U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB
        (mark one)

        |X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities
        Exchange Act of 1934

                     For the quarterly period ended September 30, 2001

        |_| Transition report under Section 13 or 15(d) of the Securities
        Exchange Act of 1934

                     For the transition period from _______ to _______.

                               Commission File No. 000-26631

                        SAFE TRANSPORTATION SYSTEMS, INC.
                        ---------------------------------
                 (Name of Small Business Issuer in Its Charter)

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


909 LAKEWAY DRIVE, SUITE 208, BELLINGHAM, WA     98226
--------------------------------------------     -----
(Address of Principal Executive Offices)         (Zip Code)

                                 (360) 527-1112
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

      Check  whether the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the Exchange  Act during the past 12 months,  and (2) has
been subject to such filing requirements for the past 90 days. Yes |X| No |_|

      There were  19,170,269  shares of Common Stock  outstanding as of November
14, 2001.





<PAGE>




                                     PART I
                              FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS

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

                                                 CONDENSED FINANCIAL STATEMENTS

                                                             SEPTEMBER 30, 2001





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


CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

         Balance Sheet                                                3

         Statements of Operations                                     4

         Statements of Cash Flows                                     5

         Notes to Condensed Financial Statements                    6 - 9



                                       2
<PAGE>
<TABLE>
<CAPTION>
SAFE TRANSPORTATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 2001
===================================================================================================================================

ASSETS
===================================================================================================================================

<S>                                                                                                          <C>
CURRENT ASSETS
     Cash                                                                                                    $           5,961
     Inventory                                                                                                           3,906
     Prepaid expenses                                                                                                    7,000
--------------------------------------------------------------------------------- ------------------------ ------------------------
       Total current assets                                                                                             16,867

PROPERTY AND EQUIPMENT, net                                                                                            173,534

PREPAID LOAN COSTS, net                                                                                                 12,000

PATENT PENDING COSTS                                                                                                    11,469

DEPOSITS                                                                                                                 1,000
-----------------------------------------------------------------------------------------------------------------------------------

         TOTAL ASSETS                                                                                        $         214,870
===================================================================================================================================

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

CURRENT LIABILITIES
     Accounts payable and accrued expenses                                                                   $         585,697
     Loans payable                                                                                                      52,950
-----------------------------------------------------------------------------------------------------------------------------------
       Total current liabilities                                                                                       638,647
-----------------------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT
     Note payable                                                                                                      175,000
     Convertible debentures                                                                                             35,000
-----------------------------------------------------------------------------------------------------------------------------------
       Total long-term debt                                                                                            210,000
-----------------------------------------------------------------------------------------------------------------------------------
         TOTAL LIABILITIES                                                                                             848,647
-----------------------------------------------------------------------------------------------------------------------------------

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                                                                                  19,170
     Additional paid-in capital                                                                                      7,997,828
     Accumulated other comprehensive expense                                                               (             6,794)
     Deficit accumulated during the development stage                                                      (         8,643,981)
-----------------------------------------------------------------------------------------------------------------------------------
       Total deficiency in assets                                                                          (           633,777)
-----------------------------------------------------------------------------------------------------------------------------------

         TOTAL LIABILITIES AND DEFICIENCY IN ASSETS                                                          $         214,870
===================================================================================================================================
</TABLE>


                                                       See accompanying notes.

                                                                 3
<PAGE>
<TABLE>
SAFE TRANSPORTATION SYSTEMS, INC.
-----------------------------------------------------------------------------------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

<CAPTION>
                                                                       Three Months Ended September 30,
                                                                  -------------------------------------------
                                                                          2001                  2000
----------------------------------------------------------------- --------------------- ---------------------

<S>                                                               <C>                   <C>
SALES                                                               $            -        $            -
----------------------------------------------------------------- --------------------- ---------------------

OPERATING EXPENSES
   Selling, general and administrative
     Non-cash compensation and services                                      9,000                     -
     Other selling, general and administrative                             153,588               182,593
   Research and development                                       (         92,800)                    -
----------------------------------------------------------------- --------------------- ---------------------
----------------------------------------------------------------- --------------------- ---------------------
       Total operating expenses                                             69,788               182,593
----------------------------------------------------------------- --------------------- ---------------------

NET LOSS                                                            $       69,788        $      182,593
----------------------------------------------------------------- --------------------- ---------------------

