UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





þ
              ANNUAL REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
      December 31, 2009o
              TRANSITION REPORT
      UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934For the transition
      period from ____________________ to
  ___________________


Commission
file number 000-17746




Safe Technologies International, Inc.(Exact Name of
      Registrant as Specified in its Charter)




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


1200 North Federal Highway,
      Suite 200, Boca Raton, FL
            
            33432(Address
      of principal executive offices)
            
            (Zip
      Code)





Issuer's telephone
      number, including area code:(866)
  297-5070





Securities registered under
      Section 12(b) of the Exchange Act:





Title of each
      class
              
              Name of each
      exchange on which registeredNone
              
              None





Securities
      registered under Section 12(g) of the Exchange
Act:





Common Stock, par
      value $.00001 per share(Title of
      class)











o þ





o þ





þ o





þ o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and disclosure will not be contained, to
the best of registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. þ





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.




Large accelerated
      filer    o
            Non-accelerated
      filer    o
              (Do not
      check if a smaller reporting company)
            Accelerated
      filer    o
            Smaller reporting
      company    þ




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





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity, as of June 30, 2009, was approximately $458,996.





The
number of shares outstanding of the issuer's common stock, as of March 24, 2010,
was 276,429,379.










SAFE
TECHNOLOGIES INTERNATIONAL,
INC.





Index
to


Annual
Report on Form 10-K


For
the Year Ended December 31, 2009







PagePart IItem
      1
            Business
            
            
            1Item
      2
            Properties
            
            
            2Item
      3
            Legal
      Proceedings
            
            
            2Item
      4
            Reserved
            
            
            2Part IIItem
      5
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer’s
      Purchases of Equity Securities
            
            
            3Item
      6
            Selected
      Financial Data
            
            
            4Item
      7
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            
            4Item
      7A
            Market
      Risk Disclosures
            
            
            7Item
      8
            Financial
      Statements
            
            
            7Item
      9
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
            
            
            7Item
      9A
            Controls
      and Procedures
            
            
            7Item
      9B
            Other
      Information
            
            
            9Part
      IIIItem
      10
            Directors,
      Executive Officers and Corporate Governance
            
            
            9Item
      11
            Executive
      Compensation
            
            
            10Item
      12
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            
            
            11Item
      13
            Certain
      Relationships and Related Transactions, and Director
      Independence
            
            
            12Item
      14
            Principal
      Accounting Fees and Services
            
            
            12Part
      IVItem
      15
            Exhibits
      and Financial Statement Schedules
            
            
            13Exhibit
      Index
            
            
            
            13Signatures
            
            
            
            14Financial
      Statements
            
            
            
            F-1







PART
I





ITEM
1.   BUSINESS





Safe
Technologies International Inc. is a technology solutions
company.  Until late 2009, our operations consisted of providing
website hosting operations through our subsidiary, Internet Associates
International, Inc.





In late
2009, we began the development of new business lines within the Company related
to IT solutions, including a full suite of application hosting, monitoring and
remote solution services.  In early 2010, we began offering an
integrated suite of unified backup and remote disaster recovery services,
predictive office network health analytics and remote IT support
solutions.  We are initially targeting this product to small to medium
sized businesses.





We plan
to introduce security, data storage and systems management solutions to help
businesses secure and manage their information on a “hosted” basis. Today,
generally, the facilities required (servers, routers, switches, firewalls,
cabinets, software, wiring, etc.) to deliver IT services is either (a) purchased
and managed by the customer (“do it yourself”) (b) outsourced, where businesses
transfer full responsibility for their IT operations or (c) “hosted”, whereby
customers are provided with a full suite of customized  services to
deliver a simpler, more cost competitive solution to meet their unique IT
needs.





We
believe that our value-centric services will provide customers with mission
critical support while also adding significant value to their business. Current
new sales activity is a result of leads generated from the Company’s website,
which we continue to develop and invest resources into.





Our
strategy is to provide hosted software and services to secure and manage the
connected world of our customers against risks in a complete and cost-efficient
manner. We believe that the security, storage and systems management markets are
converging as businesses increasingly seek one solution to manage their most
valuable asset – their information.  We help businesses ensure that
their information and infrastructures are protected, managed easily, and
controlled automatically.





As a
result of the aforementioned initiatives, we are now a technology solutions
company that specializes in providing managed IT services including
mission-critical data hosting, disaster recovery and Total OfficeSM
solutions which are provided on an outsourced, rapidly-deployed fixed cost basis
to small and medium sized businesses. Our Strategic Data Support (“SDS”) brand
provides easily-deployed custom solutions that create significant cost
efficiencies, dependable network functionality and complete redundancy through
our disaster recovery facilities.  Our focus is on reliable, scalable
and affordable services in order to provide a clear value to our
customers.  We strive to earn client trust by providing superior
service, support and uncompromised standards in order to differentiate ourselves
from our competitors.  Our goal is to help organizations define and
execute technology solutions to deliver a simpler, more cost effective solution
to meet their unique IT needs.  We possess a broad range of skills
that equip us to deliver the right solution.





1





There are
a multitude of competitors providing various fragmented and isolated solutions
for the IT issues our products address.  Accordingly, our success
depends on our ability to provide integrated, seamless and easily-deployed
solutions at a lower cost. We believe we have such solutions.





We
currently have no employees.  Our President, Christopher L. Kolb, and
our Chief Financial Officer, Richard P. Sawick, as well as a limited number of
administrative personnel, are currently retained on an independent contractor
basis.





Caution
Regarding Forward-Looking Information





Certain
statements contained in this annual filing, including, without


limitation,
statements containing the words "believes", "anticipates", "expects" and words
of similar import, constitute forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.





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





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





ITEM
2.   PROPERTIES





Our
executive offices are located at 1200 North Federal Highway, Suite 200, Boca
Raton, FL 33432, where we lease approximately 550 square feet of office space.
We pay base rent of approximately $2,800 per month which includes limited
administrative and facility services.





ITEM
3.   LEGAL PROCEEDINGS





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





ITEM
4.   RESERVED





2





PART
II





ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER’S PURCHASES OF EQUITY SECURITIES.





Our
common stock is traded in the over-the-counter market under the symbol "SFAZ".
Our transfer agent is Direct Transfer, LLC, whose phone number is
919-481-4000.  The following table sets forth the high and low bid, as
reported by Nasdaq.com, for our common stock for the calendar periods indicated.
As a result of a 10-to 1 reverse stock split approved by shareholders and
adopted by the Board of Directors, the following data has been retroactively
presented as if the reverse split were in place throughout the
periods.


