U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

       [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934.

                  For the fiscal year ended December 31, 2001.

                                       OR

       [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934.

                 For the transition period from _____ to _____

                         Commission file number 0-26631

                       SAFE TRANSPORTATION SYSTEMS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)

                   FLORIDA                            59-3567558
        (State or Other Jurisdiction of            (I.R.S. Employer
        Incorporation or Organization)            Identification No.)

                          909 Lakeway Drive, Suite 208
                          Bellingham, Washington 98226
                    (Address of Principal Executive Offices)

                                 (360) 527-1112
                           (Issuer's Telephone Number)

                               Sweets & Eats, Inc.
                       ------------------------------------
                      (Former name of small business issuer)

                 3871 Airport Way, Bellingham, Washington 98226
                 ----------------------------------------------
                    (Former address of small business issuer)

     Indicate by check whether the issuer:  (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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___

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

     Registrant's revenues for the fiscal year ended December 31, 2001 were: $0.

     The aggregate market value for the Registrant's voting common stock held by
non-affiliates  based  upon the  closing  bid  price of $0.03  per share for the
common stock on May 1, 2002, as reported on the Over-the-Counter Bulletin Board,
was approximately $172,696.

     Shares of common  stock held by each  officer and  director and each person
who owns 5% or more of the  outstanding  common stock have been excluded in that
such  persons may be deemed to be  affiliates.  The  determination  of affiliate
status is not necessarily a conclusive determination for other purposes.

     The number of shares  outstanding of each of the issuer's classes of common
stock, as of the latest  practicable  date:  Common Stock,  par value $0.001 per
share, 19,670,269 shares issued and outstanding as of May 6, 2002.

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

<PAGE>


                                TABLE OF CONTENTS


PART I.........................................................................3
   ITEM 1.  DESCRIPTION OF BUSINESS............................................3
   ITEM 2.  DESCRIPTION OF PROPERTY............................................7
   ITEM 3.  LEGAL PROCEEDINGS..................................................7
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................7
PART II........................................................................8
   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            TRADING MARKET.....................................................8
   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.........10
   ITEM 7.  FINANCIAL STATEMENTS..............................................15
   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE..............................................16
PART III......................................................................17
   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS......17
   ITEM 10.  EXECUTIVE COMPENSATION...........................................18
   ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...20
   ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................20
   ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.................................21

                                       2

<PAGE>

                                     Part I


ITEM 1.  DESCRIPTION OF BUSINESS

CORPORATE HISTORY
-----------------

     Safe  Transportation was incorporated in Florida on December 6, 1994 as Big
Daddy's  Auto Sales,  Inc. Big Daddy's Auto Sales was in the business of selling
used  automobiles.  On April 19, 2000, Big Daddy's Auto Sales,  Inc. changed its
name to  Sweets  & Eats,  Inc.  Sweets  & Eats was in the  business  of  selling
chocolate  candy over the Internet.  On December 18, 2000,  Sweets & Eats,  Inc.
entered into a reverse  merger with Safe  Transportation  Systems,  Inc. In that
merger, the former  stockholders of Safe Transportation  Systems,  Inc. received
12,000,000  shares of common  stock of Sweets & Eats for all of the common stock
of Safe Transportation  Systems, Inc. On January 31, 2001, Sweets & Eats changed
its name to Safe  Transportation  Systems,  Inc. Safe  Transportation  is in the
business of  developing,  marketing  and  distributing  safety  products for the
trucking  industry.  Safe  Transportation  is in the  development  stage and its
efforts through  December 31, 2001 were  principally  devoted to  organizational
activities,  raising  capital  and  development  of  its  Accident  Control  and
Anti-Jackknife System for tractor-trailers.

GENERAL BUSINESS
----------------

     Between  July 1998 and October  2000,  Safe  Transportation  developed  and
tested  safety  products  for the  trucking  industry.  During  that time,  Safe
Transportation  spent  approximately  $8 million on  organizational  activities,
administration and developing and patenting a proprietary  technology called the
Accident  Control  and  Anti-Jackknife  System.  This system is intended to help
prevent  a  tractor-trailer  from  losing  control  and  jackknifing.  The  U.S.
Department of  Transportation  defines  "jackknifing" as occurring when the rear
wheels of the tractor lose  traction.  This  instability  results in the tractor
rotating rapidly and violently slamming into the side of the trailer.

     Safe  Transportation has completed  development and testing of the Accident
Control and  Anti-Jackknife  System and has now focused its efforts on marketing
and distribution.  To date, Safe  Transportation has not earned any revenue from
the sale of this product.

THE PRODUCT
-----------

     The Accident Control and Anti-Jackknife System is attached to the underside
of the trailer.  When activated the  high-tensile  steel engaging bar limits the
swing of the trailer  relative to the  tractor.  The trailer will not swing past
the  out-of-control  point,  allowing  the  driver  to power  and  steer  out of
emergency situations.

     The Accident Control and Anti-Jackknife System is engaged during all normal
driving conditions.  The System, however, is always under driver control and can
be activated or deactivated by an illuminated  dash-mounted switch in the cab of
the tractor.

     When  activated,  the  engaging  bar limits the amount of  rotation  of the
tractor  relative to the trailer and prevents the trailer from  swinging to such
an extent where it would become out of control,  therefore,  allowing the driver
to power and steer out of emergency situations.

     The kinetic  energy that could become an  uncontrollable  sideways swing is
instead  redirected  forward onto the front drive axle and steering  axel of the
tractor.  Since the front wheels are part of the steering  axle,  the driver can
turn into the skid  optimizing  overall  vehicle  stability.  By steering in the
opposite  direction of the skid the attitude of the tire tread runs truer to the
road surface,  which improves driver control.  Because there is additional force
being applied to the steering tires, Safe  Transportation  believes traction and
maneuverability  are enhanced.  By improving the tire's friction and maintaining
steering  control the driver can reduce  stopping  distances and  simultaneously
optimize the attempt to avoid obstacles.

     Safe  Transportation   believes  the  product  will  help  reduce  stopping
distances in emergency  braking  situations  and is planning to conduct  further
in-depth study of the control effect on stopping distances.

                                       3
<PAGE>

INDEPENDENT TESTING
-------------------

     Safe Transportation successfully completed its independent American testing
at the Transportation  Research Center (TRC), East Liberty, Ohio. The TRC is one
of is the  most  widely  recognized  and  respected  independent  transportation
proving  grounds  in the  world.  The TRC  testing  was  documented  under  full
instrumentation  with  engineers  evaluating:  angles of  articulation  for both
jackknife  and  trailer  swing,  incident  entry  acceleration,  speed,  lateral
traction, braking reaction time and emergency stopping distances.

     Safe Transportation successfully completed its independent Canadian testing
at the Pacific Traffic Education Centre (PTEC), in Vancouver,  British Columbia.
PTEC is a joint venture of the Insurance Corporation of British Columbia and the
Justice Institute of British Columbia. PTEC also promotes traffic safety through
its affiliation with  organizations such as the Institute of Police Technology &
Management,  University of North Florida,  The British  Columbia Safety Council,
University of British Columbia  Accident  Research Team,  Federal and Provincial
Crown Corporations and private industry.

     The  NHTSA  contributed  research  during  the  American  testing  and Safe
Transportation  will continue to examine the impact of its new  technology  with
regard to accident  control and reduced stopping  distance  analysis on both ABS
and non-ABS tractor-trailer configurations.

     According to  conclusions  drawn from these  independent  evaluations,  the
Accident Control and Anti-Jackknife System:

     o  Prevented jackknifing, trailer-swing and rollover of the tractor-trailer
        in all test permutations;

     o  Does not  interfere  with  normal  highway  operations,  such as passing
        maneuvers or obstacle avoidance; and

     o  Enhances the  driver's  ability to maintain steering control by limiting
        articulation  angle during  the jackknifing,  trailer-swing  or  out  of
        control incident.


PRODUCT RELIABILITY
-------------------

     An independent  engineering firm forensically  audited the Accident Control
and  Anti-Jackknife  System  and  reported  on how it stood  up to the  rigorous
testing  and the hard  hits.  The tested  system  withstood  over 100  attempted
jackknifes  with some  impacts  at speeds of up to 60 MPH and loads in excess of
80,000 lbs. Bacon Donaldson  Engineering of Richmond,  British Colombia reported
that  the  system  deviated  less  than  5/100  of an  inch  from  its  original
specifications.

THE INDUSTRY
------------

     In 1999, The Commercial  Carrier Journal Census of the  Professional  Truck
Fleet Market stated that there are over 5 million  trailers  currently in use on
the roads in the United States and Canada.

     According to the U.S.  Department  of  Commerce,  over 300,000 new trailers
were  sold and  delivered  in the U.S.  annually  in  1999.  The top 29  trailer
manufacturers command 90% of the U.S. domestic market.

     Trucking is vital to the US economy.  The  American  Trucking  Associations
recently   stated,   "Trucks  move  most  of  America's   freight  and  are  the
transportation backbone of the American economy...the trucking industry accounts
for 81% of the country's freight revenue."

     The U.S.  Department of  Transportation,  National  Highway  Traffic Safety
Administration  (NHTSA) stated in 1999, ". . . data indicates that run-off-road,
jackknife  and  rollover  accidents  account  for  23.2% of all  reported  truck
incidents.  . . ." The Vehicle Stability and Control Division,  NHTSA, stated in
2000,  trailer-swing accounts for an additional 6% of all large truck accidents.
Large trucks account for more than their share of highway deaths.

     According to the U.S. Bureau of Labor  Statistics,  highway crashes are the
number one  occupational  cause of death.  Statistically  for every truck driver
fatally  injured in a truck  accident a  corresponding  five  motorists are also
killed.  In 2000,  857 truck drivers were killed and 5,362  motorists  died as a
result of those accidents.  According to the same  statistics,  truck driving is
8.5 times more risky  occupation  than being an airline pilot or taxicab driver;
5.5 times more deadly  than being a law  enforcement  officer;  and 4 times more
deadly than being a construction laborer.

                                       4
<PAGE>

     For the year 2000, the NHTSA reported large trucks in the U.S. caused:

     o  5,362 Fatalities

     o  142,000 Injuries

     o  453,000 Accidents

     o  $24 Billion in Insurance Losses


SALES AND MARKETING
-------------------

     Given  the  economic   importance  of  keeping  trucks  moving  safely  and
efficiently,   Safe  Transportation  has  developed  a  multi-pronged   National
Marketing  Campaign,  which divides  North America into five regional  districts
geographically  arranged with consideration to major trucking fleets,  petroleum
and  chemical  refineries,  deep-sea  ports and  heavy  industry.  The  campaign
includes:

     o  DIRECT SALES.   Safe  Transportation  intends to initially market to the
        65,000  carriers  that employ liquid  petroleum  tankers and the 350,000
        hazardous material haulers.  Safe Transportation  believes these tankers
        and haulers  have the greatest  incentive to use its product  because of
        the potential harm that could be caused in accidents.

     o  In  addition  to identifying the top fleets, Safe Transportation intends
        to continue to market  through and  maintain its active  memberships  in
        strategic industry associations like:

        o  The American  Trucking  Association  with over 45,000 member trucking
           companies.

        o  The National Tank Truck Carriers,  which  represents 85% of petroleum
           hazardous material hauler fleets.

        o  The   North   American   Chemical  Distributors  Association,   which
           represents 90% of chemical distributors.

        o  The Truck Trailer Manufacturers Association,  which represents 90% of
           new trailer manufacturers.

        o  The  Commercial  Vehicle   Safety   Alliance,   the   administration,
           compliance  and  enforcement  body  representing State,  Federal  and
           Provincial Governments for commercial vehicle safety.

     Safe Transportation intends to increase exposure through all  of  these key
associations  with presentations to their boards, as well as hosting exhibits at
their trade shows and annual conferences.

     o  In order to introduce  the  potential  benefits  of  its  product,  Safe
        Transportation  has begun to work with the insurance  industry,  private
        and public  insurance  corporations;  key  industry  lobby and  research
        organizations  like the Insurance  Institute for Highway  Safety and the
        Highway Loss Data Institute;  and the industry's  education branch,  The
        American Institute for Chartered Property Casualty  Underwriters and the
        Insurance Institute of America.

     o  Safe  Transportation  will  seek  to  develop  strategic  alliances with
        original equipment trailer manufacturers.  Department of Labor published
        in 2000 suggest there are 300,000 new trailers sold and delivered in the
        U.S. annually.

     o  Safe  Transportation  is  working  with  an established Washington, D.C.
        lobbying  firm to  furnish  government  and  public  affairs  consulting
        services  and to develop of a  government  public  affairs  strategy  to
        acquaint   appropriate   members  of  the  U.S.  Congress  and  relevant
        government  agencies  with  the  existence  of the  technology  and  its
        potential to improve highway safety.

     o  Safe Transportation  intends to expand by pursuing  joint  ventures.  In
        October  2001,  Safe  Transportation  entered  into a  Subscription  and
        Distribution  Agreement  which  provides for,  among other things,  Safe
        Transportation  to obtain  50% of the  common  stock of,  together  with
        800,000  shares of  preferred  stock in a newly  formed  United  Kingdom

                                       5

<PAGE>

        corporation,  Safe Europe Plc., which will market Safe  Transportation's
        product in Europe and the Middle East. Safe Transportation also received
        a promissory  note for $202,000 with  interest  accruing at 12% per year
        until  December  31,  2001 and 18% per year  thereafter.  In 2002,  Safe
        Transportation assigned 50% of the preferred stock it receives from Safe
        Europe  and the  promissory  note to a  creditor  in  satisfaction  of a
        $175,000 note  payable.  Under this  agreement,  Safe Europe will be the
        exclusive distributor of Safe Transportation's product in Europe and the
        Middle East. Safe Europe has the right to purchase the product from Safe
        Transportation  or to manufacture the products itself.  Safe Europe will
        pay Safe  Transportation a royalty on each unit-produced  equal to 12.5%
        of its cost or $250.00, whichever is higher. Safe Transportation has the
        right to appoint three of the six directors in Safe Europe.

