997          --        7,000
  compensation for services, July 3, 2001 ($0.02 per share)

Capital subscribed, per agreements dated                             --          --      68,000          --          --       68,000
  September 5, 2001

Issuance of shares of common stock for legal                  1,000,000          10          --      19,990          --       20,000
  services, November 6, 2001

Issuance of shares of common stock in exchange for            8,749,999          87    (100,000)     99,913          --           --
  capital subscribed in 2001, November 10, 2001

Net loss, December 31, 2001                                          --          --          --          --    (589,169)    (589,169

                                                            ----------- ----------- ----------- ----------- -----------  -----------

Balance, December 31, 2001                                  829,326,599 $     8,293 $        -- $ 6,930,864 $(6,948,061) $    (8,904
                                                            =========== =========== =========== =========== ===========  ===========
</TABLE>


           See Accompanying Notes to Consolidated Financial Statements



                                      F-9
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)
<TABLE>
<CAPTION>


                                                                    2001           2000
                                                                -----------    -----------
<S>                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net (Loss)                                                    $  (589,169)   $(3,016,149)
  Adjustments to Reconcile Net Loss to Net
    Cash Provided by Operating Activities:
      Depreciation and Amortization                                  76,758         91,089
      Impairment of Long-Lived Asset                                     --        117,911
      Allowance for Doubtful Accounts                                (1,100)        16,126
   Change in Assets and Liabilities
       (Increase) decrease in Accounts Receivable                    16,478         85,310
       (Increase) decrease in Deposits                                3,688          3,085
       (Increase) decrease in Other Assets                          119,958        (93,674)
       Increase (decrease) in Accounts Payable                       (2,801)         6,836
       Increase (decrease) in Accrued Expenses                       31,690       (116,804)
       Increase (decrease) in Deferred Income                            --        (28,873)
       Increase (decrease) in Lease Payable - Current Portion        (1,700)           307
       Increase (decrease) in Shareholders' Loan                     16,089             --
                                                                -----------    -----------

                 NET CASH (USED) BY OPERATING
                         ACTIVITIES                                (330,109)    (2,934,836)
                                                                -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of Property and Equipment                               (18,892)        (3,316)
                                                                -----------    -----------

                 NET CASH USED BY INVESTING
                         ACTIVITIES                                 (18,892)        (3,316)
                                                                -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Increase (decrease) in Lease Payable                                  --         (1,014)
   Increase in Notes Payable                                             --        118,431
   Increase in Common Stock                                             237            594
   Increase (Decrease) in Capital Subscribed                             --        (40,000)
   Increase in Additional Paid-in Capital                           331,804      2,884,471
                                                                -----------    -----------

                 NET CASH PROVIDED BY FINANCING
                         ACTIVITIES                                 332,041      2,962,482
                                                                -----------    -----------

NET INCREASE (DECREASE) IN CASH                                     (16,960)        24,330

CASH, BEGINNING OF YEAR                                              40,702         16,372
                                                                -----------    -----------

CASH, END OF YEAR                                               $    23,742    $    40,702
                                                                ===========    ===========
</TABLE>



           See Accompanying Notes to Consolidated Financial Statements




                                      F-10
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


 1.      NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
         -------------------------------------------------------

         Nature of Business:
             Safe Technologies International, Inc. ("Safe Tech") and its
             subsidiaries is a multi-faceted company specializing in Internet
             services and products.

         Organization:
             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.

         Basis of Consolidation:
             The consolidated financial statements include the accounts of
             SafeTechnologies International, Inc. and its subsidiaries Internet
             Commerce, Inc., Total Micro Computers, Inc. (inactive), Connect.ad,
             Inc., Connect.ad Services, Inc., Connect.ad of South Florida, Inc.
             and Internet Associates International, Inc. All material
             intercompany transactions and balances have been eliminated in the
             consolidated financial statements.

         Use of Estimates:
             The preparation of financial statements in conformity with
             generally accepted accounting principles requires management to
             make estimates and assumptions that affect the reported amounts of
             assets and liabilities and disclosure of contingent assets and
             liabilities at the date of the financial statements and the
             reported amounts of revenues and expenses during the reporting
             period. Actual results could differ from those estimates.

         Revenue Recognition:
             Revenues of Safe Technologies International, Inc. and its'
             subsidiaries 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.

         Financial Instruments:
             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-11
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


1.       NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------------------
         (CONTINUED):
         ------------

         Accounts Receivable:
             It is the policy of management to review the outstanding accounts
             at year-end, as well as review bad debts, and establish an
             allowance for doubtful accounts and uncollectible amounts.

         Advertising:
             Advertising costs, which are included in selling, general and
             administrative expenses, are expensed as costs are incurred.
             Advertising expense was $6,152 and $5,972 for the years ended
             December 31, 2001 and 2000, respectively.

         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, since in many
             cases it has written contracts with them.

         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.

             Management has determined that the goodwill, copyrights and
             trademarks reflected on the Company's balance sheet at December 31,
             2001 represent viable assets that, in the foreseeable future, will
             generate sufficient cash flows to recover their carrying amounts.