Period
              
              
              Bid
                High/Low20081st
      Quarter
              
              
              .005/.0022nd
      Quarter
              
              
              .005/.0023rd
      Quarter
              
              
              .004/.0024th
      Quarter
              
              
              .004/.00120091st
      Quarter
              
              
              .003/.0032nd
      Quarter
              
              
              .013/.0103rd
      Quarter
              
              
              .021/.0154th
      Quarter
              
              
              .039/.031
 
 The above
quotations do not include retail mark-ups, mark-downs or commissions and
represents prices between dealers and not necessarily actual transactions. The
past performance of our securities is not necessarily indicative of future
performance.





Holders
of Record





As of
March 24, 2010, there were 1,586 shareholders of record of our common
stock.





Dividend
Policy





We have
not declared or paid any cash dividends on our common stock since our inception.
We do not intend to pay cash dividends on our common stock in the foreseeable
future. We anticipate we will retain any earnings for use in our operations and
development of our business.





Securities
authorized for issuance under equity compensation plans.





On July
20, 2009, our Board of Directors approved our 2009 Compensatory Stock Plan (the
“Plan”).  The Plan is designed for selected employees, officers,
directors and key consultants to the Company and its subsidiaries, and is
intended to advance the best interests of the Company by providing personnel who
have substantial responsibility for the management and growth of the Company and
its subsidiaries with additional incentive by increasing their proprietary
interest in the success of the Company, thereby encouraging them to remain in
the employ of the Company or its subsidiaries.  The Plan is
administered by the Board of Directors of the Company, and authorizes the
issuance of stock options, restricted stock grants and stock awards, not to
exceed a total of 10,000,000 shares.  The terms of any awards under
the Plan are determined by the Board of Directors, provided that no options may
be granted at less than the fair market value of the stock as of the date of the
grant.





3





The
following table presents information as to the number of shares of our common
stock which are authorized for issuance under the Plan.





Plan
      category
            Number
      of shares to be issued upon exercise of outstanding
options
            Weighted-average
      exercise price of outstanding options
            Number
      of shares remaining available for future issuance under the Plan
      (excluding shares reflected in column (a))(a)
            (b)
            (c)Equity
      compensation plans approved by security holders
            -0-
            n/a
            -0-Equity
      compensation plans not approved by security holders
            6,750,000
            $0.0175
            1,550,000Total
            6,750,000
            $0.0175
            1,550,000





Recent
sales of Unregistered Securities.




On
October 13, 2009, we issued 200,000 shares of common stock to our general
counsel as part payment for services rendered, valued at $4,000.  On
December 31, 2009, we issued an additional 500,000 shares to our general counsel
as part payment for additional services rendered, valued at
$19,089.  Our general counsel is an accredited investor, and a
restrictive legend was placed on the share certificates. The issuances of the
shares were exempt from registration under Regulation D and
Section 4(2) of the Securities Act of 1933.




On
December 18, 2009, we issued 654,251 shares of common stock to our Chief
Financial Officer in payment of a promissory note to him for certain assets we
purchased from him.  The shares were valued at $14,158.  Our
Chief Financial Officer is an accredited investor, and a restrictive legend was
placed on the share certificates. The issuances of the shares were exempt from
registration under Regulation D and Section 4(2) of the Securities Act
of 1933.





ITEM 6.   SELECTED
FINANCIAL DATA.





Not
applicable.





ITEM
7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS





Overview





Our
business activities until late 2009 consisted of (a) the website hosting
operations of Internet Associates International, Inc., (IAI) our sole active
wholly owned subsidiary, and (b) the development of new business
lines  within the Company related to IT solutions, including a full
suite of application hosting, monitoring and remote solution services. We
believe this, along with our focus on providing a superior service to our
customers will differentiate us from our competitors and enable us to gain
market share in today’s constrained spending environment.





4





Results
of Operations





Revenue
for the year ended December 31, 2009 was $18,507 as compared to $8,914 for 2008.
Fourth Quarter 2009 revenues were $11,550 and $1,697 for 2009 and 2008,
respectively. The sales growth resulted primarily from the commencement of IT
service offerings provided by the Company. The continued development of the
Company’s website, and the related introduction and promotion of the Company’s
new business activities, has contributed to these initial results.





Costs of
operations were $28,801 and $13,200 for the years ended December 31, 2009 and
2008, respectively. These costs consist primarily of one-time charges,
equipment, data storage costs, fee based technical support costs, and costs of
content, subscriptions, and maintenance incurred as we increased our
technological capacities in anticipation of new lines of business. In so doing,
the Company is poised for future growth without a compromise to its service
level commitment.  The one time and minimum volume costs are currently
being fully expensed until such time as revenues are consistent and the nature
of the costs are appropriate to amortize over fully achieved base
volumes.





General
and administrative expenses are comprised primarily of the valuations of certain
stock and stock options issued, the non employee (contractual) services of the
Company’s officers, professional legal and accounting fees, transfer agent and
public reporting fees and software and website development costs.





For the
year ended December 31, 2009 the Company incurred stock compensation charges of
$22,209 resulting from the issuance of common stock and common stock options
under our 2009 Compensatory Stock Plan. There were no options issued in
2008.





Legal
fees were $75,704 and $8,125 for the years ended December 31, 2009 and 2008,
respectively. The increase is attributable to legal fees incurred in 2009, in
connection with the Company’s restructuring.





Accounting
fees were $24,766 for the year ended December 31, 2009 and $54,125 for the
comparable year 2008. The 2009 fees consist of $13,341 in day to day outsourced
accounting services incurred between January and mid-October, $11,425 in
connection with our former independent registered public accounting firm’s
review of the first 3 quarters of 2009 and preparation of our 2008 tax
return.





Transfer
agent and public reporting fees and expenses were $27,315 in 2009 and $5,840 in
2008. The significant increase is a result of (1) a notice to stockholders
issued in June 2009, regarding the restructuring, including a change in
directors, the reverse stock split, disclosure of certain changes in beneficial
ownership, and the amendment to the articles of incorporation providing for the
reduction of total authorized shares, (2) fees incurred from August through
October 2009 in connection with the transition to a new transfer agent and (3)
certain one-time transfer agent activity costs in connection with the reverse
split, new certificate printing, and certain amended public
filings.





5





New
expenses incurred starting in August 2009 for software and web and e-commerce
program development in the amount of approximately $9,861, will continue as we
maintain, cultivate, advance, and expand our web presence and program
offerings.


On August
31, 2009, loans and the accrued interest due to stockholder Franklin Frank and
his affiliates totaling approximately $2,170,000 were converted to
equity.  As a result, our interest expense dramatically decreased
beginning in September 2009. Interest expense for the year ended 2009 was
$158,505 as compared to $202,386 for 2008. This debt conversion will reduce our
interest expense going forward, to the extent that significant new borrowings
are not required.





Liquidity
and Capital Resources.