COMPETITION
-----------

     Currently,  there is no known  active  competitor  that markets an Accident
Control  and  Anti-Jackknife  System.  However,  in the  late  1980s  a  company
conducted testing of a rudimentary anti-jackknife device and lobbied some levels
of  government,  the  transportation  sector and the  insurance  industry.  This
company  published  material  stating it had conducted  tests and the subsequent
evaluations  resulted in the State of New Mexico drafting legislation to mandate
the use of  anti-jackknife  devices.  It  further  stated  the  State  of  Texas
contemplated   insurance  premium   reductions  for  resident  fleets  employing
anti-jackknife  devices on their  trailers,  and both  states used the device on
their fleets. To our knowledge, this competitor is no longer doing business.

GOVERNMENTAL REGULATION
-----------------------

     Safe   Transportation   believes  it  complies  with  applicable  laws  and
regulations.   Safe   Transportation  has  made,  and  will  continue  to  make,
expenditures to comply with such laws and regulations.

EMPLOYEES
---------

     Safe  Transportation  has five  full-time  employees.  Safe  Transportation
anticipates  hiring  approximately 20 to 25 employees over the next 12 months if
sufficient  funding is obtained.  None of Safe  Transportation's  employees  are
represented  by unions.  There has been no disruption of operations due to labor
disputes. Management considers its relations with its employees to be good.

CONSULTING ARRANGEMENTS
-----------------------

     Safe Transportation has entered into the following consulting  arrangements
to assist in the development of its business operations.

     o  In August 2001,  Safe Transportation entered into a Business  Consultant
        Agreement  with MK  Associates,  Inc.  Pursuant  to this  agreement,  MK
        Associates  will  provide  advice and  counsel  regarding  business  and
        financial plans,  investor  relations,  strategy and  negotiations  with
        potential  lenders and  investors,  merger and  acquisition  candidates,
        joint ventures,  corporate  partners and others involving  financial and
        business related  transactions.  In addition,  MK Associates will assist
        Safe   Transportation  in  establishing   business   relationships  with
        investment professionals.  In exchange for these services, MK Associates
        will  be  paid  a   percentage   of  any   business   obtained  by  Safe
        Transportation as a result of MK Associates' efforts.

     o  In September 2001,  Safe   Transportation   entered   into  a  financial
        consultant agreement with Yorkville Advisors  Management,  LLC. Pursuant
        to this agreement, Yorkville Advisors will serve as financial consultant
        and advisor to the Company,  on a nonexclusive  basis for a period of 12
        months.  For its  services,  Yorkville  Advisors  will be paid  $15,000.
        Yorkville Advisors is the manager of Cornell Capital Partners.

     o  In  September 2001,  Safe  Transportation  entered  into  a  three-month
        Investment Banking Agreement with Hornblower & Weeks, Inc., a registered
        broker-dealer.  Pursuant  to this  agreement,  Hornblower  & Weeks  will
        assist Safe Transportation in a variety of financial matters,  including
        capital raising transactions.  For its services,  Hornblower & Weeks was
        paid $5,000 per month for three months. In addition,  Hornblower & Weeks
        will  receive a percentage  of any business or capital  received by Safe
        Transportation as a result of Hornblower & Weeks' efforts.

                                       6

<PAGE>

     o  In March 2002, Safe Transportation entered into a Business  Advisory and
        Consulting Services Agreement with Tarshish Capital Markets, pursuant to
        which Tarshish  Capital markets will use its best efforts to raise funds
        in a private offering.  Among other things, the agreement has an initial
        term of six months. For its services,  Tarshish Capital Markets received
        500,000 shares of common stock.


ITEM 2.  DESCRIPTION OF PROPERTY

OFFICE SPACE LEASE
------------------

     Safe Transportation  maintains executive offices and its national marketing
headquarters at 909 Lakeway Drive, Suite 208,  Bellingham,  WA, 98226; and sales
offices at 409 Granville Street, Suite 400, Vancouver,  British Colombia, Canada
V6C 1T2.

INTELLECTUAL PROPERTY
---------------------

     In  June  1999,  Safe  Transportation   filed  a  U.S.  provisional  patent
application for its first Accident Control and  Anti-Jackknife  System.  In June
2000,  Safe   Transportation   filed  Patent  Cooperation  Treaty   Applications
applications.

ITEM 3.  LEGAL PROCEEDINGS

     Safe  Transportation  is aware of the following actual and threatened legal
proceedings:

     In August 2001, a default judgment was entered against Safe  Transportation
for  $9,652.39,  plus  interest.  The case was  styled as RAELYN,  LTD.  V. SAFE
TRANSPORTATION  SYSTEMS,  INC., case no. 01-2-01296-3,  in the Superior Court of
the State of Washington in and for Whatcom County.  The judgment  relates to the
non-payment of leasehold improvements.

     In August  2001, a judgment was entered  against  Safe  Transportation  for
$23,676.44,  plus  interest.  After a payment  of $4,900 in  October  2000,  the
balance  is  approximately   $18,650.  The  case  was  styled  as  HIGHER  PLANE
CABINETWORKS,  INC. V. SAFE TRANSPORTATION SYSTEMS, INC., case no. 01-2-01058-8,
Superior  Court of Washington  for Skagit  County.  The judgment  relates to the
non-payment of leasehold improvements.

     In August  2001, a judgment was entered  against  Safe  Transportation  for
$30,981.15,  plus  interest.  The case was styled as  VIRGINIA M. BENTON V. SAFE
TRANSPORTATION,  ET AL., case no. CV01-1408, In the District Court of the County
of  Whatcom  in and for the State of  Washington.  The  judgment  relates to the
non-payment of back wages to a former employee.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                       7

<PAGE>


                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS TRADING MARKET

     Safe  Transportation's  common  stock  is  quoted  on the  Over-the-Counter
Bulletin Board maintained by the NASD under the symbol "SFTS."

     The following table sets forth the range of high and low bid quotations for
each calendar quarter for Safe  Transportation's  common stock for the prior two
years and the first quarter of 2002.

                                                    BID PRICE PER SHARE
                                             -----------------------------------
                                                   HIGH                  LOW
                                             ----------------  -----------------
      January 3, 2000 - March 31, 2000          $0.1000              $0.1000
      April 3, 2000 - June 30, 2000                 N/A                  N/A
      July 3, 2000 - September 29, 2000         $2.0625              $1.0100
      October 2, 2000 - December 29, 2000       $2.7500              $0.1000

      January 2, 2001 - March 30, 2001          $4.1500              $1.0100
      April 2, 2001 - June 29, 2001             $1.4000              $0.4000
      July 2, 2001 - September 28, 2001         $0.4800              $0.1000
      October 1, 2001 - December 31, 2001       $0.1950              $0.0500

      January 2, 2002 - March 29, 2002          $0.1100              $0.0500

     The above  prices were  obtained  from Pink  Sheets,  LLC.  The  quotations
represent  inter-dealer   quotations,   without  retail  mark-up,   markdown  or
commission,   and   may   not   necessarily   represent   actual   transactions.

     As of May 5, 2002, Safe Transportation believes there were approximately 87
holders of record of our common stock.

     We have not paid  dividends in the past on any class of stock and we do not
anticipate paying dividends in the foreseeable future.


SALES OF UNREGISTERED SECURITIES BY SAFE TRANSPORTATION SYSTEMS, INC.

     In March 2002,  Safe  Transportation  entered into a Business  Advisory and
Consulting  Services Agreement with Tarshish Capital Markets,  pursuant to which
Tarshish  Capital  Markets will use its best efforts to raise funds in a private
offering.  The  agreement  provides for an initial  term of six months.  For its
services, Tarshish Capital Markets will receive 500,000 shares of common stock.

     In January 2002, Safe Transportation  borrowed $20,812 from Cornell Capital
Partners,  L.P.  These loans bears an interest rate of 12% per year and were due
in March 2002. Safe  Transportation  is in default of these loans for failing to
pay  principal and interest when due. Our  Executive  Vice  President,  James B.
Long,  personally  guaranteed  the loan and pledged  4,250,000  shares of common
stock as collateral to secure his guaranty obligations. Cornell Capital Partners
had  started  selling  the  pledged  shares  in  partial   satisfaction  of  the
indebtedness.

     In December 2001,  Safe  Transportation  borrowed  $46,000 and $26,000 from
Cornell Capital  Partners,  L.P. The loans bear an interest rate of 12% per year
and the  first  loan  was due in  January  2002 and the  second  loan was due in
February 2002. Safe  Transportation  is in default of these loans for failing to
pay  principal  and interest  when due. In  connection  with these  loans,  Safe
Transportation  granted to Cornell Capital Partners  warrants to purchase 46,000
shares of common stock,  at an exercise price of $0.01 per share.  Our Executive
Vice  President,  James B.  Long,  personally  guaranteed  the loan and  pledged
4,250,000   shares  of  common  stock  as  collateral  to  secure  his  guaranty
obligations.  Cornell Capital Partners had started selling the pledged shares in
partial satisfaction of the indebtedness.

     In October 2001, Safe  Transportation  issued a warrant to purchase 250,000
shares of common  stock at an  exercise  price of $0.08 per share.  The  warrant
expires in October 2006 and allows the holder to sell any or all of the warrants


                                       8
<PAGE>

to Safe Transportation for $0.08 per share at any time prior to expiration. This
warrant  was issued in  connection  with the  renegotiation  of  $202,100  loans
originally  due by December  15,  2001.  The new terms of this loan  provide for
monthly  interest  payments at 12% per year  through  December  31, 2001 and 18%
thereafter,  with  principal due in January  2003.  In 2002,  this loan has been
satisfied by the  assignment of 50% of the preferred  stock of Safe Europe and a
promissory note in the amount of $202,100 due from Safe Europe.

     From September to November 2001, Safe Transportation received $150,000 from
the issuance of convertible  debentures.  These debentures  accrue interest at a
rate of 6% per year and mature five years from the issuance date. The debentures
are  convertible at the holder's  option any time up to maturity at a conversion
price  equal to the lower of (i)  $0.24 or (ii) 80% of the  lowest  closing  bid
price of the  common  stock for the 5 trading  days  immediately  preceding  the
conversion date. At maturity,  Safe  Transportation has the option to either pay
the holder the outstanding  principal balance and accrued interest or to convert
the  debentures  into shares of common stock at a conversion  price equal to the
lower of (i) $0.24 or (ii) 80% of the  lowest  closing  bid price of the  common
stock for the 5 trading days  immediately  preceding  the  conversion  date.  In
connection with these convertible  debentures,  Safe Transportation entered into
various consulting agreements which provide for, among other things, the payment
of fees aggregating approximately $30,000.

     In October 2001, Safe  Transportation  issued options to acquire  2,050,000
shares of common stock to various professionals,  consultants and employees. All
of these  options  have an  exercise  price of $0.05  per  share  and  expire on
December 31,  2002.  The fair value of these  options of $82,000 were  estimated
using the  Black-Scholes  pricing  model  with the  following  assumptions:  (i)
expected life of the options of approximately one year, (ii) expected volatility
in the market price of common  stock of 200%,  (iii) no expected  dividends  and
(iv) a risk-free interest rate of approximately 2.5%.

     In  September  2001,  Safe  Transportation  entered  into an Equity Line of
Credit Agreement with Cornell Capital Partners,  LP. Under this agreement,  Safe
Transportation may issue and sell common stock to Cornell Capital Partners for a
total purchase price of up to $5.0 million. Subject to certain conditions,  Safe
Transportation  will be entitled to commence  drawing down on the equity line of
credit when the common stock under the Equity Line of Credit is registered  with
the SEC and for two years  thereafter.  The amount of each advance is subject to
an aggregate  maximum advance amount of $208,333 in any thirty-day  period.  The
purchase  price for the shares  will be equal to 90% of the lowest  closing  bid
price of the common  stock during the five  trading  days  following  the notice
date. In addition,  Cornell is entitled to retain 3.75% of each advance. Cornell
Capital Partners was entitled to a one-time commitment fee of $177,500,  payable
in two  installments.  The first  installment  was paid on September 6, 2001 and
amounted to 781,250 shares of common stock. The second installment is due on the
earlier  of the filing of a  registration  statement  registering  the shares of
common  stock to be issued  under the Equity Line of Credit or March  2002.  The
shares  due  under  the  second  installment  have  not yet  been  issued.  Safe
Transportation  also will pay a placement agent fee by issuing 100,000 shares of
common stock to Westrock Advisors, Inc., a registered broker-dealer.

     Between January and August 2001, Safe  Transportation sold 1,314,019 shares
of common  stock for a total of  $157,682  or $0.12 per share.  On July 2, 2001,
Safe  Transportation  issued  25,000 shares of common stock to a consultant at a
fair-market value of $9,000.

     On December 28, 2000,  Sweets & Eats,  Inc.  completed its merger with Safe
Transportation  Systems,  Inc.  Pursuant  to the  merger  agreement,  the former
stockholders of Safe Transportation received 12,000,000 shares of Sweets & Eats,
and the former stockholders of Sweets & Eats, Inc. retained 4,000,000 shares. At
the date of the transaction,  Sweets & Eats, Inc. had no assets,  liabilities or
operations. Therefore, for accounting purposes, the transaction was treated as a
reorganization and accounted for as a reverse acquisition.

     During 2000,  Safe  Transportation  sold 449,135 shares of common stock for
$383,260.  During 2000,  83,789 shares of common stock were issued for services.
The fair market value of $71,500 was charged to expense.

     On October 19, 2000, Safe Transportation  issued 1,050,000 shares of common
stock:  500,000 shares to five outside directors,  500,000 shares to a financial
consulting firm and 50,000 shares to an attorney.

     On October 19, 2000, Safe Transportation issued stock options for 2,655,000
shares of common stock at an exercise price of $1.00.  Subsequently,  options to
purchase  500,000  shares of common stock issued to a consultant  were canceled.
The  options  do not  have an  expiration  date.  Certain  management  personnel
received options for 2,105,000 shares in exchange for the  relinquishment of any
development and proprietary  rights and/or royalties and/or licensing fee to the
anti-jackknifing  systems.  An attorney  received  options for 50,000 shares for
services.  These  options were  recorded at fair value of  $1,141,650  using the
Black-Scholes  pricing model. The calculation assumed a 5.66% risk-free interest
rate, 0% dividend  yield,  0.0001%  volatility,  and a ten-year life,  since the
options did not have an expiration date.

