UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB



(Mark One)

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

For the quarterly period ended September 30, 2007



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

For the transition period from ___________ to ___________

Commission file number 000-17746





Safe Technologies International, Inc.

(Exact name of small business issuer as specified in its charter)



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



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

(Address of principal executive offices)

(561) 832-2700

(Issuer's telephone number)



_____________________________________________________

(Former address, changed since last report)

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 (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No  ̈

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 932,631,602 shares of common stock as of November 1, 2007

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









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PART I  FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

|                                                           |  |    
|---------------------------------------------------------- |  | ---
|Consolidated Financial Statements:                         |  |    
|Consolidated Balance Sheets                                |  | 2  
|Consolidated Statements of Operations                      |  | 3-4
|Consolidated Statements of Changes in Stockholders Equity |  | 5  
|Consolidated Statements of Cash Flows                      |  | 6  
|Notes to Consolidated Financial Statements                 |  | 7  





1



---

Safe Technologies International, Inc.

Consolidated Balance Sheets

September 30, 2007 and December 31, 2006



|                                                                                                                                                                    |  |               |            |              |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | ------------ | - | ---------- | -
|                                                                                                                                                                    |  | September 30, |            | December 31, |  
|                                                                                                                                                                    |  | 2007          |            | 2006         |  
|                                                                                                                                                                    |  | Unaudited     |            | Audited      |  
|ASSETS                                                                                                                                                              |  |               |            |              |   |            |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|CURRENT ASSETS                                                                                                                                                      |  |               |            |              |   |            |  
|Cash                                                                                                                                                                |  | $             | 20,606     |              | $ | 9,948      |  
|Accounts receivable, net of allowance for doubtful accounts of $2,700 and $1,500 at September 30, 2007 and December 31, 2006 respectively                           |  |               | 867        |              |   | 4,003      |  
|Total current assets                                                                                                                                                |  |               | 21,473     |              |   | 13,951     |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|PROPERTY AND EQUIPMENT                                                                                                                                              |  |               |            |              |   |            |  
|Furniture, fixtures, and equipment                                                                                                                                  |  |               | 6,801      |              |   | 6,801      |  
|Less: Accumulated depreciation                                                                                                                                      |  |               | (6,801     | )            |   | (6,801     | )
|Total property and equipment                                                                                                                                        |  |               |           |              |   |           |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|OTHER ASSETS                                                                                                                                                        |  |               |            |              |   |            |  
|Deposits                                                                                                                                                            |  |               | 852        |              |   | 893        |  
|Total other assets                                                                                                                                                  |  |               | 852        |              |   | 893        |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|Total Assets                                                                                                                                                        |  | $             | 22,325     |              | $ | 14,844     |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                      |  |               |            |              |   |            |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|CURRENT LIABILITIES                                                                                                                                                 |  |               |            |              |   |            |  
|Accounts payable and accrued expenses                                                                                                                               |  |               | 134,883    |              |   | 146,787    |  
|Notes and loans payable                                                                                                                                             |  |               | 1,463,309  |              |   | 1,255,934  |  
|Deferred revenue                                                                                                                                                    |  |               | 970        |              |   | 1,300      |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|Total current liabilities                                                                                                                                           |  |               | 1,599,162  |              |   | 1,404,021  |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|Total liabilities                                                                                                                                                   |  |               | 1,599,162  |              |   | 1,404,021  |  
|                                                                                                                                                                    |  |               |            |              |   |            |  
|STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                      |  |               |            |              |   |            |  
|Common stock, $.00001 par value, 999,999,000 shares authorized; 932,631,602 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively |  |               | 9,326      |              |   | 9,326      |  
|Additional paid-in capital                                                                                                                                          |  |               | 7,441,803  |              |   | 7,441,803  |  
|Subscriptions received                                                                                                                                              |  |               | 12,000     |              |   | 12,000     |  
|Retained earnings (deficit)                                                                                                                                         |  |               | (9,039,966 | )            |   | (8,852,306 | )
|                                                                                                                                                                    |  |               |            |              |   |            |  
|Total stockholders' equity (deficit)                                                                                                                                |  |               | (1,576,837 | )            |   | (1,389,177 | )
|                                                                                                                                                                    |  |               |            |              |   |            |  
|Total Liabilities and Stockholders' Equity (Deficit)                                                                                                                |  | $             | 22,325     |              | $ | 14,844     |  





The accompanying notes are an integral part of the financial statements

2



---

Safe Technologies International, Inc.