As of
December 31, 2009 the Company had cash and cash equivalents of $6,032 and a
working capital deficit of $114,403, compared to cash and cash equivalents of
$3,956 and a working capital deficit of $1,939,927 for the year ended December
31, 2008.  The significant improvement to the deficit is a result of
the conversion of approximately $2,170,000 in stockholder debt into equity of
the Company. Subsequent to the conversion of debt, for the period September 1
through December 31, 2009, our sources of cash were net revenues of $14,837 and
new stockholder loans of $92,764. Accordingly, the Company continues to incur
operating losses (loss before interest expense). The operating loss for the year
ended December 30 2009 was $230,536 as compared to $89,641 for 2008. Of the
$230,536 operating loss for 2009, approximately $36,740 was incurred after the
debt restructuring on August 31, 2009.





Internally
generated cash flows continue to be insufficient to support business operations
or capital expenditures. Our ability to generate cash depends on our financial
performance, general economic conditions, technology trends and developments,
and other factors. Until we begin to generate significant new revenues, we will
continue to operate at a loss and be dependent on stockholder Franklin Frank to
fund all operating shortfalls, including our continuing investment in
e-commerce, program development, restructuring costs, and officer
compensation.





There can
be no assurance that our cash flow will increase in the near future from
anticipated new business activities, or that revenues generated from our
existing operations will be sufficient to allow us to continue to pursue new
customer programs or profitable ventures.





Net
Operating Loss Carry-Forwards





The
Company had cumulative net operating loss carry-forwards for income tax purposes
at December 31, 2009 of approximately $7,400,000, expiring through December 31,
2023. The Company has established a 100% valuation allowance against this
deferred tax asset, as the Company has no history of profitable
operations.





Going
Concern





We are
the subject of a "going concern" audit opinion. Such qualification was issued
because we have incurred continuing losses from operations. As of December 31,
2009, we had working capital deficit of $114,403, which raises substantial doubt
about our ability to continue as a going concern.





6





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





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements.





ITEM 7A.   MARKET RISK
DISCLOSURES.





Not
Applicable.





ITEM
8.   FINANCIAL STATEMENTS





Financial
statements and supplementary data are set forth on pages F-1 through
F-13.





ITEM
9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None





ITEM
9A.   CONTROLS AND PROCEDURES.





Evaluation
of Disclosure Controls and Procedures





We
carried out an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of
December 31, 2009 (the “Evaluation Date”).  This evaluation included
review of the documentation of controls, evaluation of the design effectiveness
of controls, and a conclusion on this evaluation. This evaluation was carried
out under the supervision and with the participation of our President, as chief
executive officer, and our Chief Financial Officer. Based upon that evaluation,
management concluded that, as of the end of such period, our disclosure controls
and procedures were not effective because of the material weaknesses in internal
control over financial reporting described below.





Disclosure
controls and procedures are those controls and procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our President and our Chief Financial Officer, to allow
timely decisions regarding required disclosure.





7





Management's
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, for the Company.





Internal
control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of our assets; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of its management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the consolidated financial statements.





Management
recognizes that there are inherent limitations in the effectiveness of any
system of internal control, and accordingly, even effective internal control can
provide only reasonable assurance with respect to financial statement
preparation and may not prevent or detect material misstatements. In addition,
effective internal control at a point in time may become ineffective in future
periods because of changes in conditions or due to deterioration in the degree
of compliance with our established policies and procedures.





A
material weakness is a control deficiency, or combination of deficiencies, in
internal control over financial reporting that creates a reasonable possibility
that a material misstatement of financial statements will not be prevented or
detected on a timely basis.





Under the
supervision and with the participation of our President and our Chief Financial
Officer, management conducted an evaluation of the effectiveness of our internal
control over financial reporting, as of the Evaluation Date.  The
evaluation was conducted based on the criteria set forth in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.





Based on
its evaluation, management concluded that our internal control over financial
reporting was not effective as of the Evaluation Date.  Management
identified material weaknesses as of December 31, 2009, as follows:




-
            Limited
      Accounting Personnel:  We have an inadequate number of personnel
      to properly implement control procedures by segregating
      duties.  This material weakness exists because we are currently
      a small company, with limited business operations to support multiple
      accounting personnel.  As our business grows, we expect to add
      additional accounting personnel, which will allow us to implement
      appropriate segregation of financial reporting duties.  This
      process began with our retaining of a Chief Financial Officer on
      October 12, 2009.-
            Inadequate
      Independent Review:  We have not obtained an independent review
      of our treatment of complex accounting transactions.  We intend
      to obtain such independent review in the
  future.






8





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





Changes
in internal control over financial reporting





As of the
Evaluation Date, other than the changes described above, there were no changes
in our internal control over financial reporting for the quarter ended December
31, 2009 that have materially affected, or that are reasonably likely to
materially affect, our internal control over financial reporting.





Limitations
on the effectiveness of controls and procedures





Our
management does not expect that our controls and procedures will prevent all
potential errors or fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met.





ITEM
9B.   OTHER INFORMATION.





None





PART
III





ITEM
10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





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




Name
            
            Age
            
            Position
      Held with RegistrantChristopher L.
      Kolb
            
            42
            
            Director,
      PresidentKenneth F.
      Frank
            
            51
            
            DirectorRichard P.
      Sawick
            
            54
            
            Chief Financial
      Officer





Christopher L. Kolb is the
founder and President of Coastal Networks, Inc., a company which provides
outsourced chief technology officer and information technology
services.





Kenneth F. Frank is President
of CVR Health Products, Inc., a company located in Hicksville, New York, which
purchases, sells and manages investment real estate.





Richard P. Sawick was Vice
President-Finance and Administration for Linton Truss Corporation, a design
engineering and truss manufacturer located in South Florida, for fifteen years
prior to joining the Company.





Audit
Committee and Code of Ethics.





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





9





ITEM
11.   EXECUTIVE COMPENSATION





The
following table sets forth all compensation paid or earned for services rendered
to the Company in all capacities during the years ended December 31, 2009 and
2008 by our President and our prior acting Chief Executive
Officer.  No other executive officer received total annual
compensation in excess of $100,000 in those periods.





Name
      and principal position
            Year
            Salary
              ($)
            Stock
      awards
              ($)
            Option
      awards
              ($)
            Total
              ($)Christopher
      L. Kolb, President
            2009
            16,9231
            14,5202
            87,3943
            118,837Randi
      Swatt, Acting CEO
            2009
            0
            0
            0
            02008
            0
            0
            0
            0




1
            Mr.
      Kolb was appointed President of the Company on June 18, 2009, but was not
      compensated by the Company until November 2, 2009.  Mr. Kolb’s
      annual compensation is $100,000.





2
            The
      stock award granted to Mr. Kolb was valued at 110% of the average closing
      price for the Company’s common stock for the 10 days prior to the date of
      the grant.





3
            The
      stock options awarded to Mr. Kolb were valued at the aggregate grant date
      fair value computed in accordance with the Black Scholes
      methodology.  The options represent the right to purchase
      4,000,000 shares of common stock at an exercise price equal to 110% of the
      average closing bid and ask prices for the Company’s common stock for the
      10 trading days prior to the date of the Option.  The option is
      exercisable as to 1,000,000 shares on August 25 of each year, beginning in
      2010, provided Mr. Kolb continues to be retained as a consultant to, or
      employee of, the Company as of the date of
  exercise.