                                       9
<PAGE>

     On October 1, 2000,  in  contemplation  of the merger  with  Sweets & Eats,
Inc.,  Safe  Transportation  split its shares 1.17 for one and all share amounts
have been reflected retroactively.

     From June through September 1999, Safe  Transportation  sold 247,970 shares
for $211,600.  On August 25, 1999, 41,016 shares of Common Stock were issued for
services. The fair market value of $35,000 was charged to expense.

     On May 31, 1999, Safe Transportation sold 10,913,245 shares to officers for
$93,125 and 264,844  shares for $113,000.  Compensation  expense was charged for
the difference between the cost and the fair market value of $4,563,190.

     In July 1998, Safe  Transportation  issued one share of common stock to its
founder.

     With respect to the sale of unregistered  securities  referenced above, all
transactions  were exempt  from  registration  pursuant  to Section  4(2) of the
Securities Act of 1933 (the "1933 ACT"), and Regulation D promulgated  under the
1933 Act. In each instance,  the purchaser had access to sufficient  information
regarding Safe  Transportation  so as to make an informed  investment  decision.
More  specifically,  Safe  Transportation had a reasonable basis to believe that
each  purchaser was an  "accredited  investor" as defined in Regulation D of the
1933 Act and otherwise had the requisite sophistication to make an investment in
Safe Transportation's securities.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     THE  FOLLOWING   INFORMATION   SHOULD  BE  READ  IN  CONJUNCTION  WITH  THE
CONSOLIDATED  FINANCIAL  STATEMENTS OF SAFE TRANSPORTATION AND THE NOTES THERETO
APPEARING ELSEWHERE IN THIS FILING.  STATEMENTS IN THIS MANAGEMENT'S  DISCUSSION
AND  ANALYSIS OR PLAN OF  OPERATION  AND  ELSEWHERE  IN THIS FILING THAT ARE NOT
STATEMENTS   OF   HISTORICAL   OR  CURRENT  FACT   CONSTITUTE   "FORWARD-LOOKING
STATEMENTS."

OVERVIEW

     Safe  Transportation was incorporated in Florida on December 6, 1994 as Big
Daddy's  Auto Sales,  Inc. Big Daddy's Auto Sales was in the business of selling
used  automobiles.  On April 19, 2000, Big Daddy's Auto Sales,  Inc. changed its
name to  Sweets  & Eats,  Inc.  Sweets  & Eats was in the  business  of  selling
chocolate  candy over the Internet.  On December 18, 2000,  Sweets & Eats,  Inc.
entered into a reverse  merger with Safe  Transportation  Systems,  Inc. In that
merger, the former  stockholders of Safe Transportation  Systems,  Inc. received
12,000,000  shares of common  stock of Sweets & Eats for all of the common stock
of Safe Transportation  Systems,  Inc. In that merger, Sweets & Eats changed its
name to Safe Transportation Systems, Inc.

     Between  July 1998 and October  2000,  Safe  Transportation  developed  and
tested  safety  products  for the  trucking  industry.  During  that time,  Safe
Transportation  spent  approximately $8 million on administration and developing
and  patenting  a  proprietary   technology  called  the  Accident  Control  and
Anti-Jackknife System. This system is intended to help prevent a tractor-trailer
from losing  control and  jackknifing.  The U.S.  Department  of  Transportation
defines  "jackknifing"  as  occurring  when the rear wheels of the tractor  lose
traction. This instability results in the tractor rotating rapidly and violently
slamming into the side of the trailer.

     Safe  Transportation has completed  development and testing of the Accident
Control and  Anti-Jackknife  System and has now focused its efforts on marketing
and distribution.  To date, Safe  Transportation has not earned any revenue from
the sale of this product.

PLAN OF OPERATION

     Given  the  economic   importance  of  keeping  trucks  moving  safely  and
efficiently,   Safe  Transportation  has  developed  a  multi-pronged   National
Marketing  Campaign,  which divides  North America into five regional  districts
geographically  arranged with consideration to major trucking fleets,  petroleum
and  chemical  refineries,  deep-sea  ports and  heavy  industry.  The  campaign
includes:

     o    DIRECT SALES. Safe  Transportation  intends to initially market to the
          65,000 carriers that employ liquid  petroleum  tankers and the 350,000
          hazardous material haulers. Safe Transportation believes these tankers
          and haulers have the greatest  incentive to use its product because of
          the potential harm that could be caused in accidents.  These companies
          have the highest  insurance  costs;  the highest cargo risks; the most
          expensive equipment and the greatest liabilities in an accident.



                                       10
<PAGE>

     o    In addition to identifying the top fleets, Safe Transportation intends
          to continue to market  through and maintain its active  memberships in
          strategic industry associations like:

          o  The American Trucking  Association with over 45,000 member trucking
             companies.

          o  The National Tank Truck Carriers, which represents 85% of petroleum
             hazardous material hauler fleets.

          o  The  North  American  Chemical  Distributors   Association,   which
             represents 90% of chemical distributors.

          o  The Truck Trailer Manufacturers  Association,  which represents 90%
             of new trailer manufacturers.

          o  The  Commercial  Vehicle  Safety  Alliance,   the   administration,
             compliance and enforcement  body  representing  State,  Federal and
             Provincial Governments for commercial vehicle safety.

     Safe  Transportation  intends to increase exposure through all of these key
associations  with  presentations to their boards as well as hosting exhibits at
their trade shows and annual conferences.

     o    In order to introduce  the  potential  benefits of its  product,  Safe
          Transportation has begun to work with the insurance industry,  private
          and public  insurance  corporations;  key industry  lobby and research
          organizations like the Insurance  Institute for Highway Safety and the
          Highway Loss Data Institute;  and the industry's education branch, The
          American  Institute for Chartered  Property Casualty  Underwriters and
          the Insurance Institute of America.

     o    Safe  Transportation  will seek to develop  strategic  alliances  with
          original equipment trailer manufacturers.

     o    Safe  Transportation  is working with an established  Washington  D.C.
          lobbying  firm to furnish  government  and public  affairs  consulting
          services and to develop of a  government  public  affairs  strategy to
          acquaint  appropriate  Members  of  the  U.S.  Congress  and  relevant
          government  agencies  with the  existence  of the  technology  and its
          potential to improve highway safety.

     o    Safe Transportation  intends to expand by pursuing joint ventures.  In
          October 2001,  Safe  Transportation  entered into a  Subscription  and
          Distribution  Agreement  which provides for, among other things,  Safe
          Transportation  to obtain 50% of the common  stock of,  together  with
          800,000  shares of preferred  stock in a newly formed  United  Kingdom
          corporation, Safe Europe Plc., which will market Safe Transportation's
          product  in Europe  and the  Middle  East.  Safe  Transportation  also
          received a promissory note for $202,000 with interest  accruing at 12%
          per year until  December  31, 2001 and 18% per year  thereafter.  Safe
          Transportation  assigned 50% of the  preferred  stock it receives from
          Safe Europe and the promissory note to a creditor in satisfaction of a
          $175,000 note payable.  Under this agreement,  Safe Europe will be the
          exclusive distributor of Safe  Transportation's  product in Europe and
          the Middle  East.  Safe Europe has the right to  purchase  the product
          from Safe  Transportation or to manufacture the products itself.  Safe
          Europe will pay Safe  Transportation  a royalty on each unit  produced
          equal to  12.5% of its cost or  $250.00,  whichever  is  higher.  Safe
          Transportation  has the right to appoint three of the six directors in
          Safe Europe.

     Safe Transportation  Systems has out-sourced the manufacture of its product
to a third party and intends to concentrate its efforts on the sales,  marketing
and distribution of its product.

RESEARCH AND DEVELOPMENT

     Safe Transportation  believes that its product is ready for market and does
not anticipate  incurring any significant research and development expenses over
the next 12 months.

PLANT AND EQUIPMENT

     Safe Transportation does not anticipate  incurring any significant expenses
for the purchase of plant or equipment over the next 12 months.



                                       11
<PAGE>

EMPLOYEES

     Safe Transportation has five full time employees and anticipates increasing
the  number  of  employees  to  approximately  20-25  over the next 12 months if
funding permits.

RESULTS OF OPERATIONS

     YEAR ENDED  DECEMBER  31, 2001  COMPARED TO YEAR ENDED  DECEMBER  31, 2000.
During the year ended  December 31, 2001,  Safe  Transportation  had no revenues
from operations.  It incurred selling,  general and  administrative  expenses of
$1,178,802  in the year ended  December 31, 2001  compared to  $2,761,511 in the
comparable  period in the prior  year.  The  decrease  in  selling,  general and
administrative  expenses  resulted  principally  from the  reduction of non-cash
compensation in the form of stock and option granted to directors, employees and
consultants.  The decrease in non-cash  compensation  was partially offset by an
increase in payroll resulting  primarily from the transition from a research and
development company to a marketing and distribution  company.  Selling,  general
and  administrative  expenses  for the year ended  December  31, 2001  consisted
primarily of payroll and payroll taxes of $477,000, rent of $116,500,  insurance
of $48,000,  professional  fees of  $136,000,  travel and  marketing of $51,000,
telephone of $34,000,  depreciation  and  amortization  of $43,000,  interest of
$83,000 and miscellaneous expenses of $49,000. These operating expenses resulted
in a net loss of  $(1,178,802)  or $(0.06) per share in the year ended  December
31,  2001  compared  to a net loss of  $(2,761,511)  or $(0.23) per share in the
comparable  period  in the  prior  year.  Selling,  general  and  administrative
expenses for the year ended  December 31, 2000  consisted  primarily of non-cash
compensation  of  $2,263,150,  rent of $36,000,  advertising  and  promotion  of
$141,000, professional fees of $70,000, travel of $122,000, telephone of $9,000,
depreciation  and  amortization of $3,000,  payroll and payroll taxes of $36,000
and miscellaneous office of $75,000.

LIQUIDITY AND SOURCES OF CASH

     Safe  Transportation  is dependent on external cash to fund its operations.
It will  need to raise  capital  to  continue  operations  and to  complete  its
transition  from  a  research  and  development   company  to  a  marketing  and
distribution company.  During this transition,  Safe Transportation  anticipates
that  its  most  significant   operating  expense  will  be  sales,   marketing,
distribution, OEM integration and technical support expenses. As of December 31,
2001, Safe Transportation had $11,474 of cash-on-hand.

     For the  year  ended  December  31,  2001,  Safe  Transportation  had a net
increase  in cash of  $10,749,  derived  primarily  from  net cash  provided  by
financing  activities,  which  offset net cash used in operating  and  investing
activities.   Net  cash  provided  by  financing  activities  totaled  $537,861,
consisting primarily of stockholders' loans of $52,950, notes payable of $72,000
and the  proceeds of  long-term  debt of  $175,000,  convertible  debentures  of
$150,000  and common stock of  $151,411.  Net cash used in operating  activities
totaled $359,162,  consisting  primarily of a net loss of $1,178,802,  which was
partially offset by depreciation and amortization of $63,449,  loss on disposals
of property  and  equipment  of $62,449 and an increase in accounts  payable and
accrued  expenses of  $640,142.  Net cash used in investing  activities  totaled
$167,950  and  consisted  of the  purchase of  engineering  patterns and casting
molds, computer equipment and software, and furniture and fixtures.

     From September to November 2001,  Safe  Transportation  raised  $150,000 of
gross proceeds from the issuance of  convertible  debentures.  These  debentures
accrue interest at a rate of 6% per year and mature five years from the issuance
date.  The  debentures  are  convertible  at the holder's  option any time up to
maturity  at a  conversion  price equal to the lower of (i) $0.24 or (ii) 80% of
the  lowest  closing  bid  price of the  common  stock  for the 5  trading  days
immediately preceding the conversion date. At maturity,  Safe Transportation has
the  option to either  pay the  holder the  outstanding  principal  balance  and
accrued  interest or to convert the debentures  into shares of common stock at a
conversion  price  equal  to the  lower of (i)  $0.24 or (ii) 80% of the  lowest
closing  bid  price of the  common  stock  for the 5  trading  days  immediately
preceding the conversion date. In connection with these convertible  debentures,
Safe  Transportation  entered into various  consulting  agreements which provide
for, among other things, the payment of fees of approximately $30,000.

     In December 2001,  Safe  Transportation  borrowed  $46,000 and $26,000 from
Cornell Capital  Partners,  L.P. The loans bear an interest rate of 12% per year
and the  first  loan  was due in  January  2002 and the  second  loan was due in
February 2002. Safe  Transportation  is in default of these loans for failing to
pay  principal  and interest  when due. In  connection  with these  loans,  Safe
Transportation  granted to Cornell Capital Partners  warrants to purchase 46,000
shares of common stock at an exercise  price of $0.01 per share.  Our  Executive
Vice  President,  James B.  Long,  personally  guaranteed  the loan and  pledged
4,250,000   shares  of  common  stock  as  collateral  to  secure  his  guaranty
obligations.  Cornell Capital Partners has started selling the pledged shares in
partial satisfaction of the indebtedness.


                                       12
<PAGE>

     In  September  2001,  Safe  Transportation  entered  into an Equity Line of
Credit Agreement with Cornell Capital Partners,  LP. Under this agreement,  Safe
Transportation  may issue and sell common stock to Cornell for a total  purchase
price of up to $5.0 million. Subject to certain conditions,  Safe Transportation
will be entitled to commence  drawing down on the equity line of credit when the
common stock under the Equity Line of Credit is registered  with the  Securities
and Exchange Commission and for two years thereafter. The purchase price for the
shares will be equal to 90% of the lowest  closing bid price of the common stock
during the five  trading  days  following  the notice  date.  The amount of each
advance is subject to an  aggregate  maximum  advance  amount of $208,333 in any
thirty-day  period.  Cornell was  entitled to a one-time  fee equal to $177,500,
payable  in  shares  of  common  stock  in two  equal  installments.  The  first
installment  was paid in September  2001 and resulted in the issuance of 781,250
shares of common  stock.  The second  installment  is due on the  earlier of the
filing of a registration  statement registering the shares of common stock to be
issued  under the Equity  Line of Credit or March  2002.  Cornell is entitled to
retain 3.75% of each advance. In addition, Safe Transportation will entered into
a  placement  agent  agreement  with  Westrock  Advisors,   Inc.,  a  registered
broker-dealer.  Pursuant to the placement agent agreement,  Safe  Transportation
will pay a one-time placement agent fee of 100,000 shares of common stock.