LOSS PER SHARE - BASIC AND DILUTED                                ( $            -)     ( $         0.02)
----------------------------------------------------------------- --------------------- ---------------------

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                           18,364,653            11,780,000
----------------------------------------------------------------- --------------------- ---------------------

</TABLE>



                                       4
<PAGE>

<TABLE>
SAFE TRANSPORTATION SYSTEMS, INC.
-----------------------------------------------------------------------------------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

<CAPTION>
                                                                                                                  Inception
                                                                                                               (July 8, 1998) to
                                                                      Nine Months Ended September 30,         September 30, 2001
                                                                 -------------------------------------------
                                                                         2001                  2000
-------------------------------------------------------------------------------------- --------------------- --------------------
<S>                                                              <C>                   <C>                    <C>

SALES                                                              $            -        $            -       $            -
-------------------------------------------------------------------------------------- --------------------- --------------------

OPERATING EXPENSES
   Selling, general and administrative


     Non-cash compensation and services                                     9,000                     -            6,870,340
     Other selling, general and administrative                            733,904               294,074            1,529,651
   Research and development                                      (         92,800)                    -              243,990
-------------------------------------------------------------------------------------- --------------------- --------------------
-------------------------------------------------------------------------------------- --------------------- --------------------
       Total operating expenses                                           650,104               294,074            8,643,981
-------------------------------------------------------------------------------------- --------------------- --------------------

NET LOSS                                                           $      650,104        $      294,074       $    8,643,981
-------------------------------------------------------------------------------------- --------------------- --------------------

LOSS PER SHARE - BASIC AND DILUTED                               ( $         0.04)     ( $         0.03)
-------------------------------------------------------------------------------------- --------------------- --------------------

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                          17,946,792            11,659,100
-------------------------------------------------------------------------------------- --------------------- --------------------
</TABLE>





                                                                 5
<PAGE>

<TABLE>
<CAPTION>
SAFE TRANSPORTATION SYSTEMS, INC.
-----------------------------------------------------------------------------------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                                                                                   Inception
                                                                                                               (July 8, 1998) to
                                                                       Nine Months Ended September 30,         September 30, 2001
                                                                  -------------------------------------------
                                                                          2001                  2000
===================================================================================================================================

CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                              <C>                   <C>                   <C>
  Net loss                                                       ( $      650,104)     ( $      294,074)     ( $    8,643,981)
   Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
     Depreciation and amortization                                          25,982                 1,803                29,071
     Issuance of stock for services                                          9,000                     -             5,728,690
     Issuance of stock options for services                                      -                     -             1,141,650
     Changes in operating assets and liabilities:
       Inventory                                                  (          3,906)                    -      (          3,906)
       Patent pending costs                                                      -      (         10,804)     (         11,469)
       Prepaid expenses                                           (          7,000)                    -      (          7,000)
       Other assets                                               (          1,000)                    -      (          1,000)
       Accounts payable and accrued expenses                               401,502      (          2,508)              578,903
----------------------------------------------------------------- --------------------- --------------------- ---------------------
           Net cash used in operating activities                  (        225,526)     (        305,583)     (      1,189,042)
----------------------------------------------------------------- --------------------- --------------------- ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from returns of equipment                                       82,060                     -                82,060
   Purchase of property and equipment                             (        241,660)     (         26,875)     (        272,665)
----------------------------------------------------------------- --------------------- --------------------- ---------------------
           Net cash used in investing activities                  (        159,600)     (         26,875)     (        190,605)
----------------------------------------------------------------- --------------------- --------------------- ---------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from loans payable                                             227,950                     -               227,950
   Prepaid loan costs                                             (         24,000)                    -      (         24,000)
   Proceeds from subordinated debentures                                    35,000                     -                35,000
   Net advances (repayments) from stockholders                                   -                     -               194,261
   Proceeds from sale of stock                                             151,412               384,583               952,397
----------------------------------------------------------------- --------------------- --------------------- ---------------------
           Net cash provided by financing activities                       390,362               384,583             1,385,608
----------------------------------------------------------------- --------------------- --------------------- ---------------------

NET INCREASE IN CASH                                                         5,236                52,125                 5,961

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

CASH - END OF PERIOD                                                $        5,961        $       52,522        $        5,961
===================================================================================================================================

Supplemental Disclosures of Cash Flow Information:
----------------------------------------------------------------- --------------------- --------------------- ---------------------

   Interest paid                                                    $       13,918        $            -        $       13,918
----------------------------------------------------------------- --------------------- --------------------- ---------------------

   Income taxes paid                                                $            -        $            -        $            -
----------------------------------------------------------------- --------------------- --------------------- ---------------------

</TABLE>


                                                      See accompanying notes.