Outstanding
Equity Awards at December 31, 2009




Name
            Option
      awardsNumber
      of securities underlying unexercised options
              (#)
      exercisable
            Number
      of securities
              underlying
              unexercised
              options
              (#)
      unexercisable
            Option
              exercise
      price
              ($)
            Option
      expiration dateChristopher
      L. Kolb
            0
            4,000,0001
            0.01452
            August
      25, 2019





10





1
              The options vest as to 1,000,000 shares on August 25 of each year,
      beginning in 2010, provided Mr. Kolb continues to be retained as a
      consultant to, or employee of, the Company as of the date of
  exercise.
 
 Compensation
of Directors





We do not
currently pay any compensation to our directors.





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.





The
following table sets forth information as of March 10, 2010 with respect to the
number of shares of the Company's Common Stock that are beneficially owned by
(i) each executive officer of the Company, (ii) each director of the Company and
(iii) each shareholder of the Company who owns more than 5% of the Company's
Common Stock. An asterisk indicates beneficial ownership of less than 1% of the
Company's outstanding stock. Except as otherwise indicated, each of the
shareholders listed below has voting and investment power over the shares
beneficial owned. As of March 10, 2010, there were issued and outstanding
276,429,379 shares of the Company's common stock.




Name and Address of  Beneficial
      Owner
              
              Shares Beneficially
      Owned
              
              Percent
      of ClassRuth
      Deutsch
                1200
      N Federal Highway, Suite 200
                Boca
      Raton, FL 33432
                Shareholder
              
              112,027,428 1
              
              40.5Franklin
      Frank
                1200
      N Federal Highway, Suite 200
                Boca
      Raton, FL 33432
                Shareholder
              
              112,027,428 1
              
              40.5William
      P. Stueber II

                1200
      N Federal Highway, Suite 200
                Boca
      Raton, FL 33432
              
              111,032,368
              
              40.2Christopher
      L. Kolb

                1200
      N Federal Highway, Suite 200
                Boca
      Raton, FL 33432
                Director,
      President
              
              1,000,000
              
              *Kenneth
      F. Frank

                1200
      N Federal Highway, Suite 200
                Boca
      Raton, FL 33432
                Director
              
              6,800,000
      2
              
              2.5Richard
      P. Sawick

                1200
      N Federal Highway, Suite 200
                Boca
      Raton, FL 33432
                Chief
      Financial Officer
              
              654,251
              
              *All
      Officers and Directors

                as
      a group (3 persons)
              
              8,454,251
              
              3.1
 ____________


1
              Includes 82,130,775 shares held by Franklin Frank, 14,821,508 shares
      held by Ruth Deutsch, Franklin Frank’s wife, 11,675,145 shares held by
      Zaras Investments, Inc., a corporation controlled by Franklin Frank, and
      3,400,000 shares held by LVDB, Inc., a corporation controlled by Franklin
      Frank and Kenneth F. Frank.
 
 2
              Includes 3,400,000 shares held by Kenneth F. Frank and 3,400,000
      shares held by LVDB, Inc., a corporation controlled by Franklin Frank and
      Kenneth F. Frank.


11





ITEM
13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.





Franklin
Frank and/or entities controlled by him have lent us money from time to time in
order to fund our operations.  In addition, Mr. Frank and/or
affiliates purchased two notes given by us to former officers for loans to
us.  As of August 31, 2009, the amount of these loans, with interest,
totaled $2,169,742.  Effective August 31, 2009, this amount was
converted into 180,811,840 shares of our common stock at a conversion price of
$.012 per share, which was the average of the closing bid and asked prices of
our common stock for the twenty trading days ending August 21,
2009.





Since the
date of the debt conversion described above, Franklin Frank has continued to
lend us money from time to time in order to fund our
operations.   The total amount we owed to Franklin Frank as of
December 31, 2009 was $92,764.  The loans bear interest at 8% per
annum and are payable on demand.





During
2008, a total of $202,386 of interest was accrued against the loans, and was
converted to common stock in the above described debt conversion. During 2009, a
total of $158,505 of interest was accrued against the loans.  Interest
accrued in 2009 through August 31, 2009 was converted to common stock in the
above described debt conversion.





In
December 1, 2009, we purchased from Richard P. Sawick, our Chief Financial
Officer, various computers and computer-related equipment for a total purchase
price of $14,158.  The purchase was paid for by promissory
note.  On December 18, 2009 the note was converted into 654,251 shares
of our common stock at a conversion price of $.02164 per share, which was the
average of the closing bid and asked prices of our common stock for the seven
trading days ending December 18, 2009.





Under the
definition of director independence found in NASD Rule 4200, Bruce Taylor and
Glenn Wistey were independent directors until their removal as directors on June
18, 2009.  Kenneth F. Frank is now our sole independent
director.





ITEM
14.   PRINCIPAL ACCOUNTING FEES AND SERVICES.





Audit
Fees.





The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by our independent registered public accounting firm for the
audit of our annual financial statements and review of our financial statements
included in our Forms 10-Q were $25,000 in 2008 and $25,500 in
2009.





12





Audit-Related
Fees.





The
aggregate fees billed in each of the last two fiscal years for
assurance


and
related services by our independent registered public accounting firm that are
reasonably related to the performance of the audit or review of our financial
statements, and are not reported above, were $25,000 in 2008 and $0 in
2009.





Tax
Fees.





The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by our independent registered public accounting firm for tax
compliance, tax advice, and tax planning were $925 in 2008 and $1,250 in
2009.  These services consisted of the preparation of our tax
returns.





All fees
for audit services, and any material fees for other services, are approved in
advance by our Board of Directors.