     In 2002,  Safe  Transportation  satisfied a note payable of $175,000,  plus
interest.  Originally,  this note  payable  was due in monthly  installments  of
principal and interest through December 15, 2001. Safe Transportation  defaulted
on the original terms of the note and, in October 2001,  renegotiated the terms.
The new terms  provide for  monthly  interest  payments at 12% per year  through
December 31, 2001 and 18%  thereafter,  with  principal  due in January 2003. In
2002, Safe Transportation assigned 50% of the preferred stock in Safe Europe and
a promissory  note in the amount of $202,100 it received from Safe Europe to the
creditor in satisfaction of the notes payable.

     In January 2002, Safe Transportation  borrowed $20,812 from Cornell Capital
Partners,  L.P.  The loan bears an  interest  rate of 12% per year and the first
loan was due in March 2002. Safe Transportation is in default of these loans for
failing to pay principal and interest  when due. Our Executive  Vice  President,
James B. Long,  personally  guaranteed the loan and pledged  4,872,000 shares of
common stock as collateral to secure his guaranty  obligations.  Cornell Capital
Partners had started  selling the pledged shares in partial  satisfaction of the
indebtedness.

     Safe  Transportation  has judgments  against it for a total of  $64,309.98,
plus interest.  These amounts are due and payable.  Safe Transportation does not
have enough  cash-on-hand to satisfy these  judgments.  Excluding the judgments,
Safe  Transportation  believes it has sufficient funds to finance its operations
for the next three months. Thereafter,  Safe Transportation will need additional
capital to finance  its  operations  and to satisfy the  judgments.  In order to
raise such capital,  Safe  Transportation  will need to raise additional capital
from loans or the sale of securities,  if available.  Other than the Equity Line
of Credit,  Safe Transportation does not have any commitments to receive capital
from any source.

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 141, "Business  Combinations," and No. 142,
"Goodwill and Other  Intangible  Assets",  effective for fiscal years  beginning
after December 15, 2001.  Under the new rules,  goodwill and  intangible  assets
deemed to have indefinite  lives will no longer be amortized but will be subject
to annual  impairment tests in accordance with the Statements.  Other intangible
assets will continue to be amortized over their useful lives.

     In August 2001, the Financial  Accounting  Standards Board Issued Statement
of Financial  Accounting  Standards  No. 143  "Accounting  for Asset  Retirement
Obligations",  effective for fiscal years  beginning  after June 15, 2002.  This
statement   addresses   financial   accounting  and  reporting  for  obligations
associated with the retirement of tangible  long-lived assets and the associated
retirement costs.

     In October 2001, the Financial  Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 144  "Accounting  for the  Impairment or
Disposal of  Long-lived  Assets",  effective  for fiscal years  beginning  after
December 15, 2001. This statement addresses  financial  accounting and reporting
for the impairment or disposal of long-lived assets.

     Safe  Transportation  believes that adopting the above  statements will not
have a material impact on the financial statements.

BUSINESS RISK FACTORS

     Safe  Transportation  is subject to various risks that may materially  harm
its  business,  financial  condition  and  results  of  operations.  YOU  SHOULD
CAREFULLY  CONSIDER THE RISKS AND  UNCERTAINTIES  DESCRIBED  BELOW AND THE OTHER
INFORMATION IN THIS FILING BEFORE  DECIDING TO PURCHASE OUR COMMON STOCK. IF ANY


                                       13
<PAGE>

OF  THESE  RISKS  OR  UNCERTAINTIES  ACTUALLY  OCCUR,  OUR  BUSINESS,  FINANCIAL
CONDITION OR OPERATING  RESULTS COULD BE MATERIALLY  HARMED.  IN THAT CASE,  THE
TRADING  PRICE OF OUR COMMON STOCK COULD  DECLINE AND YOU COULD LOSE ALL OR PART
OF YOUR INVESTMENT.

     WE HAVE HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE IN THE FUTURE

     We have  historically  lost money.  In the year ended December 31, 2001, we
had a net loss of $(1,178,802) or $(0.06) per share. Future losses are likely to
occur.  Accordingly,  we may  experience  significant  liquidity  and cash  flow
problems  because our operations are not profitable.  No assurances can be given
that we will be successful in reaching or maintaining profitable operations.

     WE WILL NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS

     We have relied on significant  external  financing to fund our  operations.
Such financing has  historically  come from a combination of borrowings and sale
of common stock from third  parties and funds  provided by certain  officers and
directors.  We cannot assure you that financing whether from external sources or
related parties will be available if needed or on favorable terms. Our inability
to  obtain  adequate  financing  will  result  in the need to  curtail  business
operations.  Any of these events would be materially harmful to our business and
may result in a lower stock price. We will need to raise  additional  capital to
fund our  anticipated  operating  expenses  and future  expansion.  Among  other
things, external financing may be required to cover our operating costs.

     WE HAVE BEEN THE SUBJECT OF A GOING  CONCERN  OPINION FROM OUR  INDEPENDENT
     AUDITORS, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS
     WE OBTAIN ADDITIONAL FUNDING

     Our independent auditors have added an explanatory paragraph to their audit
opinion  issued in connection  with the year ended  December 31, 2001  financial
statements,  which  states that Safe  Transportation's  ability to continue as a
going  concern  depends upon its ability to achieve  profitable  operations  and
positive cash flows from operations or obtaining debt or equity  financing.  Our
financial  statements do not include any adjustments  that might result from the
outcome of this  uncertainty.  We expect to be able to continue  operations  for
three months with the cash currently on hand.

     WE HAVE A WORKING CAPITAL  DEFICIT,  WHICH MEANS THAT OUR CURRENT ASSETS ON
     DECEMBER 31, 2001 WERE NOT SUFFICIENT TO SATISFY OUR CURRENT LIABILITIES ON
     THAT DATE

     We had a working  capital  deficit of $955,812 at December 31, 2001,  which
means that our current  liabilities  exceeded our current assets on December 31,
2001 by  $955,812.  Current  assets are assets that are expected to be converted
into cash within one year and, therefore, may be used to pay current liabilities
as they become due. Our working capital deficit means that our current assets on
December 31, 2001 were not sufficient to satisfy all of our current  liabilities
on that date.

     OUR FUTURE DEPENDS UPON THE MARKET ACCEPTANCE OF A SINGLE PRODUCT

     Safe  Transportation  markets and  distributes a single  product called the
Accident Control and Anti-Jackknife System. To date, Safe Transportation has not
had any revenue from the sale of its product. Safe  Transportation's  success is
completely dependent on the trucking industry's acceptance of this product, such
that Safe  Transportation  can  generate  sufficient  revenues  and cash flow to
finance its operations.  Safe  Transportation  may need to overcome  substantial
hurdles to obtain such market  acceptance,  including  convincing  the  trucking
industry of the necessity of such product and  encouraging  insurance  companies
and government entities to offer incentives to use our product.  Such incentives
may include lower insurance premiums or tax rebates.  No assurances can be given
that the market will accept our product.

     THE PRICE OF OUR COMMON STOCK MAY BE AFFECTED BY A LIMITED  TRADING  VOLUME
     AND MAY FLUCTUATE SIGNIFICANTLY

     There has been a limited  public  market for our common stock and there can
be no assurance that an active trading market for our common stock will develop.
An absence of an active trading market could adversely affect our  stockholders'
ability to sell our common stock in short time periods,  or possibly at all. Our
common  stock  has  experienced,  and is  likely to  experience  in the  future,
significant  price and volume  fluctuations  which  could  adversely  affect the
market price of our common stock without regard to our operating performance. In
addition,  we  believe  that  factors  such  as  quarterly  fluctuations  in our


                                       14
<PAGE>

financial  results and changes in the overall  economy or the  condition  of the
financial  markets  could  cause  the  price of our  common  stock to  fluctuate
substantially.

     WE COULD FAIL TO ATTRACT OR RETAIN KEY PERSONNEL

     Our success  largely depends on the efforts and abilities of key executives
and  consultants,  including  Ian  Pallett,  our  Chief  Executive  Officer  and
President,  and James B. Long,  our Executive  Vice  President.  The loss of the
services of either Mr. Long or Mr.  Pallett could  materially  harm our business
because of the cost and time necessary to replace and train a replacement.  Such
a loss would also divert management  attention away from operational  issues. We
do not presently  maintain a key-man life insurance policy on either Mr. Long or
Mr. Pallett.

ITEM 7.  FINANCIAL STATEMENTS

                                             SAFE TRANSPORTATION SYSTEMS, INC.
                                                 (A DEVELOPMENT STAGE COMPANY)
------------------------------------------------------------------------------

                                                          FINANCIAL STATEMENTS

                                                             DECEMBER 31, 2001



                                       15

<PAGE>


C O N T E N T S
                                                                      Page
------------------------------------------------------------------------------

INDEPENDENT AUDITORS' REPORTS                                         F-1 - F-2

FINANCIAL STATEMENTS

      Balance Sheet                                                     F-3

      Statements of Operations                                          F-4

      Statements of Changes in Deficiency in Assets                     F-5

      Statements of Cash Flows                                          F-6

      Notes to Financial Statements                                  F-7 - F-16




<PAGE>



INDEPENDENT AUDITORS' REPORT
------------------------------------------------------------------------------

Board of Directors
Safe Transportation Systems, Inc.

We have audited the accompanying  balance sheet of Safe Transportation  Systems,
Inc. (a  development  stage  company)  as of  December  31, 2001 and the related
statements of operations  and changes in deficiency in assets and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial  statements  based on our audit.  The 2000 financial  statements  were
audited by other auditors whose report dated April 16, 2001, on those statements
included an explanatory  paragraph describing conditions that raised substantial
doubt about the Company's ability to continue as a going concern.  The financial
statements  for the period from  inception  (July 8, 1998) through  December 31,
1999 were  audited by other  auditors  whose  report  dated  December  29,  2000
expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the 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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of Safe  Transportation  Systems,
Inc. as of December 31,  2001,  and the results of its  operations  and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States.

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 sustained  operating losses and negative
cash flows from operations  since  inception,  has experienced  severe liquidity
problems and has negative working capital which raises  substantial  doubt about
its  ability to  continue as a going  concern.  Management's  plans in regard to
these matters are  discussed in Note 2. The financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.


                                    /s/ KAUFMAN, ROSSIN & CO., P.A.
                                    -------------------------------
                                    KAUFMAN, ROSSIN & CO., P.A.

April 25, 2002
Miami, Florida





                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




To the Board of Directors
Safe Transportation Systems, Inc.,
Formerly Sweets & Eats, Inc.


We have audited the related  statements of operations  and  deficiency in assets
and cash  flows for the year  ended  December  31,  2000 of Safe  Transportation
Systems, Inc., (a development stage company). These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these 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 audits 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,  based on our audit of Safe  Transportation  Systems,  Inc.,  (a
development stage company),  the financial  statements referred to above present
fairly, in all material respects, the results of its operation and its cash flow
for the year ended December 31, 2000, in conformity with  accounting  principles
generally accepted in the United States of America.

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 suffered losses from operations and has a
net  capital  deficiency  that  raise  substantial  doubt  about its  ability to
continue as a going concern.  Management's  plans in regard to 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/ SWEENEY, GATES & CO.
                                    ------------------------
                                    SWEENEY, GATES & CO.

Fort Lauderdale, Florida
April 16, 2001





                                      F-2
<PAGE>

SAFE TRANSPORTATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2001
================================================================================
ASSETS
================================================================================

CURRENT ASSETS - CASH                                            $    11,474

PROPERTY AND EQUIPMENT (NOTE 3)                                      113,968

DEFERRED OFFERING COSTS (NOTE 8)                                      37,500

PREPAID CONSULTING FEES (NOTE 4)                                      10,000

PATENT PENDING COSTS                                                  11,469

DEPOSITS                                                               2,500
--------------------------------------------------------------------------------

      TOTAL ASSETS                                               $   186,911
================================================================================

LIABILITIES AND DEFICIENCY IN ASSETS
================================================================================

CURRENT LIABILITIES
   Accounts payable and accrued expenses                         $   824,336
   Current portion of long-term debt (Note 7)                         20,000
   Loans payable - stockholders (Note 6)                              50,950
   Notes payable (Note 6)                                             72,000
--------------------------------------------------------------------------------
     Total current liabilities                                       967,286

CONVERTIBLE DEBENTURES (NOTE 4)                                      150,000
LONG-TERM DEBT (NOTE 7)                                              202,100
--------------------------------------------------------------------------------
      Total liabilities                                            1,319,386
--------------------------------------------------------------------------------


COMMITMENTS (NOTE 11)

DEFICIENCY IN ASSETS
   Preferred stock, no par value 5,000,000 shares
      authorized, no shares issued and outstanding                         -
   Common stock, $0.001 par value 50,000,000 shares
      authorized, 19,170,269 shares issued and
      outstanding (Note 10)                                           19,170
   Additional paid-in capital                                      8,027,828
   Accumulated other comprehensive loss                        (       6,794)
   Deficit accumulated during the development stage            (   9,172,679)
--------------------------------------------------------------------------------
     Total deficiency in assets                                (   1,132,475)
--------------------------------------------------------------------------------

      TOTAL LIABILITIES AND DEFICIENCY IN ASSETS                 $   186,911
================================================================================



                             See accompanying notes.