                                                                 6
<PAGE>


SAFE TRANSPORTATION SYSTEMS, INC.
================================================================================
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
--------------------------------------------------------------------------------
NOTE 1.           BASIS OF PRESENTATION AND CONSOLIDATION
--------------------------------------------------------------------------------

                  BASIS OF PRESENTATION

                  The accompanying unaudited condensed financial statements have
                  been  prepared  in  accordance  with   accounting   principles
                  generally  accepted in the United States for interim financial
                  information  and  with the  instructions  to Form  10-QSB  for
                  quarterly  reports under section 13 or 15(d) of the Securities
                  Exchange Act of 1934. Accordingly,  they do not include all of
                  the  information  and  footnotes   necessary  for  a  complete
                  presentation of financial position,  results of operations and
                  cash flows in conformity with accounting  principles generally
                  accepted in the United States.

                  In the  opinion  of  management,  all  adjustments  considered
                  necessary for a fair  presentation have been included and such
                  adjustments  are  of  a  normal  recurring  nature.  Operating
                  results for the nine-month period ended September 30, 2001 are
                  not necessarily indicative of the results that may be expected
                  for the year ending December 31, 2001.

                  The audited  financial  statements for the year ended December
                  31, 2000, which are included in the Company's Annual Report on
                  Form  10-KSB,   should  be  read  in  conjunction  with  these
                  condensed financial statements.

--------------------------------------------------------------------------------
NOTE 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

                  USE OF ESTIMATES

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

                  NET INCOME (LOSS) PER SHARE

                  Basic income (loss) per share is computed in  accordance  with
                  Statement of Financial Accounting Standards No. 128, "Earnings
                  Per Share"  (FAS 128)  using the  weighted  average  number of
                  common shares  outstanding during the period. All common stock
                  data has been restated to give effect to the  recapitalization
                  in  December   2000.   Outstanding   stock  options  were  not
                  considered  in the  calculation  of diluted loss per share for
                  the three and nine month periods  ended  September 30, 2001 as
                  their  effect  would  have been  anti-dilutive.  There were no
                  potentially  dilutive securities  outstanding during the three
                  and nine month periods ended September 30, 2000.



                                        7
<PAGE>


--------------------------------------------------------------------------------
NOTE 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------------------------

                  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 has not yet
                  determined what the effects of these Statements will be on its
                  financial position and results of operations.

                  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 the above  statements will
                  not have a material impact on the financial statements.

--------------------------------------------------------------------------------
NOTE 3.           GOING CONCERN
--------------------------------------------------------------------------------

                  The  Company has  incurred  significant  operating  losses and
                  negative  cash  flows from  operations  since  inception.  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.


--------------------------------------------------------------------------------
NOTE 4.           STOCK SUBSCRIPTION
--------------------------------------------------------------------------------

                  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.


                                       8
<PAGE>

--------------------------------------------------------------------------------
NOTE 5.           NOTE PAYABLE
--------------------------------------------------------------------------------

                  Note  payable  at  June  30,  2001 is 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 of the note provide for monthly interest payments at 12%
                  per annum through  December 31, 2001 and 18% thereafter,  with
                  principal due in January 2003. Accordingly,  the note has been
                  classified as long-term in the accompanying  condensed balance
                  sheet.

--------------------------------------------------------------------------------
NOTE 6.           CONVERTIBLE DEBENTURES
--------------------------------------------------------------------------------

                  From September  through November 2001, the Company borrowed an
                  aggregate  of  $150,000   from  various   parties  and  issued
                  convertible  debentures which provide for, among other things,
                  interest  at 6% per  annum  and  mature  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.  Borrowings  through  September  30, 2001
                  amounted to $35,000.

                  In connection with these convertible  debentures,  the Company
                  entered into various consulting  agreements which provide for,
                  among  other  things,  the  payment  of  consulting  fees  and
                  commissions aggregating approximately 25% of all funds raised.