PART
IV





ITEM
15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES




Reports of
      Independent Registered Public Accounting Firms
            
            
            F-2 – F-3Consolidated
      Financial Statements:Consolidated Balance
      Sheets
            
            
            F-4Consolidated
      Statements of Operations
            
            
            F-5Consolidated
      Statements of Stockholders’ Deficit
            
            
            F-6Consolidated
      Statements of Cash Flows
            
            
            F-7Notes to
      Consolidated Financial Statements
            
            
            F-8 – F-13




Exhibit
Index





31.1
            Rule
      13a-14(a)/15d-14(a) Certification – President (principal executive
      officer)





31.2
            Rule
      13a-14(a)/15d-14(a) Certification – Chief Financial
  Officer





32
            Section
      1350 Certifications





13





SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.  SAFE
      TECHNOLOGIES INTERNATIONAL, INC.By:
              /s/ Christopher L.
      KolbChristopher L. Kolb,
      PresidentDate: April 5,
      2010





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


By:
                /s/ Christopher L.
      KolbChristopher L. Kolb,
      Director and President (principal executive officer)Date: April 5,
      2010
   By:
                  /s/ Richard P.
      SawickRichard P. Sawick, Chief Financial OfficerDate: April 5,
      2010





By:
                /s/ Kenneth F.
    FrankKenneth F. Frank, DirectorDate: April 5,
      2010


14




SAFE
TECHNOLOGIES INTERNATIONAL, INC. AND SUBSIDIARIES
 
 INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 Reports of
      Independent Registered Public Accounting Firms
                
                
                F-2 – F-3Consolidated Balance
      Sheets as of December 31, 2009 and 2008
                
                
                F-4Consolidated
      Statements of Operations For the Years EndedDecember
      31, 2009 and 2008
                
                
                F-5Consolidated
      Statement of Stockholders’ Deficit For the Years EndedDecember
      31, 2009 and 2008
                
                
                F-6Consolidated
      Statements of Cash Flows For the Years EndedDecember
      31, 2009 and 2008
                
                
                F-7Notes to
      Consolidated Financial Statements
                
                
                F-8 – F-13
 F-1
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
 To the
Board of Directors and Stockholders Safe Technologies International,
Inc.
  We have
audited the accompanying consolidated balance sheet of Safe Technologies
International, Inc. and Subsidiaries as of December 31, 2009, and the related
consolidated statements of operations, stockholders' deficit and cash flows for
the year 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
audit.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Safe Technologies
International, Inc. and Subsidiaries as of December 31, 2009, and their results
of operations and cash flows for year then ended, in conformity with accounting
principles generally accepted in the United States of America.
  The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has experienced recurring losses
in 2009, and since inception. This raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 3. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
 
  
 /s/ J.H.
Cohn LLP
 
 Roseland,
New Jersey
 April 2,
2010
 
 F-2
  Baum
& Company, P.A.
 605
Lincoln Road, Suite 210
 Miami
Beach, FL 33139
 
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides a reasonable basis
for our opinion. In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Safe Technologies
International  Inc. as of  December 31, 2008 and the related
consolidated results of operations, stockholders’ deficiency and cash flows for
the year then ended in conformity with United States generally accepted
accounting principles. The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 2 to the
financial statements the Company has experienced a loss in 2008 and since
inception.  The Company's financial position and operating results
raise substantial doubts about its ability to continue a going
concern.  Management's plans concerning these matters are also
described in Note 2.  The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
 
 
 /s/
Baum & Company PA
  Miami
Beach, Florida
 April
5, 2009
 
 F-3
 Safe
Technologies International, Inc. and Subsidiaries
 Consolidated
Balance Sheets
 December
      31,
                
                
                December
      31,2009
                
                
                2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                
                $
                6,032
                
                
                $
                3,956Accounts
      receivable, net of allowance for doubtful accounts of$200
      at December 31, 2009 and $1,300 at December 31, 2008
                
                
                4,353
                
                
                
                1,260Prepaid
      expenses
                
                
                5,692Total
      current assets
                
                
                16,077
                
                
                
                5,216PROPERTY
      AND EQUIPMENTFurniture
      and fixtures
                
                
                -
                
                
                
                5,644Computer
      equipment
                
                
                14,158Less:
      Accumulated depreciation
                
                
                (236
                )
                
                
                (5,644
                )Total
      property and equipment
                
                
                13,922
                
                
                
                -OTHER
      ASSETS
                
                
                1,650
                
                
                
                939Total
      Assets
                
                $
                31,649
                
                
                $
                6,155LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                
                $
                37,571
                
                
                $
                228,660Notes
      and loans payable - related parties
                
                
                92,764
                
                
                
                1,715,900Deferred
      revenue
                
                
                145
                
                
                
                583Total
      liabilites
                
                
                130,480
                
                
                
                1,945,143COMMITMENTSSTOCKHOLDERS'
      DEFICITCommon
      stock, $.00001 par value, 400,000,000 and 99,999,900 shares
      authorizedat
      December 31, 2009 and December 31, 2008, respectively; 276,429,379
      sharesand
      93,263,160 shares issued and outstanding at December 31,
    2009and
      December 31, 2008, respectively
                
                
                2,765
                
                
                
                933Additional
      paid-in capital
                
                
                9,689,562
                
                
                
                7,462,196Accumulated
      deficit
                
                
                (9,791,158
                )
                
                
                (9,402,117
                )Total
      stockholders' deficit
                
                
                (98,831
                )
                
                
                (1,938,988
                )Total
      Liabilities and Stockholders' Deficit
                
                $
                31,649
                
                
                $
                6,155
 See
the accompanying notes to consolidated financial
statements
 F-4
 
 Safe
      Technologies International, Inc. and Subsidiaries
                    Consolidated
      Statements of Operations
                    For
      the years ended December 31, 2009
      and 20082009
                
                
                2008REVENUES
                
                $
                18,507
                
                
                $
                8,914COST
      OF OPERATIONS
                
                
                28,801
                
                
                
                13,200Gross
      loss
                
                
                (10,294
                )
                
                
                (4,286
                )OPERATING
      EXPENSESSelling,
      general and adminstrative expenses
                
                
                220,242
                
                
                
                85,355Total
      operating expenses
                
                
                220,242
                
                
                
                85,355Operating
      loss
                
                
                (230,536
                )
                
                
                (89,641
                )OTHER
      EXPENSEInterest
      expense - related parties
                
                
                (158,505
                )
                
                
                (202,386
                )Total
      other expense
                
                
                (158,505
                )
                
                
                (202,386
                )Loss
      before provision for income taxes
                
                
                (389,041
                )
                
                
                (292,027
                )Income
      taxes
                
                
                -
                
                
                
                -Net
      loss
                
                
                (389,041
                )
                
                $
                (292,027
                )Net
      loss per common share, basic and diluted
                
                $
                (0.00
                )
                
                $
                (0.00
                )Weighted
      average number of common shares outstanding, basic and
    diluted
                
                
                154,612,689
                
                
                
                93,263,160
 See
the accompanying notes to consolidated financial
statements
 F-5
 Safe Technologies International, Inc. and
Subsidiaries
 Consolidated Statements of Stockholders'
Deficit For
the years ended December 31, 2009
and  2008
 Number
      ofShares
                
                Common
                    Stock
                
                
                AdditionalPaid-in
      Capital
                
                
                Accumulated
                  Deficit
                
                
                TotalBALANCE,
      December 31, 2007
                
                
                93,263,160
                
                
                $
                933
                
                
                $
                7,462,196
                
                
                $
                (9,110,090
                )
                
                $
                (1,646,961
                )Net
      loss for the year
                
                
                
                
                
                
                
                (292,027
                )
                
                
                (292,027
                )BALANCE,
      December 31, 2008
                
                
                93,263,160
                
                
                
                933
                
                
                
                7,462,196
                
                
                