                                        F-3

<PAGE>

<TABLE>
SAFE TRANSPORTATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001 AND 2000 AND THE PERIOD
FROM INCEPTION (JULY 8, 1998) TO DECEMBER 31, 2001
==========================================================================================


<CAPTION>
                                           Year Ended December 31,           Inception
                                      ---------------------------------- (July 8, 1998) to
                                            2001              2000       December 31, 2001
==========================================================================================
<S>                                   <C>               <C>                 <C>
SALES                                    $        -        $        -       $        -
------------------------------------------------------------------------------------------

OPERATING EXPENSES
  Selling, general and administrative
   Non-cash compensation and
services                                      39,000        2,263,150        6,900,340
   Other selling, general and
administrative                             1,139,802          491,892        1,935,549
  Research and development                         -            6,469          336,790
------------------------------------------------------------------------------------------
     Total operating expenses              1,178,802        2,761,511        9,172,679
------------------------------------------------------------------------------------------

NET LOSS                                 $1,178,802        $2,761,511       $9,172,679
==========================================================================================

LOSS PER SHARE - BASIC AND DILUTED    (  $     0.06)    ( $      0.23)
==========================================================================================

WEIGHTED AVERAGE NUMBER OF SHARES
   OUTSTANDING                            18,317,247       12,096,665
==========================================================================================
</TABLE>



                             See accompanying notes.

                                        F-4

<PAGE>
SAFE TRANSPORTATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN DEFICIENCY IN ASSETS
YEARS ENDED DECEMBER 31, 2001 AND 2000 AND THE PERIOD FROM INCEPTION  (JULY 8,
1998) TO DECEMBER 31, 2001
<TABLE>
<CAPTION>
=============================================================================================================================
                                                                                                  Deficit
                                                                                 Accumulated    Accumulated
                                           Common Stock                             Other        During The
                                  ------------------------------    Additional   Comprehensive  Development
                                      Shares         Amount      Paid-In Capital Income/(Loss)     Stage          Total
=============================================================================================================================
<S>                                 <C>            <C>          <C>            <C>            <C>            <C>
                                             1     $        -     $        1     $        -     $        -     $        1
Issuance of stock, July 8, 1998
Foreign currency translation
   adjustment                                -              -              -          3,531              -          3,531
Net loss                                     -              -              -              -   (    169,082)  (    169,082)
-----------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1998                  1              -              1          3,531   (    169,082)  (    165,550)
Sale of stock                       11,426,059         11,426        406,299              -              -        417,725
Charge for sale of stock at less
   than fair market value                    -              -      4,563,190              -              -      4,563,190
Issuance of stock for services          41,016             41         34,959              -              -         35,000
Foreign currency translation
   adjustment                                -              -              -   (     14,539)             -   (     14,539)
Net loss                                     -              -              -              -   (  5,063,284)  (  5,063,284)
-----------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999         11,467,076         11,467      5,004,449   (     11,008)  (  5,232,366)  (    227,458)
Contribution of stockholders'
   loans                                     -              -        194,261              -              -        194,261
Sale of stock                          449,135            449        382,811              -              -        383,260
Issuance of stock for services       1,133,789          1,134      1,120,366              -              -      1,121,500
Issuance of stock options for
   services                                  -              -      1,141,650              -              -      1,141,650
Reorganization                       4,000,000          4,000   (      4,000)             -              -              -
Foreign currency translation
   adjustment                                -              -              -          4,042              -          4,042
Net loss                                     -              -              -              -   (  2,761,511)  (  2,761,511)
-----------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 2000         17,050,000         17,050      7,839,537   (      6,966)  (  7,993,877)  (    144,256)
Sale of stock                        1,314,019          1,314        156,368              -              -        157,682
Private placement costs                      -              -   (      6,271)             -              -   (      6,271)
Issuance of stock for equity line
   of credit                           781,250            781   (        781)             -              -              -
Issuance of stock for services          25,000             25          8,975              -              -          9,000
Issuance of stock options for
   services                                  -              -         30,000              -              -         30,000
Foreign currency translation
   adjustment                                -              -              -            172              -            172
Net loss                                     -              -              -              -   (  1,178,802)  (  1,178,802)
-----------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2001         $19,170,269    $   19,170     $8,027,828   ( $    6,794)  ( $9,172,679)  ( $1,132,475)
=============================================================================================================================
</TABLE>



                             See accompanying notes.

                                        F-5

<PAGE>
<TABLE>
<CAPTION>
SAFE TRANSPORTATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001 AND 2000 AND THE PERIOD
FROM INCEPTION (JULY 8, 1998) TO DECEMBER 31, 2001
==========================================================================================


                                                                             Inception
                                                                              (July 8,
                                                Year Ended December 31,       1998) to
                                             ----------------------------   December 31,
                                                  2001           2000           2001
==========================================================================================
<S>                                         <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                   ( $1,178,802)  ( $2,761,511)  ( $9,172,679)
------------------------------------------------------------------------------------------
  Adjustments to reconcile net loss to net
    cash used in operating activities:
   Depreciation and amortization                  63,449          3,089         66,538
   Loss on disposals of property and
    equipment                                     62,449              -         62,449
   Issuance of stock for services                  9,000      1,121,500      5,728,690
   Issuance of stock options for services         30,000      1,141,650      1,171,650
   Accrued interest on long-term debt             47,100              -         47,100
   Changes in operating assets and
    liabilities:
     Patent pending costs                              -    (    11,469)   (    11,469)
     Prepaid consulting fees                 (    30,000)             -    (    30,000)
     Deposits                                (     2,500)             -    (     2,500)
     Accounts payable and accrued expenses       640,142        141,498        817,542
------------------------------------------------------------------------------------------
        Total adjustments                        819,640      2,396,268      7,850,000
------------------------------------------------------------------------------------------
         Net cash used in operating
          activities                         (   359,162)   (   365,243)   ( 1,322,679)
------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment        (   167,950)   (    31,005)   (   198,955)
------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of deferred offering costs         (    37,500)             -    (    37,500)
  Proceeds from loans payable -
   stockholders                                   52,950              -         52,950
  Payments on loans payable - stockholders   (     2,000)             -    (     2,000)
  Proceeds from notes payable                     72,000              -         72,000
  Proceeds from long-term debt                   175,000              -        175,000
  Payment of loan costs                      (    24,000)             -    (    24,000)
  Proceeds from convertible debentures           150,000              -        150,000
  Net advances from stockholders                       -         13,316        194,261
  Proceeds from sale of stock, net               151,411        383,260        952,397
------------------------------------------------------------------------------------------
        Net cash provided by financing
         activities                              537,861        396,576      1,533,108
------------------------------------------------------------------------------------------

NET INCREASE IN CASH                              10,749            328         11,474

CASH - BEGINNING OF PERIOD                           725            397              -
------------------------------------------------------------------------------------------

CASH - END OF PERIOD                           $  11,474      $     725      $  11,474
==========================================================================================

Supplemental Disclosures of Cash Flow
 Information:
==========================================================================================

  Interest paid                                $  27,617      $       -      $  27,617
==========================================================================================

  Income taxes paid                            $       -      $       -      $       -
==========================================================================================
</TABLE>




                             See accompanying notes.

                                        F-6

<PAGE>
SAFE TRANSPORTATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
================================================================================

--------------------------------------------------------------------------------
NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

            BUSINESS AND BASIS OF PRESENTATION

            Big Daddy's Auto Sales,  Inc. ("Big  Daddy's") was  incorporated on
            December  6,  1994 in  Florida.  On April  19,  2000,  Big  Daddy's
            changed  its name to Sweets & Eats,  Inc.  ("S & E").  On  December
            18, 2000,  the  stockholders  of S & E  approved a merger with Safe
            Transportation   Systems,   Inc.   ("the   Company"),   a   Wyoming
            corporation located in Bellingham, Washington.

            The  merger  agreement  provided  that  the  Company's  stockholders
            receive  12,000,000  shares of common stock of S & E. At the date of
            the  transaction,  S & E had no assets,  liabilities  or operations.
            Therefore, for accounting purposes, the transaction was treated as a
            reorganization  and  accounted  for as a  reverse  acquisition.  The
            accompanying  financial  statements reflect the assets,  liabilities
            and operations of the Company as if it had been the reporting entity
            since inception.  On January 3, 2001, S & E changed its name to Safe
            Transportation Systems, Inc.

            The  Company  is  in  the  business  of  developing,  marketing  and
            distributing safety products for the trucking industry.  The Company
            is in the  development  stage and its efforts  through  December 31,
            2001 were principally devoted to organizational activities,  raising
            capital and development of its accident  control and  anti-jackknife
            system for tractor-trailers.

            PROPERTY AND EQUIPMENT

            Property and equipment is recorded at cost.  Expenditures  for major
            betterments  and additions are charged to the asset  accounts  while
            replacements, maintenance and repairs which do not improve or extend
            the lives of the respective assets are charged to expense currently.

            DEPRECIATION

            Depreciation  is computed  using the  straight-line  method over the
            estimated useful lives of the assets which range from 3 to 7 years.

            INCOME TAXES

            The Company  accounts  for income  taxes  according  to Statement of
            Financial  Accounting  Standards No. 109, which requires a liability
            approach to calculating  deferred  income taxes.  Under this method,
            deferred tax assets and  liabilities  are  recognized for future tax
            consequences attributable to differences between financial reporting
            and  income  tax bases of assets and  liabilities  and are  measured
            using enacted tax rates and laws expected to apply to taxable income
            in the years in which these temporary differences are expected to be
            recovered or settled.  A valuation  allowance is established when it
            is more likely than not that some or all of the  deferred tax assets
            will not be realized.


                                       F-7
<PAGE>


--------------------------------------------------------------------------------
NOTE 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------

            USE OF ESTIMATES

            The   preparation  of  financial   statements  in  conformity   with
            accounting  principles  generally  accepted  in  the  United  States
            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 respective  reporting  period.  Actual results could differ from
            those estimates.

            FAIR VALUE OF FINANCIAL INSTRUMENTS

            Statement of Financial  Accounting  Standards No. 107,  "Disclosures
            about Fair Value of Financial Instruments" requires that the Company
            disclose  estimated fair values for its financial  instruments.  The
            following  methods and assumptions  were used in estimating the fair
            values of each class of financial instruments disclosed herein:

               CASH AND  ACCOUNTS  PAYABLE AND ACCRUED  EXPENSES - The  carrying
               amounts approximate fair value because of the short-term maturity
               of the instruments.

               NOTES  PAYABLE,  LOANS PAYABLE,  LONG-TERM  DEBT AND  CONVERTIBLE
               DEBENTURES - The fair value is estimated  using  discounted  cash
               flows  based on the  Company's  incremental  borrowing  rates for
               similar types of borrowing arrangements. At December 31, 2001 the
               fair values approximated the carrying values.

            RESEARCH AND DEVELOPMENT EXPENSES

            Research  and  development  expenses  are charged to  operations  as
            incurred.

            START-UP COSTS

            The  Company  accounts  for  start up costs in  accordance  with the
            Accounting  Standards  Executive Committee of the AICPA Statement of
            Position 98-5,  "Reporting on the Costs of Start-Up Activities" (SOP
            98-5) which requires start-up costs, including  organizational costs
            be expensed as  incurred.  Accordingly,  the  Company  expensed  all
            start-up costs.

            NET INCOME (LOSS) PER SHARE

            The Company applies Statement of Financial  Accounting Standards No.
            128, "Earnings Per Share" (FAS 128) which requires dual presentation
            of net income (loss) per share;  Basic and Diluted.  Basic  earnings
            (loss) per share is computed  using the weighted  average  number of
            common  shares  outstanding  during the  period.  Outstanding  stock
            options and  warrants  were not  considered  in the  calculation  of
            diluted  earnings  (loss) per share as their  effect would have been
            antidilutive.   Securities  that  could  potentially   dilute  basic
            earnings per share in the future  consist of options and warrants to
            purchase 8,518,057 shares of common stock at various exercise prices
            ranging from $.01 through  $1.00 (see note 12).  Shares  outstanding
            exclude  15,690,000 shares of common stock that management  believes
            were issued without proper  authorization.  The Company  anticipates
            that such shares will be cancelled.


                                       F-8
<PAGE>


--------------------------------------------------------------------------------
NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------

            SEGMENT REPORTING

            Statement of Financial  Accounting  Standards No. 131,  "Disclosures
            about Segments of an Enterprise and Related  Information"  (SFAS No.
            131)  requires  companies  to  report  information  about  operating
            segments  in  interim  and  annual  financial  statements.  It  also
            requires segment disclosures about product and services,  geographic
            areas and major  customers.  The Company did not have any separately
            reportable operating segments for the period from inception (July 8,
            1998) through December 31, 2001.

            FOREIGN CURRENCY TRANSLATION

            The functional currency of the Company was the Canadian dollar until
            October 18,  2000.  Since that date,  the Company  reports in United
            States  dollars.  Accordingly,  the  Company has applied the current
            rate method to  translate  the prior  financial  statements  and the
            current  transactions  into United  States  dollars.  All assets and
            liabilities  are translated  using the period-end  exchange rate and
            all  expenses  are  translated  at the average of exchange in effect
            during  the  period.   Translation   adjustments   are  recorded  in
            comprehensive   income   (loss)  in  the  statement  of  changes  in
            deficiency in assets.

            NEW ACCOUNTING PRONOUNCEMENTS

            In June  2001,  the  Financial  Accounting  Standards  Board  issued
            Statement  of  Financial  Accounting  Standards  No. 141,  "Business
            Combinations," and No. 142, "Goodwill and Other Intangible  Assets",
            effective for fiscal years beginning after December 15, 2001.  Under
            the  new  rules,  goodwill  and  intangible  assets  deemed  to have
            indefinite  lives will no longer be amortized but will be subject to
            annual  impairment  tests in accordance with the  Statements.  Other
            intangible  assets will  continue to be amortized  over their useful
            lives.  The Company is currently  assessing  the impact of SFAS Nos.
            141 and 142 which is not  expected to have a material  impact on the
            Company's  financial  statements,  however,  future  amortization of
            goodwill  that  relates  to  future  acquisitions,  if any,  will be
            affected by these statements.

            In August 2001,  the  Financial  Accounting  Standards  Board Issued
            Statement of Financial  Accounting Standards No. 143 "Accounting for
            Asset Retirement Obligations",  effective for fiscal years beginning
            after June 15, 2002. This statement addresses  financial  accounting
            and  reporting for  obligations  associated  with the  retirement of
            tangible long-lived assets and the associated retirement costs.