--------------------------------------------------------------------------------
NOTE 7.           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.  Subject to certain  conditions,  Safe Transportation
will be entitled to commence  drawing down on the Equity Line of Credit when the
sale of the common stock under the Equity Line of Credit is registered  with the
SEC and will  continue  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.  Unless  waived by the
Investor, the maximum advance amount is equal to 75% of the average daily volume
of the  Company's  common  stock  multiplied  by the  purchase  price during the
particular  pricing period,  as defined.  As consideration for entering into the
Agreement, the Company will pay the Investor a fee equal to $187,500, 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 Company will also pay
the Investor a fee of 3.75% of each advance.


                                      9
<PAGE>
--------------------------------------------------------------------------------
NOTE 8.           CREDIT FROM VENDOR
--------------------------------------------------------------------------------

                  During the  quarter  ended  September  30,  2001,  the Company
                  received a credit from a vendor in the amount of $92,800.  The
                  items  originally  acquired  from the vendor were  included in
                  research   and   development   expenses   in  prior   periods.
                  Accordingly, the credit is included as a reduction to research
                  and  development   expenses  in  the  current  period  in  the
                  accompanying condensed statement of operations.

--------------------------------------------------------------------------------
NOTE 9.           SUBSEQUENT EVENTS
--------------------------------------------------------------------------------

                  ISSUANCE OF COMMON STOCK

                  In  October  2001,  the  Company  issued  options  to  acquire
                  2,050,000  shares of common  stock to  various  professionals,
                  consultants and employees.

                  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  which  will  market  the
                  products  developed  by the  Company  in Europe and the Middle
                  East.


                                       10






<PAGE>




             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  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. On April 19, 2000, Big Daddy's Auto Sales, Inc. changed
its name to Sweets & Eats,  Inc.  On  December  18,  2000,  Sweets & Eats,  Inc.
entered into a reverse  merger with Safe  Transportation  Systems,  Inc. In that
merger, the former  shareholders 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  $1.8 million on 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  (i.e.,  the loss of  traction  by the rear wheels of a tractor
causing it to rotate rapidly to approximately a 90 degree angle to the trailer).

      Safe  Transportation's  Accident  Control  and  Anti-Jackknife  System  is
attached to the underside of the trailer.  The system is turned on during normal
driving,  but may be  deactivated  by the driver if  desired.  The system has an
engaging  bar that limits the amount of rotation of the tractor  relative to the
trailer and prevents the trailer from swinging out-of-control.


PLAN OF OPERATION

      Safe  Transportation  has not had revenues from  operations in each of the
last two  fiscal  years,  or the last  fiscal  year  and the nine  months  ended
September 30, 2001. As such, Safe  Transportation  is required to provide a Plan
of Operation.

      During the next twelve  months,  Safe  Transportation  intends to focus on
marketing its product for sale. To that end, Safe  Transportation  has performed
several  key  marketing  activities  recently,  including  the  development  and
production   of  sales   materials,   a  follow  up  campaign  to  tank  trailer
manufacturers  and trucking  companies and  participation in industry  sponsored
conferences such as the American Trucking  Associates'  Safety & Loss Prevention
Council, the American Trucking Association Management Council, the Truck Trailer
Manufacturers  Association  Convention,  the National Truck Carriers Association
Conference,  the Commercial  Vehicle Safety  Alliance  Conference,  the National
Association  of  Chemical  Distributors  Conference,   the  California  Trucking
Association  Safety  Conference  and  the  Oregon  Trucking  Association  Safety
Conference.

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

      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,  together with preferred stock
in a newly formed United Kingdom  corporation,  Safe Europe Limited,  which will
market  Safe  Transportation's  products  in Europe  and the Middle  East.  Safe
Transportation  will also receive a promissory  note for $202,000  with interest
accruing at 12% per year until  December  31, 2001 and 18% per year  thereafter.
Safe  Transportation  intends to assign 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  products in Europe and the Middle  East.
Safe Europe has the right to purchase the products 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 Transportation.


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.


                                       11
<PAGE>

PLANT AND EQUIPMENT

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


EMPLOYEES

      Safe  Transportation  has five full time employees and does not anticipate
any material changes in the number of employees over the next 12 months.