                (9,402,117
                )
                
                
                (1,938,988
                )Net
      loss for the year
                
                
                
                
                
                
                
                (389,041
                )
                
                
                (389,041
                )Common
      stock issued for reverse split rounding
                
                
                128Common
      stock issued for debt conversion
                
                
                180,811,840
                
                
                
                1,808
                
                
                
                2,167,934
                
                
                
                
                
                
                
                2,169,742Common
      stock issued for computer equipment
                
                
                654,251
                
                
                
                7
                
                
                
                14,151
                
                
                
                
                
                
                
                14,158Stock
      compensation expense
                
                
                
                7,689
                
                
                
                
                
                
                
                7,689Common
      stock issued for services
                
                
                1,700,000
                
                
                
                17
                
                
                
                37,592
                
                
                
                
                
                
                
                37,609BALANCE,
      December 31, 2009
                
                
                276,429,379
                
                
                $
                2,765
                
                
                $
                9,689,562
                
                
                $
                (9,791,158
                )
                
                $
                (98,831
                )
   F-6
 
 Safe Technologies International, Inc. and
Subsidiaries Consolidated Statements of Cash Flows For
the years ended December 31, 2009 and
2008
 2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                
                $
                (389,041
                )
                
                $
                (292,027
                )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
                
                
                236Bad
      debt expense
                
                
                (442
                )
                
                
                3,339Issuance
      of commons stocks for services
                
                
                37,609Stock
      compensation expense
                
                
                7,689Changes
      in operating assets and liabilities:Increase
      in accounts receivable
                
                
                (2,651
                )
                
                
                (3,731
                )Increase
      in prepaid expenses
                
                
                (5,692
                )Increase
      in other assets
                
                
                (711
                )Increase
      in accounts payable and accrued expenses
                
                
                168,653
                
                
                
                214,715Decrease
      in deferred revenue
                
                
                (438
                )
                
                
                (617
                )Net
      cash used in operating activities
                
                
                (184,788
                )
                
                
                (78,321
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Borrowings
      from stockholder
                
                
                186,864
                
                
                
                75,500Net
      cash provided by financing activities
                
                
                186,864
                
                
                
                75,500Net
      increase (decrease) in cash and cash equivalents
                
                
                2,076
                
                
                
                (2,821
                )Cash
      and cash equivalents, beginning of year
                
                
                3,956
                
                
                
                6,777Cash
      and cash equivalents, end of year
                
                $
                6,032
                
                
                $
                3,956SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Purchase
      of computer equipment with issuance of 654,251 shares of common
      stock
                
                $
                14,158Stock
      split 10:1
                
                $
                8,393Conversion
      of note payable to common stock - related parties
                
                $
                2,169,742
 F-7
 
 Safe
Technologies International, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 
 NOTE
1. DESCRIPTION OF BUSINESS
 
 Safe
Technologies International Inc. is a technology solutions
company.  Until late 2009, our operations consisted of providing
website hosting operations through our subsidiary, Internet Associates
International, Inc.
 In late
2009, we began the development of new business lines within the Company related
to IT solutions, including a full suite of application hosting, monitoring and
remote solution services.  The Company offers an integrated suite of
unified backup and remote disaster recovery services, predictive office network
health analytics and remote IT support solutions.  Target for this
product are small to medium-sized businesses. The Company strategy is to provide
hosted software and services to secure and manage the connected world of their
customers against risks in a complete and cost-efficient manner. The Company
believes that the security, storage and systems management markets are
converging as businesses increasingly seek one solution to manage customers’
most valuable asset – their information.  The Company business goal is
to ensure that customers’ information and infrastructures are protected, managed
easily, and controlled automatically.
 
 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.
 
 NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use
of estimates
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 reported amounts of revenues and expenses during
the reporting period. Actual results may differ from these
estimates.  Estimates are used when accounting for allowance for bad
debts, collectability of accounts receivable, amounts due to service providers,
depreciation, and litigation contingencies, among others.
 
 Principles
of consolidation
 The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries, Total Micro Computers, Inc., Connect.ad, Inc.,
Connect.ad Services, Inc. and Internet Associates International, Inc. and have
been prepared in accordance with U.S. generally accepted accounting principles,
under the rules and regulations of the U.S. Securities and Exchange Commission
(SEC). All inter-company transactions and balances have been eliminated in
consolidation.
  
 Revenue
recognition
 Revenue
is recognized when the related service has been provided, there is persuasive
evidence of an arrangement, the fee is fixed or determinable, and collection is
reasonably assured.  The Company derives the majority of its revenue
from recurring hosting services. The Company recognizes revenue for these
services as they are provided, beginning on the date that the customer commences
our services and continuing over the term of the customer contract. Revenue from
other professional services, including setup and direct installation activities
are recognized in the period the services are provided. Amounts that have been
invoiced are recorded in accounts receivable and either deferred revenues or
revenues, depending on whether the revenue recognition criteria have been met.
Therefore, deferred revenue consists of amounts that have been prepaid and
services have not yet been rendered.
 
 F-8
 
 Net
loss per common share
 Basic net
loss per common share is computed using the weighted average number of common
shares outstanding during each period presented, excluding unvested restricted
stock awards subject to cancellation. Diluted net loss per common share is
computed by using the weighted average number of common shares and potential
common shares outstanding during the period. Potential common shares represent
the incremental common shares issuable for stock options.
 
 Cash
and cash equivalents
 The
Company classifies cash on hand and deposits in the bank as cash and considers
all highly liquid debt instruments with an original maturity of three months or
less to be cash equivalents.
 
 Concentrations
of Risk
 The
Company’s revenues are primarily derived from IT services and hosting, the
market for which is highly competitive and rapidly changing. Significant changes
in this industry or changes in customer buying behavior could adversely impact
our operating results. The Company’s concentrations of credit risk are
principally in accounts receivable. The Company periodically reviews the credit
quality of its customers and does not require collateral. The Company relies on
equipment and software purchased from third parties to provide its hosting
services.  This equipment and software may not continue to be
available on commercially reasonable terms to meet our business needs. Any
errors or defects in third party equipment and software could result in errors
or a failure of our service, which could harm our business. Indemnification from
equipment and software providers, if any, would likely be insufficient to cover
any damage to our business or our customers resulting from such
failures.
 
 Property
and Equipment
 Property
and equipment is stated at cost. Depreciation is computed on the straight-line
method, based on the estimated useful lives of the asset of five years.
Expenditures for maintenance and repairs are charged to operations as incurred.
Upon retirement or sale, the cost of assets disposed of and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is
credited or charged to operations.
 
 Share-Based
Compensation
 The
Company records compensation expense for share-based compensation in accordance
with ASC Topic 718. For share options to certain officers and others, the
Company used the Black-Scholes pricing model to determine the fair value of
stock options on the grant dates for stock option awards issued. The
Black-Scholes valuation model requires the Company to make assumptions and
judgments about the variables used in the calculation. These variables and
assumptions include the fair value of our common stock, expected term, the
expected volatility, and certain present values.
 