            In October 2001,  the Financial  Accounting  Standards  Board issued
            Statement of Financial  Accounting Standards No. 144 "Accounting for
            the  Impairment  or Disposal of  Long-lived  Assets",  effective for
            fiscal years  beginning  after  December 15,  2001.  This  statement
            addresses  financial  accounting and reporting for the impairment or
            disposal of long-lived assets.

            The Company  believes  that  adopting SFAS Nos. 143 and 144 will not
            have a material impact on the financial statements.


                                       F-9
<PAGE>

--------------------------------------------------------------------------------
NOTE 2.     GOING CONCERN
--------------------------------------------------------------------------------

            The Company has sustained  operating  losses and negative cash flows
            from operations  since inception,  has experienced  severe liquidity
            problems and has negative  working capital at December 31, 2001. The
            Company's  ability to continue as a going concern is dependent  upon
            achieving  profitable   operations  and  positive  cash  flows  from
            operations or obtaining debt or equity  financing.  These conditions
            raise substantial doubt about the Company's ability to continue as a
            going  concern.   The  financial   statements  do  not  include  any
            adjustments   that   might   result   from  the   outcome  of  these
            uncertainties.

            Management's  plans in  regard to this  matter  is to raise  capital
            pursuant  to an  Equity  Line of Credit  Agreement  (see Note 8) and
            become   profitable   by   marketing   its   accident   control  and
            anti-jackknife system in the United States and Europe.


--------------------------------------------------------------------------------
NOTE 3.     PROPERTY AND EQUIPMENT
--------------------------------------------------------------------------------

            Property  and  equipment  at  December  31,  2001  consisted  of the
            following:

            Furniture and fixtures                                  $   82,030
            Computer equipment and software                             22,883
            Engineering and patterns                                    27,792
            --------------------------------------------------------------------
                                                                       132,705
            Less: accumulated depreciation                         (    18,737)
            --------------------------------------------------------------------

                                                                    $  113,968
            ====================================================================

            Depreciation  expense for the year ended  December 31, 2001 and 2000
            amounted to $19,449 and 3,089, respectively.


--------------------------------------------------------------------------------
NOTE 4.     CONVERTIBLE DEBENTURES
--------------------------------------------------------------------------------

            From  September  through  November  2001,  the  Company  borrowed an
            aggregate  of $150,000  from  various  unrelated  parties and issued
            convertible  debentures  which  provide  for,  among  other  things,
            interest  at 6% per annum and  matures  five years from the  funding
            date. The debentures are convertible at the holder's option any time
            up to maturity at a specified  price,  as defined.  At the Company's
            option,  at maturity,  the entire  principal  amount and all accrued
            interest  shall be either paid to the holder or  converted to common
            stock at a specified price, as defined.

            In connection with these convertible debentures, the Company entered
            into various  consulting  agreements  which provide for, among other
            things, the payment of fees aggregating approximately $30,000. These
            fees were recorded as prepaid  consulting  costs on the accompanying
            balance  sheet  and are  amortized  over the life of the  consulting
            agreements.  Amortization  expense for the year ended  December  31,
            2001 amounted to $20,000.


                                       F-10
<PAGE>


--------------------------------------------------------------------------------
NOTE 5.     SUBSCRIPTION AND DISTRIBUTION AGREEMENT
--------------------------------------------------------------------------------

            In  October  2001,  the  Company  entered  into a  Subscription  and
            Distribution  Agreement which provides for, among other things,  the
            Company to obtain a 50% ownership  interest in a newly formed United
            Kingdom  Corporation  ("Safe Europe") which will market the products
            developed by the Company in Europe and the Middle East.  Pursuant to
            the  agreement,  Safe Europe was to raise capital  through a private
            placement  offering and repay  $202,100 of the  Company's  long-term
            debt.  The private  placement and debt  repayment  were completed in
            2002.


--------------------------------------------------------------------------------
NOTE 6.     LOANS AND NOTES PAYABLE
--------------------------------------------------------------------------------

            Loans  payable  -  stockholders  at  December  31,  2001  represents
            unsecured  loans from various  stockholders  which are due on demand
            and bear interest at 8% per annum.

            Notes  payable at December 31, 2001 consists of two notes payable to
            an unrelated  partnership  which bear  interest at 12% per annum and
            mature through  February 28, 2002, with the interest rate increasing
            to 24%  thereafter.  One of the notes contains a warrant to purchase
            46,000  shares of common  stock for $0.01 per  share.  The notes are
            guaranteed by one of the stockholders.


--------------------------------------------------------------------------------
NOTE 7.     LONG-TERM DEBT
--------------------------------------------------------------------------------

            Long-term debt at December 31, 2001 consists of a note payable to an
            individual  which  originally  was due in  monthly  installments  of
            principal  and  interest  through  December  15,  2001.  The Company
            defaulted  on the  original  terms of the note and in October  2001,
            renegotiated  the terms of the note with the  lender.  The new terms
            provide  for  monthly  interest  payments  at 12% per annum  through
            December 31, 2001 and 18% per annum  thereafter,  with principal due
            in January  2003.  In  addition,  the  lender  received a warrant to
            purchase  250,000  shares of common stock of the Company at $.08 per
            share.  The warrant  expires in October  2006 and allows the warrant
            holder to sell any or all of the  warrants  to the  Company for $.08
            per share at any time prior to expiration.  Accordingly, the current
            portion of long-term  debt  includes  $20,000  related to this "put"
            option.


--------------------------------------------------------------------------------
NOTE 8.     EQUITY LINE OF CREDIT
--------------------------------------------------------------------------------

            In September 2001, the Company entered into an Equity Line of Credit
            Agreement   (Agreement)  with  an  entity  (Investor).   Under  this
            Agreement,  the  Company may issue and sell to the  Investor  common
            stock for a total purchase price of up to $5,000,000. This Agreement
            will   commence  when  the  common  stock  under  the  Agreement  is
            registered  with the  Securities  and Exchange  Commission  and will
            continue  for two years  thereafter.  The amount of each  advance is
            subject to an aggregate  maximum  advance  amount of $208,333 in any
            thirty day period.  The purchase  price for the shares will be equal
            to 90% of the lowest  closing bid price of the common  stock  during
            the five trading days following the notice date.


                                       F-11
<PAGE>


--------------------------------------------------------------------------------
NOTE 8.     EQUITY LINE OF CREDIT (CONTINUED)
--------------------------------------------------------------------------------

            As consideration  for entering into the Agreement,  the Company will
            pay the  Investor  a fee  equal to  $177,500,  payable  in shares of
            common stock in two equal  installments.  The first  installment was
            paid on September  6, 2001 and amounted to 781,250  shares of common
            stock. The second installment is due on the earlier of the filing of
            a registration  statement  registering the shares of common stock to
            be issued under the  Agreement or six months after the closing date,
            whichever occurs first. The shares under the second installment have
            not yet been issued. The Company will also pay the Investor a fee of
            3.75% of each advance.

            In  connection  with the  Agreement,  the  Company  paid  $37,500 in
            professional  fees  which  have been  recorded  on the  accompanying
            balance  sheet  as  deferred  offering  costs.  These  fees  will be
            deducted from the proceeds related to the sale of common stock under
            the agreement in future periods.


--------------------------------------------------------------------------------
NOTE 9.     INCOME TAXES
--------------------------------------------------------------------------------

            The components of income taxes were as follows:

                                                         2001           2000
            ====================================================================

            Provision (Benefit) For Income Taxes
              Current                                 $       -      $       -

              Deferred                                  398,000         70,000

            Change in Valuation Allowance           (   398,000)   (    70,000)
            --------------------------------------------------------------------

            Income Tax Expense                        $       -      $       -
            ====================================================================

            The major elements  contributing  to the  difference  between income
            taxes and the amount computed by applying the federal  statutory tax
            rate of 34% to  income  before  income  taxes  for the  years  ended
            December 31, 2001 and 2000 are as follows:

                                                         2001           2000
            ====================================================================

            Income tax benefit at statutory rate      $ 401,000      $ 818,000
            Change in valuation allowance           (   398,000)   (    70,000)
            Canadian losses prior to merger                   -    (   150,000)
            Non-deductible expenses                           -    (   598,000)
            Permanent differences and other         (     3,000)             -
            --------------------------------------------------------------------

                                                      $       -      $       -
            ====================================================================

            The Company has net operating loss  carryforwards  of  approximately
            $1,006,000  for United  States  income  tax  purposes,  expiring  in
            various years through 2021.


                                       F-12
<PAGE>


--------------------------------------------------------------------------------
NOTE 9.     INCOME TAXES (CONTINUED)
--------------------------------------------------------------------------------

            At  December   31,  2001,   approximate   deferred  tax  assets  and
            liabilities were as follows:

            DEFERRED TAX ASSETS:
            --------------------
            Accrued payroll                                          $ 126,000
            Net operating loss carryforward                            342,000
            --------------------------------------------------------------------
            Total deferred tax assets                                  468,000
            Less valuation allowance                                 ( 468,000)
            --------------------------------------------------------------------
                                                                     $       -
            ====================================================================


--------------------------------------------------------------------------------
NOTE 10.    CAPITAL TRANSACTIONS
--------------------------------------------------------------------------------

            On October 1, 2000, in  contemplation  of the merger with S & E, the
            Company  split its shares  1.17 for one and all share  amounts  have
            been reflected retroactively.

            In July 1998,  the Company  issued one share of common  stock to its
            founder.

            On May 31, 1999, the Company sold 10,913,245  shares to officers for
            $93,125 and 264,844  shares for $113,000.  Compensation  expense was
            charged  for the  difference  between  the cost and the fair  market
            value of $4,563,190.

            From June through  September  1999,  the Company sold 247,970 shares
            for $211,600. On August 25, 1999, 41,016 shares of common stock were
            issued for services. The fair market value of $35,000 was charged to
            expense.

            During  2000,  the Company  sold  449,135 shares of common stock for
            $383,260 and 83,789 shares of common stock were issued for services.
            The fair market value of $71,500 was charged to expense.

            On October 19, 2000, the Company issued  1,050,000  shares of common
            stock:  500,000 to five outside  members of the board of  directors,
            500,000 to a financial  consulting  firm and 50,000 to an  attorney.
            The fair market value of $1,050,000 was charged to expense.

            On October 19, 2000, the Company issued  nonqualified  stock options
            to purchase 2,655,000 shares of common stock at an exercise price of
            $1.00 per share,  vesting  immediately.  The  options do not have an
            expiration  date.  Of this  amount,  certain  members of  management
            received  options to purchase  2,105,000  shares in exchange for the
            relinquishment  of any  development  and  proprietary  rights and/or
            royalties and/or licensing fee to the  anti-jackknifing  systems.  A
            financial  consulting  firm received  options for 500,000 shares for
            services, which options were cancelled in 2001. An attorney received
            options for 50,000 shares for services.  These options were recorded
            at the fair  market  value of  $1,141,650  using  the  Black-Scholes
            option formula.  The calculation  assumed a 5.66% risk-free interest
            rate, 0% dividend yield,  0.0001%  volatility,  and a ten-year life,
            since the options did not have an expiration date.


                                       F-13
<PAGE>


--------------------------------------------------------------------------------
NOTE 10.    CAPITAL TRANSACTIONS (CONTINUED)
--------------------------------------------------------------------------------

            On December 18, 2000, the Company completed a merger with S & E (See
            Note 1).

            In January 2001, the Company commenced a private placement  offering
            of securities.  The Company was seeking to raise up to $5,700,000 by
            selling up to  3,700,000  shares of common stock at $1 per share and
            1,000,000  shares of common  stock at $2 per share.  In August 2001,
            the  Company  repriced  the  offering  at $0.12 per share and issued
            three  attached  warrants to purchase one share of common stock with
            each  warrant at  exercise  prices of $0.25,  $0.375 and $0.50.  All
            shares issued  related to the private  placement  have been adjusted
            for this  repricing.  1,314,019  shares  were sold for an  aggregate
            purchase price of $157,682 less offering costs of $6,271.

            On July 2, 2001, the Company issued 25,000 shares of common stock to
            a consultant at a fair market value of $9,000.

            On October 12, 2001, the Company issued options to purchase  750,000
            shares of common  stock to  various  consultants.  The  options  are
            exercisable  upon grant at $.05 per share and expire on December 31,
            2002. The fair market value of the options granted was $30,000.

--------------------------------------------------------------------------------
NOTE 11.    COMMITMENTS
--------------------------------------------------------------------------------

            OPERATING LEASE

            The  Company  leases its office  facilities  under a  non-cancelable
            operating lease.

            The future  minimum lease  payments  under this  agreement for years
            subsequent to December 31, 2001 are as follows:

            2002                                                     $  12,000
            2003                                                         8,000
            --------------------------------------------------------------------

                                                                     $  20,000
            ====================================================================

            Total  rent  expense  for the  year  ended  December  31,  2001  was
            approximately $117,000.

            EMPLOYMENT AGREEMENTS

            On January 1, 2001, the Company entered into  employment  agreements
            with the President  and Executive  Vice  President.  The  agreements
            terminate on December  31, 2011 and provide for,  among other things
            an initial  base  salary of  $120,000  each.  The  salaries  will be
            adjusted  annually to an equal  industry  standard  of a  comparably
            capitalized  and  successful  undertaking at a rate no less than ten
            percent of the prior year.


                                       F-14
<PAGE>


--------------------------------------------------------------------------------
NOTE 12.    STOCK BASED COMPENSATION
--------------------------------------------------------------------------------

            The Company adopted the  disclosure-only  provisions of Statement of
            Financial  Accounting Standards No. 123, "Accounting for Stock-Based
            Compensation,"  ("SFAS  123") in 1997.  The  Company  has elected to
            continue  using   Accounting   Principles   Board  Opinion  No.  25,
            "Accounting  for  Stock  Issued  to  Employees"  in  accounting  for
            employee stock options.  Accordingly,  compensation expense has been
            recorded to the extent that the market value of the underlying stock
            exceeded the exercise price at the date of grant.