RESULTS OF OPERATIONS

      During the nine months ended September 30, 2001, Safe  Transportation  had
no revenues from operations.  It incurred  selling,  general and  administrative
expenses of $733,904 in the nine months  ended  September  30, 2001  compared to
$294,074 in the comparable period in the prior year. Accordingly,  the credit is
included as a  reduction  to research  and  development  expenses in the current
period. This increase in selling,  general and administrative  expenses resulted
primarily from transitioning Safe Transportation from a research and development
company  to  a  marketing  and  distribution  company.   Selling,   general  and
administrative  expenses for the nine months ended September 30, 2001 consisting
primarily of payroll and payroll taxes of $332,000, rent of $110,000,  insurance
of $48,000,  professional  fees of  $37,000,  travel and  marketing  of $58,000,
telephone of $24,000,  depreciation  and  amortization  of $25,000,  interest of
$23,000 and  miscellaneous  office of $30,000.  These  operating  expenses  were
partially  offset by a credit  received in the quarter ended  September 30, 2001
from a vendor in the amount of $92,800.  This credit relates to items originally
acquired from the vendor that were included in research and development expenses
in prior periods. These operating expenses resulted in a net loss of $650,104 or
$0.04 per share in the nine months ended  September  30, 2001  compared to a net
loss of $294,074 or $0.03 per share in the comparable period in the prior year.


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  and technical  support  expenses.  As of September 30, 2001,  Safe
Transportation had $5,961 of cash-on-hand. 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
consulting  fees and  commissions  aggregating  approximately  25% of all  funds
raised.

      In  September  2001,  Safe  Transportation  entered into an Equity Line of
Credit Agreement.  Under this agreement,  Safe Transportation may issue and sell
to Cornell  Capital  Partners  common stock 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 sale of
the common stock under the Equity Line of Credit is registered  with the SEC and
will continue for two years  thereafter.  The purchase price for the shares will
be equal to 90% of the market  price,  which is the lowest  closing bid price of
the common stock during the five trading days following the notice date.  Unless
waived by Cornell Capital  Partners,  the maximum advance amount is equal to 75%
of the average daily volume of Safe Transportation's  common stock multiplied by
the purchase price during the particular  pricing  period.  Safe  Transportation
will pay Cornell a one-time fee equal to  $187,500,  payable in shares of common
stock in two equal installments.  The first installment was paid on September 6,
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 six months  after the  closing  date,  whichever  occurs  first.  Safe
Transportation will also pay Cornell a fee of 3.75% of each advance.

      Safe  Transportation  has 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. Safe Transportation


                                       12
<PAGE>

intends to assign 50% of the  preferred  stock in Safe European and a promissory
note in the amount of $202,100 it receives  from Safe Europe to the  creditor in
satisfaction of the notes payable.

      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,  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.





                                       13
<PAGE>
                                     PART II
                                OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

      Safe Transportation  received a demand letter from its former accountants,
Sweeney & Gates,  Co. In its  letter,  Sweeney & Gates,  Co.  alleged  that Safe
Transportation owed them $11,050 for past due accounting services.

      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 development expenses.

      In August  2001, a judgment was entered  against Safe  Transportation  for
$23,676.44,  plus  interest.  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 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS


      (a), (b) AND (d)

      None.


      (c)   SALE OF UNREGISTERED SECURITIES

      Between January and July 2001, Safe  Transportation  sold 1,255,685 shares
of common stock for a total of $150,682, or $0.12 per share.

      In August 2001, Safe  Transportation  issued options to purchase 2,050,000
shares of common stock at an exercise  price of $0.12 per share.  These  options
expire on December 31,  2002,  and were issued in exchange  for  consulting  and
employment services.

      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 had 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 consulting fees and commissions aggregating approximately
25% of all funds raised.

      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 had an exercise price of $0.05 per share and expire on December
31, 2002.

      In  September  2001,  Safe  Transportation  entered into an Equity Line of
Credit Agreement.  Under this agreement,  Safe Transportation may issue and sell
to Cornell  Capital  Partners  common stock 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 sale of
the common stock under the Equity Line of Credit is registered with the SEC. The
purchase price for the shares will be equal to 90% of the market price, which is
the lowest  closing bid price of the common  stock  during the five trading days
following the notice date. In addition,  Safe  Transportation will pay Cornell a
fee of 3.75% of each advance.  Unless waived by Cornell  Capital  Partners,  the
maximum  advance  amount  is equal to 75% of the  average  daily  volume of Safe
Transportation's


                                       14
<PAGE>

common stock  multiplied  by the purchase  price during the  particular  pricing
period.