 Income
taxes
 The
Company adopted the new accounting for uncertainty in income taxes guidance on
January 1, 2009. The adoption of that guidance did not result in the recognition
of any unrecognized tax benefits and the Company has no unrecognized tax
benefits at December 31, 2009. The Company’s U.S. Federal and state income tax
returns prior to fiscal year December 31, 2006 are closed and management
continually evaluates expiring statutes of limitations, audits, proposed
settlements, changes in tax law and new authoritative rulings.
 
 The
Company recognizes interest and penalties associated with tax matters as part of
the income tax provision and includes accrued interest and penalties with the
related tax liability in the consolidated balance sheets.
 
 Fair
Value of Financial Instruments
 The
carrying amounts of cash and cash equivalents, accounts receivable, prepaid
expenses, accounts payable and accrued expenses approximate fair value due to
the immediate or short-term maturity of these financial
instruments.  The fair  value of notes and loan payables is
determined using current applicable rates which approximate market rates of such
debt.
 
 F-9
 
 Recently
Issued Accounting Standards
 In
January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06,
“improving Disclosures about Fair Value Measurements,” which clarifies certain
existing requirements in ASC 820 “Fair Value Measurements and Disclosures,” and
required disclosures related to significant transfers between each level and
additional information about Level 3 activity.  FASB ASU 2010-06
begins phasing in the first fiscal period beginning after December 15,
2009.  The Company is currently assessing the impact on its
consolidated results of operations and financial conditions.
 
 In June
2009, the FASB issued additional guidance under ASC 860 “Accounting for Transfer
of financial Assets and Extinguishment of Liabilities” which improves the
relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial statements about a transfer of
financial asset; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets.  This additional guidance requires
that a transferor recognize and initially measure at fair value all assets
obtained (including a transferor's beneficial interest) and liabilities incurred
as a result of a transfer of financial assets accounted for as a sale. Enhanced
disclosures are required to provide financial statement users with greater
transparency about transfers of financial assets and a transferor's continuing
involvement with transferred financial assets. This additional guidance must be
applied as of the beginning of each reporting entity's first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period and for interim and annual reporting periods
thereafter. Earlier application is prohibited. This additional guidance must be
applied to transfers occurring on or after the effective date. The adoption of
this ASC 860 is not expected to have a material impact on the Company's
financial statements and disclosures.
 
 In
October 2009, the FASB issued guidance on “Multiple Deliverable Revenue
Arrangements,” updating ASC 605 “Revenue Recognition.” This standard provides
application guidance on whether multiple deliverables exist, how the
deliverables should be separated and how the consideration should be allocated
to one or more units of accounting. This update establishes a selling price
hierarchy for determining the selling price of a deliverable. The selling price
used for each deliverable will be based on vendor-specific objective evidence,
if available, third-party evidence if vendor-specific objective evidence is not
available, or estimated selling price if neither vendor-specific or third-party
evidence is available. The Company is currently evaluating the requirements of
this guidance and has not yet determined the impact of its adoption on the
Company’s consolidated financial statements.
 
 In
October 2009, the FASB issued ASC 985-605, “Software Revenue Recognition.” This
guidance changes the accounting model for revenue arrangements that include both
tangible products and software elements that are “essential to the
functionality,” and scopes these products out of current software revenue
guidance. The new guidance will include factors to help companies determine what
software elements are considered “essential to the functionality.” The
amendments will now subject software-enabled products to other revenue guidance
and disclosure requirements, such as guidance surrounding revenue arrangements
with multiple deliverables. The amendments in this guidance are effective
prospectively for revenue arrangements entered into or materially modified in
the fiscal years beginning on or after June 15, 2010. Early application is
permitted. The Company is currently evaluating the requirements of this guidance
and has not yet determined the impact of its adoption on the Company’s
consolidated financial statements.
 
 In
February 2010, the FASB issued FASB ASU 2010-09, “Subsequent Events, Amendments
to Certain Recognition and Disclosure Requirements,” which clarifies certain
existing evaluation and disclosure requirements in ASC 855 “Subsequent Events”
related to subsequent events. FASB ASU 2010-09 requires SEC filers to evaluate
subsequent events through the date in which the financial statements are issued
and is effective immediately. The new guidance does not have an effect on the
Company’s consolidated results of operations and financial
condition.
 
 Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
 
 F-10
 
 NOTE
3. GOING CONCERN
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has suffered recurring
losses, has a net capital deficiency and is currently unable to generate
sufficient cash flow to meet its obligations and sustain its operations. A major
stockholder of the Company has been funding, and continues to fund at his
discretion, the Company’s operations. These conditions raise substantial doubt
about its ability to continue as a going concern. The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern. Management is introducing new commerce into the
Company including a full suite of hosting services and solutions aimed at small
and mid-sized businesses that they believe will meet their unique IT needs. The
Company is also contemplating expanding operations and market presence by
entering into business combinations, investments or alliances with third
parties. There can be no assurance that they will be successful in overcoming
the risks or establishing such new commerce, business combinations or expansion
and that the Company would be able to continue its operations without continued
support from its major stockholder.
 
 NOTE
4. INCOME TAXES
 Deferred
income taxes (benefits) are provided for certain income and expenses which are
recognized in different periods for tax and financial reporting
purposes.  The Company had cumulative net operating loss
carry-forwards for income tax purposes at December 31, 2009 of approximately
$7,400,000, expiring through December 31, 2023. The Company has established a
100% valuation allowance against this deferred tax asset, as the Company has no
history of profitable operations.
  NOTE
5. LEASES
 The
Company rents office space in Boca Raton, Florida under a lease that commenced
on July 1, 2009. The lease continues through June 30, 2010 at a base rent of
$2,800 per month. Rent expense for the years ended December 31, 2009 and 2008
were $17,486 and $5,713, respectively
  NOTE
6. STOCKHOLDERS’ EQUITY
 
 All of
the Company’s authorized capital stock consists of common stock. The Company has
authorized 400,000,000 shares of common stock, par value $.00001 per share. As
of December 31, 2009, there are 276,429,379 shares issued and outstanding. Each
holder of the Company’s common stock is entitled to one vote for each share held
of record on all matters submitted to the vote of stockholders, including the
election of Directors. All voting is non-cumulative, which means that the holder
of fifty percent (50%) plus one share, can in voting for the election of
Directors, elect all Directors. The holders of common stock are entitled to
receive pro-rata dividends, when and as declared by the Board of Directors in
its discretion, out of funds legally available therefore. Payment of dividends
will depend on the Company’s financial condition, results of operations, capital
requirements and such other factors as the Board of Directors deems relevant.
The Company has never paid any dividends and the Board has no plans for the
payment of future dividends at this time.
 