            Statement of Financial  Accounting Standards No. 123 "Accounting for
            Stock-based  Compensation," ("SFAS No. 123") requires the Company to
            provide pro forma information  regarding net income and earnings per
            common share as if compensation  cost for the Company's Stock Option
            plan had been  determined  in  accordance  with the fair value based
            method  prescribed  in SFAS No.  123.  The fair value of the options
            granted in 2001 were  estimated by using the  Black-Scholes  pricing
            model  with the  following  assumptions:  (i)  expected  life of the
            options of  approximately  1 year,  (ii) expected  volatility in the
            market  price  of the  Company's  common  stock  of  200%,  (iii) no
            expected   dividends,   and  (iv)  a  risk  free  interest  rate  of
            approximately 2.5%.

            Under the  accounting  provisions of SFAS No. 123, the Company's net
            loss and  basic  and  diluted  loss  per  share  for the year  ended
            December  31,  2001 would  have been  approximately  $1,231,000  and
            $0.07, respectively.

            Stock option activity for the years ended December 31, 2001 and 2000
            were as follows:

                                                   Number of    Weighted Average
                                                    Options      Exercise Price
            --------------------------------------------------------------------

            Balance, January 1, 2000                        -        $     -
            Granted during the year                 2,655,000        $  1.00
            Exercised  and  returned  during the
            year                                            -        $     -
            Forfeited/cancelled during the year             -        $     -
            ----------------------------------------------------
            Balance, December 31, 2000              2,655,000        $  1.00
            Granted during the year                 2,050,000        $  0.05
            Exercised  and  returned  during the
            year                                            -        $     -
            Forfeited/cancelled during the year  (    500,000)       $  1.00
            ----------------------------------------------------

            Balance, December 31, 2001              4,205,000        $  0.54
            ====================================================

            Exercisable, December 31, 2001          4,205,000        $  0.54
            ====================================================

            The  weighted-average  fair value of options  granted  during  2001,
            using  the fair  value  calculations  discussed  above was $0.04 per
            option.


                                       F-15
<PAGE>


--------------------------------------------------------------------------------
NOTE 12.    STOCK BASED COMPENSATION (CONTINUED)
--------------------------------------------------------------------------------

            Exercise  prices for options  outstanding  as of  December  31, 2001
            ranged  from  $0.05  to  $1.00.  The  weighted   average   remaining
            contractual life of these options is as follows, assuming a ten year
            life for options without a stated life:

                                                                      Weighted
                                                                       Average
                                                                      Remaining
                 Exercise                       Weighted Average     Contractual
                  Price             Shares       Exercise Price     Life (Years)
            --------------------------------------------------------------------

                  $0.05          2,050,000            $0.05            1.00
                  $1.00          2,155,000            $1.00            8.75

            In  addition  to the above  options,  the  Company  has  outstanding
            4,313,057  warrants to  purchase  common  stock at various  exercise
            prices ranging from $0.01 to $0.50.


--------------------------------------------------------------------------------
NOTE 13.    SUBSEQUENT EVENT
--------------------------------------------------------------------------------

            In March 2002,  the Company  entered  into a Business  Advisory  and
            Consulting   Services  Agreement  with  a  private  venture  capital
            consulting firm, whereby the consultant will use its best efforts to
            raise funds in a private  offering  for the Company.  The  agreement
            provides for, among other things,  an initial term of six months and
            the consultant to receive 500,000 shares of restricted  common stock
            of the Company.


                                       F-16



<PAGE>

ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     There were no  changes  in or  disagreements  with our  independent  public
accountants on accounting and financial disclosure in 2001.


                                       16
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

     Safe  Transportation's  present  directors  and  executive  officers are as
follows:

     NAME                 AGE   POSITION
     ------------------- -----  --------------------------------------
     Ian Pallett          53    President, Chief Executive Officer and
                                Chairman of the Board

     James B. Long        42    Executive Vice President and Director

     Lawrence J. Brady    61    Director

     The following is a brief description of the background of the directors and
executive officers of Safe Transportation.



IAN  PALLETT,  PRESIDENT  CHIEF  EXECUTIVE  OFFICER AND CHAIRMAN OF THE BOARD OF
DIRECTORS

     Prior to joining Safe  Transportation  in the spring of 1998,  Mr.  Pallett
served as  President  of Penn Lease  Corporation  from 1995 to 1998.  Penn Lease
Corporation  was in the  business  of  leasing  primarily  heavy  machinery  and
automobiles.  Mr. Pallett brings over 20 years  experience as a highly  creative
executive  specializing  in  innovative  financial  services  to  the  transport
industry particularly involving investment services such as finance structuring,
lease facilitation and currency hedging strategies for trans-border carriers. He
has worked  extensively  with  foreign and US banks,  syndicates,  institutional
funds and brokerages.

     From 1990 to 1995,  Mr.  Pallett was a turnaround  consultant to automobile
and truck fleet  dealers in  Edmonton  and  Vancouver  where he  specialized  in
restructuring the dealership's leasing and insurance operations.

     Mr.  Pallett's  administrative,  financial,  leasing and lending  expertise
gives Safe  Transportation  the  ability  to offer  clients  diverse  and unique
finance options for employing Safe Transportation's technology.

     Mr.  Pallett  attended  Vancouver City College,  Langara,  where he studied
Honors  Math  and  Physics.  Mr.  Pallett  is  also a  co-inventor  of the  Safe
Transportation's proprietary technologies.

JAMES B. LONG  EXECUTIVE VICE  PRESIDENT,  FOUNDER OF SAFE  TRANSPORTATION,  AND
DIRECTOR

     James B. Long has substantial business management, marketing, sales skills,
beginning  in 1980 with IBM,  and  progressed  through a series of  increasingly
senior positions in the business equipment and telecommunications industry.

     From  1987 to 1992,  Mr.  Long  was VP Sales  and  Marketing  for  Marathon
Telecommunications,  a data  logistics  firm.  In  1992  he  co-founded  Starcom
International  Optics  Corporation  which  linked  Vancouver  B.C.  to  Seattle,
Washington  with one of the first fiber optic links joining Canada to the United
States.

     From 1994 to 1997,  Mr. Long  co-developed  an  aerodynamic  device for the
tractor-trailer  industry. As Director and VP of Sales and Marketing with Gorlan
Fairing Inc. he proved the value of the  technology to industry as recognized by
the Innovation Center of Waterloo,  Ontario, where the invention won first prize
as the Most Environmentally Useful Innovation Award of 1996.

     Mr. Long  brings his highly  strategic  approach  to the task of  corporate
development,  international  marketing  and strategic  alliances.  Mr. Long is a
co-inventor of Safe Transportation's new technologies.

     Mr. Long earned a Diploma of  Technology in Marketing  Management  from the
British Columbia Institute of Technology.

                                       17
<PAGE>

LAWRENCE J. BRADY, DIRECTOR

     Since  December  1997,  Mr.  Brady has been  Chief  Executive  Officer  and
Chairman of the Board of American Technologies Group, Inc. American Technologies
Group is in the business of developing  water  technologies.  From 1994 until he
joined the American Technologies Group, Mr. Brady was an independent  consultant
except for a  five-month  period  during which he served as president of Chantal
Pharmaceutical   Corp.,   a   corporation   in  the  business  of   distributing
pharmaceutical  products.  From 1991 to 1994, Mr. Brady served as a director and
founder of Capitoline  International  Group,  Ltd., a consulting  firm. He was a
Senior Vice President of Hill & Knowlton  Public Affairs  Worldwide from 1987 to
1991 and Director of International Marketing for Sanders Associates,  a Lockheed
subsidiary from 1985 to 1987.

     Mr.   Brady   served  as   Assistant   Secretary   of  Commerce  for  Trade
Administration  in the  Reagan  Administration,  responsible  for  administering
federal government export and import trade regulation functions,  which included
high technology,  export control and enforcement programs,  the anti-dumping and
countervailing  duty laws and the  anti-boycott and foreign trade zone programs.
He has completed all  requirements  for a Ph.D. in  International  Economics and
International Affairs except for the dissertation.

ITEM 10.  EXECUTIVE COMPENSATION

     The  following  table  shows  all  the  cash   compensation  paid  by  Safe
Transportation,  as well as certain other  compensation paid or accrued,  during
the fiscal years ended December 31, 2001, 2000 and 1999 to Safe Transportation's
President and Chief Executive  Officer.  No restricted  stock awards,  long-term
incentive  plan  payouts  or  other  types  of  compensation,   other  than  the
compensation  identified in the chart below, were paid to this executive officer
during these fiscal years. No executive officer earned a total annual salary and
bonus for any of these years in excess of $100,000.

<TABLE>
<CAPTION>
                                   ANNUAL COMPENSATION                                 LONG-TERM COMPENSATION
                         -------------------------------------------    ----------------------------------------------------
                                                                                 AWARDS           PAYOUTS
                                                                        -----------------------   -------
                                                            OTHER       RESTRICTED
                                                           ANNUAL         STOCK        OPTIONS/        LTIP      ALL OTHER
                                   SALARY     BONUS     COMPENSATION     AWARD(S)        SARS        PAYOUTS    COMPENSATION
NAME AND                           ------     -----     ------------     --------        ----        -------    ------------
PRINCIPAL POSITION        YEAR       ($)        ($)           ($)           ($)           (#)          ($)          ($)
------------------        ----       ---        ---           ---           ---           ---          ---          ---
<S>                      <C>      <C>            <C>     <C>                 <C>     <C>                <C>            <C>

James B. Long(1)          2001    120,000(3)     --      9,000(3)            --       500,000(2)        --             --
  Executive               2000            --     --            --            --      1,000,000          --             --
  Vice-President          1999        96,000     --            --            --             --          --             --


Ian Pallett(1)            2001    120,000(3)     --      9,000(3)            --       500,000(2)        --             --
  President               2000            --     --            --            --      1,000,000          --             --
                          1999            --     --            --            --             --          --             --


(1)   Mr. Long was President and Chief Executive  Officer of Safe  Transportation  until June 1, 2001. On that date, Mr. Long became
      Executive Vice-President and Mr. Pallett was promoted to President and Chief Executive Officer.

(2)   In 2001,  Safe  Transportation  granted  each of Mr. Long and Mr.  Pallett  options to  purchase a total of 500,000  shares of
      common stock at $0.05.  These  options  expire on December 31, 2002.  In 2000,  Safe  Transportation  granted each of Mr. Long
      and Mr.  Pallett  options to purchase a total of 1,000,000  shares of common stock at $1.00.  These options expire do not have
      an expiration date.

(3)   Salaries  were  accrued  but unpaid as of  December  31,  2001.  Each of Messrs.  Long and  Pallett  were also  entitled to an
      automobile allowance of $9,000 per year.  The automobile allowance was accrued but unpaid as of December 31, 2001.
</TABLE>

                                       18
<PAGE>

     The following table contains  information  regarding options granted during
the year  ended  December  31,  2001 to Safe  Transportation's  named  executive
officers.

<TABLE>

                                                       OPTION/SAR GRANTS TABLE
<CAPTION>

                                         % TOTAL
                 NO. OF SECURITIES      OPTIONS/SAR'S
                     UNDERLYING           GRANTED TO
                   OPTIONS/SAR'S      EMPLOYEES IN 2001    EXERCISE OR BASE PRICE
NAME                GRANTED (#)              (%)               ($ PER SHARE)          EXPIRATION DATE
---------------- ------------------ --------------------  ------------------------- --------------------
<S>                  <C>                     <C>                    <C>             <C>
James B. Long        500,000                 50%                    $0.05           December 31, 2002
Ian Pallett          500,000                 50%                    $0.05           December 31, 2002

</TABLE>

     The following table contains information regarding options exercised in the
year  ended  December  31,  2001,  and the  number of  shares  of  common  stock
underlying options held as of December 31, 2001, by Safe Transportation's  named
executive officer.

<TABLE>

                                                  AGGREGATED OPTIONS/SAR EXERCISES
                                                       IN LAST FISCAL YEAR AND
                                                FISCAL YEAR END OPTIONS/SAR VALUES(1)
<CAPTION>

                                                            NUMBER OF SECURITIES      VALUE OF UNEXERCISED
                     SHARES                                UNDERLYING UNEXERCISED         IN-THE-MONEY
                   ACQUIRED ON           VALUE                 OPTIONS/SAR'S AT          OPTIONS/SAR'S AT
NAME                EXERCISE          REALIZED ($)            FISCAL YEAR END(1)        FISCAL YEAR END(2)
---------------- ------------------ --------------------  ------------------------- ----------------------
<S>                   <C>                <C>               <C>             <C>                    <C>
James B. Long         --                 --                Exercisable:    1,500,000              --
Ian Pallett           --                 --                Exercisable:    1,500,000              --

---------------------------------
</TABLE>

(1)  These grants represent options to purchase common stock. No SAR's have been
     granted.

(2)  The  value of the  unexercised  in-the-money  options  were  calculated  by
     determining  the  difference  between the fair  market  value of the common
     stock  underlying  the options and the exercise  price of the options as of
     December 30, 2001.


EMPLOYMENT AGREEMENTS

     On  January  1,  2001,  Safe  Transportation   entered  into  an  Executive
Employment  Agreement  with  James  B.  Long.  Pursuant  to the  terms  of  this
agreement,  Mr.  Long will serve as Safe  Transportation's  President  and Chief
Executive Officer. The agreement has a ten-year term. The agreement provides for
a base salary of  $120,000,  plus annual  increases of not less than ten percent
per year.  In addition,  the agreement  provides for an automobile  allowance of
$750 per month.  Mr. Long will be entitled to annual vacation of 6 weeks in year
one, 7 weeks in year two, 8 weeks in years  three  through  five and 12 weeks in
years six through ten. In connection  with the agreement,  Mr. Long assigned all
rights   he  had  to   certain   technology   used  in   connection   with  Safe
Transportation's  product.  In exchange,  in October 2001,  Safe  Transportation
granted Mr.  Long  options to purchase  1,000,000  shares of common  stock at an
exercise price of $1.00 per share. These options do not have an expiration date.