      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 3.     DEFAULTS UPON SENIOR SECURITIES

      Safe  Transportation  has 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. Safe Transportation
intends to assign 50% of the  preferred  stock in Safe European and a promissory
note in the amount of $202,100  it  receives  in Safe Europe to the  creditor in
satisfaction of the notes payable.


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

      None.


ITEM 5.     OTHER INFORMATION

      None.





                                       15
<PAGE>
ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K


      (a)   EXHIBITS
<TABLE>
<CAPTION>


EXHIBIT NO. DESCRIPTION                        LOCATION
----------- -----------                        --------

<S>         <C>                                <C>
2.1         Articles of Merger Between Safe    Incorporated by reference to Exhibit
            Transportation Systems, Inc. and   2.1 to the Registrant's Annual
            Sweets and Eats. Inc. dated        Report as filed on Form 10-KSB on
            December 28, 2000                  April 17, 2001 (the "Form 10-KSB")

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

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

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

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

2.6         Amendment to Articles of           Incorporated by reference to Exhibit
            Incorporation                      2.6 to the Registrant's Form 10-KSB

2.7         Amendment of Articles of           Incorporated by reference to Exhibit
            Incorporation                      2.7 to the Registrant's Form 10-KSB

2.8         Bylaws                             Incorporated by reference to Exhibit
                                               2.8 to the Registrant's Form 10-KSB

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

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

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

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

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

10.6        Consulting Agreement dated as of   Provided herewith
            September 5, 2001 between Safe
            Transportation Systems, Inc. and
            Yorkville Advisors Management, LLC


                                       16
<PAGE>
EXHIBIT NO. DESCRIPTION                        LOCATION
----------- -----------                        --------


10.7        Subscription and Distribution      Provided herewith
            Agreement dated as of October 24,
            2001 among Safe Transportation
            Systems, Inc., Safe Europe
            Limited, Timothy Meyrich and
            Wilton Capital Limited

10.8        Securities Purchase Agreement      Provided herewith
            dated as of September 2001
            between Safe Transportation
            Systems, Inc. and the Buyers
            listed thereon

10.9        Registration Rights Agreement      Provided herewith
            dated as of September 2001
            between Safe Transportation
            Systems, Inc. and the Buyer
            listed thereon

10.10       Form of Debenture                  Provided herewith

10.11       Escrow Agreement dated as of       Provided herewith
            September 2001 among Safe
            Transportation Systems, Inc.,
            Yorkville Advisors Management,
            LLC and First Union National Bank

10.12       Escrow Agreement dated as of       Provided herewith
            September 2001 among Safe
            Transportation Systems, Inc.,
            Cornell Capital Partners, LP,
            Butler Gonzalez LLP and First
            Union National Bank

10.13       Registration Rights Agreement      Provided herewith
            dated as of September 2001
            between Safe Transportation
            Systems, Inc. and Cornell Capital
            Partners, LP

10.14       Equity Line of Credit Agreement    Provided  herewith
            dated as of September 2001
            between Cornell Capital Partners,
            LP  and  Safe Transportation
            Systems, Inc.

99.1        Pacific Traffic Education Centre   Incorporated by reference to Exhibit
            Inc. Test Report                   12.1 to the Registrant's Form 10-KSB

99.2        Transportation Research Center     Incorporated by reference to Exhibit
            Inc. Test Report                   12.2 to the Registrant's Form 10-KSB

99.3        Bacon Donaldson Test Report        Incorporated by reference to Exhibit
                                               12.3 to the Registrant's Form 10-KSB

      (b)   REPORTS ON FORM 8-K
------------------------------------------------------------------------------------
</TABLE>

      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.


                                       17
<PAGE>




                                   SIGNATURES

      In accordance  with the  requirements  of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

NOVEMBER 19, 2001                  SAFE TRANSPORTATION SYSTEMS, INC.

                                   By:    /s/ Ian Pallet
                                      ---------------------------------------

                                   Name:  Ian Pallet
                                      ---------------------------------------

                                   Title: President
                                      ---------------------------------------





                                       18