 F-11
 
 NOTE
7. NOTES AND LOANS PAYABLE - RELATED PARTIES
 
 At
December 31, 2009 and 2008, total notes and loans payable consisted of the
following:
  December 31,2009
              
              
              December 31,2008Notes
      and loans payable to principal stockholders, unsecured,
      and due upon demand, withinterest
      at 12% on Notes and loans as ofDecember
      31, 2008, and 8% on Notes andloans
      as of December 31, 2009. Upon default,the
      notes and loans become due immediately at an interest rate of
      18%
              
              $
              92,764
              
              
              $
              1,715,900
 
 Interest
expense was $158,505 and $202,386 for the years ended December 31, 2009 and
2008, respectively.
 
 NOTE
8. COMMON STOCK AND OPTIONS ISSUED FOR SERVICES
 
 Effective
August 31, 2009, certain principal stockholders of the Company converted
$1,810,000 of loans and $359,742 of accrued interest on those loans into
180,811,840 shares of common stock at an average price of $.012 per share, as
determined by an average of the fair market value of the shares over a twenty
day period prior to the conversion date.
 
 On
October 13, 2009, the Company issued 200,000 shares of restricted common stock
to its Corporate Counsel, Gerald W. Gritter, as part payment for legal fees
incurred and to be incurred at a reduced rate. In connection with the
arrangement, approximately $5,900 of legal fees incurred in August were
discounted in full and, commencing in October all legal fees would be discounted
by 40%, with the remaining 60% to be invoiced and paid as incurred by the
Company.  Additional common stock will be issued from time to time and
in amounts determined by mutual agreement between the Company and Mr. Gritter,
in consideration of the on-going discount.   As a result of this
issuance $4,000 was charged to operations as legal expense, based on the average
of the fair market value of the Company’s common stock over a seven day period
prior to issuance. Additional common stock will be issued from time to time and
in amounts determined by mutual agreement between the Company and Mr. Gritter,
in consideration of the on-going discount. On December 31, 2009, the Company
issued an additional 500,000 shares of stock to Mr. Gritter, resulting in a
charge to legal expense of $19,089, as determined by an average of the fair
market value of the shares over a seven day period prior to issuance.
Accordingly, as of December 31, 2009, the Company has received a discount of
$10,382, with 700,000 shares being issued in consideration thereof.
 
 On
December 18, 2009, the Company exchanged 654,251 of its common stock at a price
of $0.022 per share for a note payable in the amount of $14,158 to an officer of
the Company for the purchase of computer equipment.  The stock price
was determined by an average of the fair market value of the Company’s common
stock over a seven day period prior to the conversion date.
 
  F-12
 
 NOTE
9. REVERSE STOCK SPLIT
 
 On June
18, 2009, the directors adopted, and the stockholders approved, proposals to
amend the Company’s Certificate of Incorporation to effect a 10-to-1 reverse
stock split, and to amend the Company’s Certificate of Incorporation to decrease
the Company’s total number of authorized shares from 999,999,000 shares to
400,000,000 shares, all of which shall be common stock, par value $.00001 per
share.   The new symbol for the Company is SFAZ.  As a
result of the 10-to-1 reverse stock split, all share and per share information
has been revised to give retroactive effect to the stock split.
 
 NOTE
10. PURCHASE COMMITMENTS
 
 A
non-cancelable purchase commitment which commenced in April 2009 relates to
contracted services with our data center. The contract is for a period of 24
months with a commitment for 2010 of approximately $30,000. Charges in
connection with the contract during 2009 of $19,000, is reflected in cost of
operations.
 
 NOTE
11. EQUITY BASED COMPENSATION
 
 The
Company’s Compensatory Stock Plan, which became effective on July 20, 2009,
provides for the grant of stock options, restricted stock grants and stock
awards. The plan is designed for select employees, officers, directors and key
consultants to the Company and is intended to advance the best interests of the
Company by providing personnel who have substantial responsibility for the
management and growth of the Company with additional incentive by increasing
their proprietary interest in the success of the Company, thereby encouraging
them to remain in the employ of the Company. The plan is administered by the
Board of Directors of the Company, and authorizes the issuance of awards and
grants not to exceed a total of 10,000,000 shares. Stock options expire ten
years from the date the option is granted and the Board in its discretion may
provide that the option shall be exercisable throughout the ten year period or
during any lesser period of time commencing on the date of grant. The specific
terms of any awards under the plan are determined by the Board of Directors,
provided that no options may be granted at less than the fair market value of
the stock as of the date of the grant. The plan terminates on the tenthanniversary
of the effective date.
 
 On August
25, 2009, the Company issued 1,000,000 shares of restricted common stock to its
President, who fills that position as an independent contractor.  The
shares were valued at $14,520 as stock-based compensation. The valuation,
charged to operations, was based on 110% of the average bid/ask prices of the
Company’s common stock during the 10 day period prior to the issuance. The
Company also issued to its President, 4,000,000 common stock purchase options,
valued at $87,394. The options vest 1,000,000 per year over 4 years at an
exercise price of $ 0.015. The valuation of $7,283, which was charged to
operations, was calculated per the Black-Scholes pricing model. On
December 21, 2009, the Company issued to an officer, 2,000,000 common stock
purchase options valued at $59,293. The options vest 500,000 per year over 4
years at an exercise price of $0.025 per share, which is 110% of the average
bid/ask prices of the Company’s common stock during the seven day period prior
to issuance. The valuation of $406 which was charged to operations was
calculated per the Black-Scholes pricing model. As of
December 31, 2009, option awards that have been issued to key personnel under
the plan are as follows:
 
 Number
      ofOptions
              
              
              Weighted-AverageExercise
      Price
              
              Weighted
      Average RemainingContractual
      Term
              
              AggregateIntrinsic
      ValueOutstanding
      at beginning of year 2009
              
              
              0
              
              
              
              0Granted
              
              
              6,000,000
              
              
              $
              0.0181
              
              117
      monthsExercised
              
              
              -
              
              
              
              -Expired
              
              
              -
              
              
              
              -Outstanding
      at end of year 2009
              
              
              6,000,000
              
              
              $
              0.0181
              
              117
      months
              
              $
              131,120Exercisable
      at end of year 2009
              
              
              -
              
              
              
              -Weighted-average
      fair value per award of awards granted during the year
              
              $
              0.0181
 
 No
options have been granted or outstanding prior to January 1, 2009.
 
 The
options issued were valued based on the Black Sholes pricing model with the
following assumptions for grants: dividend rate of 0%; risk-free interest rates
of between 3.18% and 3.10% based on the U.S. Treasury yield curve in effect at
the time of the grant; expected lives of 7year under simplified method and
average volatility rates of 185% to 196% based upon the Company’s stock price
volatility. None of the options issued above are either exercisable or vested at
the year ended December 31, 2009. The charge to operations during 2009 in
connection with the stock-based compensation issues was $7,689.
  F-13