     On  January  1,  2001,  Safe  Transportation   entered  into  an  Executive
Employment Agreement with Ian Pallett.  Pursuant to the terms of this agreement,
Mr. Pallett will serve as Safe  Transportation's  Executive Vice President.  The
agreement  has a ten-year  term.  The  agreement  provides  for a base salary of
$120,000,  plus  annual  increases  of not less than ten  percent  per year.  In
addition,  the agreement provides for an automobile allowance of $750 per month.
Mr. Pallett will be entitled to annual  vacation of 6 weeks in year one, 7 weeks
in year  two,  8 weeks in years  three  through  five and 12 weeks in years  six
through ten. In connection with the agreement,  Mr. Pallett  assigned all rights
he had to  certain  technology  used in  connection  with Safe  Transportation's
product. In exchange,  in October 2001, Safe Transportation  granted Mr. Pallett
options to purchase  1,000,000  shares of common  stock at an exercise  price of
$1.00 per share. These options do not have an expiration date.

     On June 1, 2001,  Ian Pallett  assumed the  position of President & CEO and
James B. Long became Executive Vice President.

                                       19
<PAGE>

STOCK OPTION PLAN

     The Company does not have a formal stock option plan.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of May 5, 2002, information with respect
to the  beneficial  ownership of our common stock by (i) persons  known by us to
beneficially  own more than five percent of the  outstanding  shares,  (ii) each
director,  (iii) each  executive  officer and (iv) all  directors  and executive
officers as a group.

                                                     COMMON STOCK
                                                  BENEFICIALLY OWNED
                                          --------------------------------------
NAME/ADDRESS                                   NUMBER               PERCENT(1)
----------------------------------------  -----------------  -------------------

James B. Long(2)                             9,122,000                46.4%
Ian Pallett(3)                               4,591,720                23.3%
Lawrence J. Brady(4)                           200,000                 1.0%
All Directors and Officers as a Group       13,913,720                70.7%
------------------------------------

(1)  Applicable  percentage of ownership is based on 19,670,269 shares of common
     stock outstanding as of May 5, 2002,  together with securities  exercisable
     or  convertible  into shares of common  stock within 60 days of May 5, 2002
     for each stockholder. Beneficial ownership is determined in accordance with
     the rules of the  Commission  and generally  includes  voting or investment
     power  with  respect  to  securities.  Shares of common  stock  subject  to
     securities  exercisable or convertible into shares of common stock that are
     currently  exercisable  or  exercisable  within  60 days of May 5, 2002 are
     deemed to be beneficially  owned by the person holding such options for the
     purpose of computing the  percentage  of ownership of such person,  but are
     not treated as  outstanding  for the purpose of  computing  the  percentage
     ownership of any other  person.  The common  stock is the only  outstanding
     class of equity securities of Safe Transportation.

(2)  Represents  7,622,000  shares of common  stock,  plus  options to  purchase
     1,500,000  shares of  common  stock,  of which  1,000,000  options  have an
     exercise  price of $1.00 per share and  500,000  options  have an  exercise
     price of $0.05 per share.  Mr. Long has pledged a total of 4,250,000 shares
     of common  stock as  collateral  to secure loans of $92,812 made by Cornell
     Capital Partners, L.P. to Safe Transportation. Cornell Capital Partners has
     started  to sell  these  pledged  shares  in  partial  satisfaction  of the
     guaranty  obligations.  Safe Transportation  anticipates that it will issue
     additional shares to Mr. Long to replace any shares of common stock sold by
     Cornell  Capital  Partners,  subject  to  the  approval  of  the  Board  of
     Directors.  As a result,  no adjustment has been made to reflect the number
     of shares of common stock sold by Cornell Capital Partners.

(3)  Represents  3,091,720  shares of common  stock,  plus  options to  purchase
     1,500,000  shares of  common  stock,  of which  1,000,000  options  have an
     exercise  price of $1.00 per share and  500,000  options  have an  exercise
     price of $0.05 per share.

(4)  Represents 100,000 shares of common stock, plus options to purchase 100,000
     shares of common stock at an exercise price of $0.05 per share.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On  January  1,  2001,  Safe  Transportation   entered  into  an  Executive
Employment  Agreement  with  James  B.  Long.  Pursuant  to the  terms  of  this
agreement,  Mr.  Long will serve as Safe  Transportation's  President  and Chief
Executive Officer. The agreement has a ten-year term. The agreement provides for
a base salary of  $120,000,  plus annual  increases of not less than ten percent
per year.  In addition,  the agreement  provides for an automobile  allowance of
$750 per month.  Mr. Long will be entitled to annual vacation of 6 weeks in year
one, 7 weeks in year two, 8 weeks in years  three  through  five and 12 weeks in
years six through ten. In connection  with the agreement,  Mr. Long assigned all
rights   he  had  to   certain   technology   used  in   connection   with  Safe
Transportation's  product.  In exchange,  in October 2001,  Safe  Transportation
granted Mr.  Long  options to purchase  1,000,000  shares of common  stock at an
exercise price of $1.00 per share.

     On  January  1,  2001,  Safe  Transportation   entered  into  an  Executive
Employment Agreement with Ian Pallett.  Pursuant to the terms of this agreement,
Mr. Pallett will serve as Safe  Transportation's  Executive Vice President.  The
agreement  has a ten-year  term.  The  agreement  provides  for a base salary of
$120,000,  plus  annual  increases  of not less than ten  percent  per year.  In
addition,  the agreement provides for an automobile allowance of $750 per month.
Mr. Pallett will be entitled to annual  vacation of 6 weeks in year one, 7 weeks
in year  two,  8 weeks in years  three  through  five and 12 weeks in years  six
through ten. In connection with the agreement,  Mr. Pallett  assigned all rights
he had to  certain  technology  used in  connection  with Safe  Transportation's
product. In exchange,  in October 2001, Safe Transportation  granted Mr. Pallett
options to purchase  1,000,000  shares of common  stock at an exercise  price of
$1.00 per share.
                                       20
<PAGE>

     On June 1, 2001,  Ian Pallet  assumed the  position of  President & CEO and
James B. Long became Executive Vice-President.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  The  following  exhibits  are  filed  as  part  of  this  registration
          statement:
<TABLE>
<CAPTION>

EXHIBIT NO.           DESCRIPTION                                              LOCATION
-----------           -----------                                              --------
<S>                   <C>                                                      <C>

Exhibit No.           Description                                              Location

2.1                   Articles of Merger Between Safe Transportation           Incorporated by reference to Exhibit 2.1 to
                      Systems, Inc. and Sweets and Eats, Inc. dated December   the Registrant's Form 10-KSB filed on April
                      28, 2000                                                 24, 2001

2.2                   Certificate of Incorporation of Safe Transportation      Incorporated by reference to Exhibit 2.2 to
                      Systems, Inc.                                            the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

2.3                   Certificate of Continuance and Good Standing of Safe     Incorporated by reference to Exhibit 2.3 to
                      Transportation Systems, Inc.                             the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

2.4                   Articles of Incorporation of Big Daddy's Auto Sales,     Incorporated by reference to Exhibit 2.4 to
                      Inc.                                                     the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

2.5                   Amendment to Articles of Incorporation of Big Daddy's    Incorporated by reference to Exhibit 2.5 to
                      Auto Sales, Inc.                                         the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

2.6                   Amendment to Articles of Incorporation of Big Daddy's    Incorporated by reference to Exhibit 2.6 to
                      Auto Sales, Inc.                                         the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

2.7                   Amendment of Articles of Incorporation of Sweets &       Incorporated by reference to Exhibit 2.7 to
                      Eats, Inc.                                               the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

2.8                   Bylaws                                                   Incorporated by reference to Exhibit 2.8 to
                                                                               the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

10.1                  Lease Agreement, between Safe Transportation Systems,    Incorporated by reference to Exhibit 6.2 to
                      Inc. and the Port of Bellingham                          the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

10.2                  Merger Agreement, dated December 18, 2000, between       Incorporated by reference to Exhibit 8.1 to
                      Safe Transportation, Inc. and Sweets and Eats, Inc.      the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

10.3                  Agreement for the Exchange of Common Stock, dated        Incorporated by reference to Exhibit 8.2 to
                      December 18, 2000, between Safe Transportation, Inc.     the Registrant's Form 10-KSB filed on April
                      and Sweets and Eats, Inc.                                24, 2001

10.4                  Executive Employment Agreement, dated January 1, 2001,   Incorporated by reference to Exhibit 99.1 to
                      between Safe Transportation Systems, Inc. and Ian        the Registrant's Form 10-KSB filed on April
                      Pallet                                                   24, 2001



                                       21
<PAGE>

10.5                  Executive Employment Agreement, dated January 1, 2001,   Incorporated by reference to Exhibit 99.2 to
                      between Safe Transportation Systems, Inc. and James B.   the Registrant's Form 10-KSB filed on April
                      Long                                                     24, 2001

10.6                  Subscription and Distribution Agreement dated as of      Incorporated by reference to Exhibit 10.7 to
                      October 24, 2001 among Safe Transportation Systems,      the Registrant's Form 10-QSB for the quarter
                      Inc., Safe Europe Limited, Timothy Meyrich and Wilton    ended September 30, 2001
                      Capital Limited

10.7                  Securities Purchase Agreement dated as of September      Incorporated by reference to Exhibit 10.8 to
                      2001 between Safe Transportation Systems, Inc. and the   the Registrant's Form 10-QSB for the quarter
                      Buyers listed thereon                                    ended September 30, 2001

10.8                  Registration Rights Agreement dated as of September      Incorporated by reference to Exhibit 10.9 to
                      2001 between Safe Transportation Systems, Inc. and the   the Registrant's Form 10-QSB for the quarter
                      Buyer listed thereon                                     ended September 30, 2001

10.9                  Form of Debenture                                        Incorporated by reference to Exhibit 10.10 to
                                                                               the Registrant's Form 10-QSB for the quarter
                                                                               ended September 30, 2001

10.10                 Escrow Agreement dated as of September 2001 among Safe   Incorporated by reference to Exhibit 10.11 to
                      Transportation Systems, Inc., Yorkville Advisors         the Registrant's Form 10-QSB for the quarter
                      Management, LLC and First Union National Bank            ended September 30, 2001

10.11                 Escrow Agreement dated as of September 2001 among Safe   Incorporated by reference to Exhibit 10.12 to
                      Transportation Systems, Inc., Cornell Capital            the Registrant's Form 10-QSB for the quarter
                      Partners, LP, Butler Gonzalez LLP and First Union        ended September 30, 2001
                      National Bank

10.12                 Registration Rights Agreement dated as of September      Incorporated by reference to Exhibit 10.13 to
                      2001 between Safe Transportation Systems, Inc. and       the Registrant's Form 10-QSB for the quarter
                      Cornell Capital Partners, LP                             ended September 30, 2001

10.13                 Equity Line of Credit Agreement dated as of September    Incorporated by reference to Exhibit 10.14 to
                      2001 between Cornell Capital Partners, LP and Safe       the Registrant's Form 10-QSB for the quarter
                      Transportation Systems, Inc.                             ended September 30, 2001

10.14                 Business Consultant Agreement dated as of August 21,     Incorporated by reference to Exhibit 10.14 to
                      2001 between Safe Transportation Systems, Inc. and MK    the Registrant's Form SB-2 filed with the SEC
                      Associates, Inc.                                         on February 14, 2002

10.15                 Investment Banking Agreement dated as of September 19,   Incorporated by reference to Exhibit 10.15 to
                      2001 between Safe Transportation Systems, Inc. and       the Registrant's Form SB-2 filed with the SEC
                      Hornblower & Weeks, Inc.                                 on February 14, 2002

10.16                 Non-Negotiable Promissory Note dated as of November      Incorporated by reference to Exhibit 10.16 to
                      30, 2001 in the Original Principal Amount of $46,000     the Registrant's Form SB-2 filed with the SEC
                      given by Safe Transportation Systems, Inc. to Cornell    on February 14, 2002
                      Capital Partners, L.P.

10.17                 Warrant dated as of November 30, 2001 between Safe       Incorporated by reference to Exhibit 10.17 to
                      Transportation System, Inc. and Cornell Capital          the Registrant's Form SB-2 filed with the SEC
                      Partners, L.P.                                           on February 14, 2002



                                                                 22
<PAGE>

10.18                 Guaranty dated as of November 30, 2001 between Safe      Incorporated by reference to Exhibit 10.18 to
                      Transportation Systems, Inc. and Cornell Capital         the Registrant's Form SB-2 filed with the SEC
                      Partners, L.P.                                           on February 14, 2002

10.19                 Placement Agent Agreement between Westrock Advisors,     Incorporated by reference to Exhibit 10.19 to
                      Inc. and Safe Transportation Systems                     the Registrant's Form SB-2 filed with the SEC
                                                                               on February 14, 2002

10.20                 Business Advisory and Consulting Services Agreement      Provided herewith
                      dated as of March 19, 2002 between Tarshish Capital
                      Markets and Safe Transportation Systems, Inc.

99.1                  Pacific Traffic Education Centre Inc. Test Report        Incorporated by reference to Exhibit 12.1 to
                                                                               the Registrant's Form 10-KSB filed on April
                                                                               24, 2001

99.2                  Transportation Research Center Inc. Test Report          Incorporated by reference to Exhibit 12.2 to
                                                                               the Registrant's Form 10-KSB filed on April
                                                                               24, 2001
</TABLE>

     (b)  Reports on Form 8-K.

     Safe  Transportation  filed  a  report  on  Form  8-K on  August  27,  2001
disclosing  that on December 18, 2000,  Safe  Transportation  dismissed James E.
Scheifley & Associates,  P.C., the independent  certified public  accountants of
Safe Transportation.

     Safe  Transportation  filed a report  on Form  8-K on  September  10,  2001
disclosing that on August 22, 2001, Safe Transportation engaged Kaufman Rossin &
Company as its new independent certified public accountants.


                                       23
<PAGE>

                                   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 TRANSPORTATION SYSTEMS, INC.

                                 By:/s/ Ian Pallett
                                    -----------------------------------------
                                 Name:  Ian Pallett
                                 Title: President and Chief Executive Officer


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

SIGNATURE               TITLE                                     DATE

/s/ Ian Pallett         President, Chief Executive Officer        May 9, 2002
----------------------   (Chief Accounting Officer) and Director
Ian Pallett


/s/ James B. Long       Executive Vice President and Director     May 9, 2002
----------------------
James B. Long


/s/ Lawrence J. Brady   Director                                  May 9, 2002
----------------------
Lawrence J. Brady