         Reclassifications:
             Certain reclassifications were made to the 2001 financial
             statements presentation in order to conform to the 2000 financial
             statements presentation.

         Property & Equipment:
             Property and equipment is carried at cost. Depreciation of
             depreciable assets is computed using the straight-line method of
             depreciation over the estimated useful lives of the assets. The
             estimated useful life is between 5 and 10 years.



                                      F-12
<PAGE>


                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


1.       NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------------------
         (CONTINUED):
         ------------

         Amortization:
             Amortization of trademarks, copyrights and goodwill is determined
             utilizing the straight- line method based generally on the
             estimated useful lives of the intangibles, as follows:

                  Trademarks and copyrights                       15 years
                  Goodwill                                        15 years

         Cash and Cash Equivalents:
             For purposes of the statements of cash flows, the Company considers
             all unrestricted highly liquid investments with an initial maturity
             of three months or less to be cash equivalents.

         Deferred Income:
             Deferred income arises in the normal course of business from the
             development of new web site contracts. The Company recognizes
             income when delivery has occurred or services have been rendered.

             Deferred income at December 31, 2001 and 2000 was $4,515.

         Accounting Pronouncements:
             In June 1997, the Financial Accounting Standards Board issued
             Statement of Accounting Standards No. 131, Disclosures About
             Segments of an Enterprise and Related Information (SFAS No. 131),
             which established presentation of financial data based on the
             "management approach." SFAS No. 131 is applicable for fiscal years
             beginning after December 15, 1997. For the current fiscal year, the
             presentation of segment reporting is deemed by management to be
             immaterial.

         Net Loss Per Share:
             Net loss per share is computed by dividing net loss by the weighted
             average number of common shares outstanding for the period.

2.       CAPITAL STOCK TRANSACTIONS:
         ---------------------------

         The Articles of Incorporation provide for the authorization of
         950,000,000 shares of common stock at $0.00001 par value. On January
         30, 1999, the stockholders approved increasing the authorized number of
         shares to 999,999,000.

         In June 1988, the Company completed a sale of 150,000 units to the
         public at a price of $10 per


                                      F-13
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


2.       CAPITAL STOCK TRANSACTIONS (CONTINUED):
         ---------------------------------------

         unit. The Company received proceeds in the amount of $1,213,841, net of
         commissions and expenses to the underwriter, legal, accounting and
         other expenses related to the public offering in the amount of
         $286,159. Each unit consisted of 1,000 shares of common stock, $0.00001
         par value, and 500 redeemable common stock warrants designated
         redeemable Warrant "A". Each redeemable Warrant "A" would, upon
         exercise, entitle the holder to purchase one share of common stock for
         $0.20 per share and to receive one redeemable Class "B" Common stock
         purchase warrant. Each redeemable Class "B" Common Stock purchase
         warrant would, upon exercise, entitle the holder to purchase one share
         of common stock for $0.50 per share. The exercise periods of both Class
         "A" and Class "B" warrants were extended by the Board of Directors
         through January 9, 2001, after giving effect to the ten-for-one reverse
         split on February 9, 1998. At June 30, 2000, 14,727,280 shares of
         common stock, reserved in connection with such warrants, remain
         outstanding. There was no market activity for these warrants through
         December 31, 2001.

         On December 30, 2000, the Board of Directors extended the exercise
         periods of both Class "A" and Class "B" Common Stock purchase warrants
         through January 8, 2002.

3.       SUBSCRIPTIONS
         -------------

         The Company entered into a subscription agreement for the purchase of
         4,405,882 shares of common stock for $40,000 on November 4, 1998. At
         December 31, 2000, the Company had received payment in full and had
         issued the shares related to this subscription.

         The Company entered into a subscription agreement for the purchase of
         1,666,667 shares of common stock for $50,000 on January 12, 2001. At
         March 31, 2001, the Company had received payment in full and had issued
         the shares related to this subscription.

         In May 2001, the Company received a total of $32,000 in deposits on two
         subscription agreements for the purchase of a total of 3,083,333 shares
         of common stock. At December 31, 2001, the Company had received payment
         in full and had issued the shares related to this subscription.

         In September 2001, the Company received a total of $68,000 in deposits
         on two subscription agreements for the purchase of a total of 3,583,333
         shares of common stock. At December 31, 2001, the Company had received
         payment in full and had issued the shares related to this subscription.



                                      F-14
<PAGE>


                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)

4.       LEASES:
         ------
         The Company rents office space in Palm Beach and Boca Raton, Florida.
         The total monthly rent is currently $3,514. The Company also rented
         office furniture and equipment on a month- to-month basis for $1,000
         from the president, an arrangement that was discontinued in March 2001
         when furniture and equipment was purchased.

5.       INCOME TAXES:
         -------------

         The Company and its subsidiaries file consolidated income tax returns.
         No provision has been made in the accompanying financial statements for
         income taxes payable because of the Company's operating loss from
         operations. At December 31, 2001, the Company had $6,616,746 of
         operating loss carry-forwards for financial reporting and income tax
         purposes available to offset future income taxes, expiring through the
         year 2021. Net operating losses of $576,793 for the year ended December
         31, 2001 will expire in 2021. The net operating loss carryforwards will
         begin to expire in 2003. Additionally, the Company has approximately
         $44,000 of research and development credits available to offset future
         income taxes through the year 2005. There can, however, be no assurance
         that the Company will have future operating profits.

6.       NOTES PAYABLE:
         --------------

         At December 31, 2001, short-term debt consisted of the following:

             12% note payable to an officer,                       $  231,513
             unsecured, due on demand.  Upon
             any default, the note becomes due
             immediately at an interest rate of
             18% per annum.

             Note payable to a shareholder,                           134,086
             unsecured, due on demand, no
             interest rate specified.

             Note payable to CGI Marketing,                            35,142
             unsecured, due on demand, with
             an interest rate of 5.5%



                                      F-15
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


6.       NOTES PAYABLE (CONTINUED):
         -------------------------

               Note payable to an officer, unsecured,                   1,350
               due on demand, no interest rate                       --------
               specified.

               Total short-term debt                                 $402,091
                                                                     ========


7.       STOCK AWARDS
         ------------

         In April 1998, the Company adopted a stock option plan (the "Incentive
         Stock Plan") that was intended to provide incentives to, and awards
         for, certain eligible employees, officers, directors and consultants.
         The Company reserved 30,000,000 shares of common stock under this Plan,
         consisting of a maximum of 15,000,000 restricted stock grants and
         15,000,000 stock awards.

         In December 1999, the Company adopted a stock option plan called the
         Safe Technologies International, Inc. - Year 2000 Stock Award Plan (the
         "Year 2000 Stock Award Plan"). Pursuant to this plan, the Company
         registered 30,000,000 shares of its common stock, to be awarded to
         eligible persons thereunder.

         Under both plans, the Company awarded 3,000,000 shares of common stock
         in 2001, 14,450,000 shares in 2000, 18,770,764 in 1999 and 7,325,000 in
         1998 to its officers, directors and consultants.


8.       EMPLOYMENT AGREEMENTS
         ---------------------

         The Company entered into an employment agreement dated January 30, 1997
         with Barbara Tolley, its chairman of the board. The term of the
         agreement was for a period of two (2) years, commencing on February 9,
         1998 and ending on February 9, 2000.

         On February 9, 2000, the contract was renewed for one (1) year with the
         same terms by mutual consent. The contract was not renewed on February
         9, 2001.

         In consideration of the services performed, the Company paid Ms. Tolley
         in stock $360,000 during the year ended December 31, 2000 ($120,000 per
         year for the three-year term of the agreement.)



                                      F-16
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


9.       GOING CONCERN:
         --------------

         The Company's financial statements have been presented on the basis
         that it is a going concern, which contemplates the realization of
         assets and the satisfaction of liabilities in the normal course of
         business.

         As shown in the accompanying consolidated financial statements, the
         Company incurred a net loss of $589,169 during the year ended December
         31, 2001 and, as of that date, intangible assets represent 73% of total
         assets. The Company's sales volume decreased substantially from the
         year ended December 31, 2000 to 2001. Those factors, as well as the
         Company's reliance on the Internet industry, create an uncertainty
         about the Company's ability to continue as a going concern. Management
         has developed a plan to acquire businesses outside of the Internet
         industry, and is actively searching for acquisition targets in order to
         reduce the Company's reliance on any one business or industry (see Note
         12). The ability of the Company to continue as a going concern is
         dependent on the success of this plan. The consolidated financial
         statements do not include any adjustments that might be necessary if
         the Company is unable to continue as a going concern.

10.      RELATED PARTY TRANSACTIONS
         --------------------------
         In 2001, the Company purchased services from and made reimbursements to
         a related party company owned by an officer and major shareholder. The
         services purchased were primarily secretarial, and reimbursements
         included telephone expenses, courier charges and postage. Total
         payments made to this company during the years ended December 31, 2001
         and 2000 were $15,804 and $0, respectively. Total amounts owed to this
         company as of December 31, 2001 and 2000 were $6,905 and $0,
         respectively.

11.      PENDING LITIGATION
         ------------------

         An individual, who was a shareholder of INI (prior to its merger with
         Safe Tech), filed a lawsuit in June 2000 against Safe Tech, its
         chairman and chief executive officer. He is claiming that he is
         entitled to more shares in the Company than he received pursuant to the
         merger of INI with Safe Tech. Management denies the claims asserted by
         the shareholder and is defending the lawsuit vigorously.



                                      F-17
<PAGE>

                      SAFE TECHNOLOGIES INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
                       (See Independent Auditor's Report)


12.      SUBSEQUENT EVENTS
         -----------------

         On April 24, 2001, the Company entered into a letter of intent with a
         private investment banker representing Pro:Con A/S, a European
         corporation desiring to merge with Internet Commerce, Inc., one of the
         Company's subsidiaries. On October 22, 2001, the Company exchanged
         agreement drafts with Pro:Con on the preliminary terms of the merger.






                                      F-18