Consolidated Statements of Operations

Nine months ended September 30, 2007 and 2006

(Unaudited)



|                                                     |  |      |             |      |   |             |  
|---------------------------------------------------- |  | ---- | ----------- | ---- | - | ----------- | -
|                                                     |  | 2007 |             | 2006 |  
|                                                     |  |      |             |      |   |             |  
|REVENUES                                             |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Sales, net of customer returns                       |  | $    | 9,515       |      | $ | 22,209      |  
|                                                     |  |      |             |      |   |             |  
|Net sales                                            |  |      | 9,515       |      |   | 22,209      |  
|                                                     |  |      |             |      |   |             |  
|COST OF OPERATIONS                                   |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Cost of operations                                   |  |      | 9,900       |      |   | 19,675      |  
|                                                     |  |      |             |      |   |             |  
|Total cost of operations                             |  |      | 9,900       |      |   | 19,675      |  
|                                                     |  |      |             |      |   |             |  
|Gross Profit                                         |  |      | (385        | )    |   | 2,534       |  
|                                                     |  |      |             |      |   |             |  
|OPERATING EXPENSES                                   |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Selling, general and administrative expenses         |  |      | 60,936      |      |   | 75,145      |  
|                                                     |  |      |             |      |   |             |  
|Total operating expenses                             |  |      | 60,935      |      |   | 75,145      |  
|                                                     |  |      |             |      |   |             |  
|Operating income (loss)                              |  |      | (61,320     | )    |   | (72,611     | )
|                                                     |  |      |             |      |   |             |  
|OTHER INCOME (EXPENSE)                               |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Interest expense                                     |  |      | (126,340    | )    |   | (107,184    | )
|                                                     |  |      |             |      |   |             |  
|Total other income (expense)                         |  |      | (126,340    | )    |   | (107,184    | )
|                                                     |  |      |             |      |   |             |  
|Loss before provision for income taxes               |  |      | (187,660    | )    |   | (179,795    | )
|Income taxes                                         |  |      |            |      |   |            |  
|                                                     |  |      |             |      |   |             |  
|Net income (loss)                                    |  | $    | (187,660    | )    | $ | (179,795    | )
|                                                     |  |      |             |      |   |             |  
|Net income (loss) per common share, basic            |  | $    | (0          | )    | $ | (0          | )
|                                                     |  |      |             |      |   |             |  
|Weighted average number of common shares outstanding |  |      | 932,631,602 |      |   | 932,631,602 |  









The accompanying notes are an integral part of the financial statements

3



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Safe Technologies International, Inc.

Consolidated Statements of Operations

Three months ended September 30, 2007 and 2006

Unaudited



|                                                     |  |      |             |      |   |             |  
|---------------------------------------------------- |  | ---- | ----------- | ---- | - | ----------- | -
|                                                     |  | 2007 |             | 2006 |  
|REVENUES                                             |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Sales, net of customer returns                       |  | $    | 2,558       |      | $ | 10,020      |  
|                                                     |  |      |             |      |   |             |  
|Net sales                                            |  |      | 2,558       |      |   | 10,020      |  
|                                                     |  |      |             |      |   |             |  
|COST OF OPERATIONS                                   |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Cost of operations                                   |  |      | 3,300       |      |   | 13,075      |  
|                                                     |  |      |             |      |   |             |  
|Total cost of operations                             |  |      | 3,300       |      |   | 13,075      |  
|                                                     |  |      |             |      |   |             |  
|Gross Profit                                         |  |      | (742        | )    |   | (3,055      | )
|                                                     |  |      |             |      |   |             |  
|OPERATING EXPENSES                                   |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Selling, general and administrative expenses         |  |      | 18,174      |      |   | 25,346      |  
|                                                     |  |      |             |      |   |             |  
|Total operating expenses                             |  |      | 18,174      |      |   | 25,346      |  
|                                                     |  |      |             |      |   |             |  
|Operating income (loss)                              |  |      | (18,916     | )    |   | (28,401     | )
|                                                     |  |      |             |      |   |             |  
|OTHER INCOME (EXPENSE)                               |  |      |             |      |   |             |  
|                                                     |  |      |             |      |   |             |  
|Interest expense                                     |  |      | (43,366     | )    |   | (36,975     | )
|                                                     |  |      |             |      |   |             |  
|Total other income (expense)                         |  |      | (43,366     | )    |   | (36,975     | )
|                                                     |  |      |             |      |   |             |  
|Loss before provision for income taxes               |  |      | (62,282     | )    |   | (65,376     | )
|Income taxes                                         |  |      |            |      |   |            |  
|                                                     |  |      |             |      |   |             |  
|Net income (loss)                                    |  | $    | (62,282     | )    | $ | (65,376     | )
|                                                     |  |      |             |      |   |             |  
|Net income (loss) per common share, basic            |  | $    |            |      | $ | (0          | )
|                                                     |  |      |             |      |   |             |  
|Weighted average number of common shares outstanding |  |      | 932,631,602 |      |   | 932,631,602 |  





The accompanying notes are an integral part of the financial statements

4



---

Safe Technologies International, Inc.

Consolidated Statements of Stockholders' Equity (Deficit)

September 30, 2007



|                             |  |                  |             |               |   |                             |  |                 |           |                     |   |        |  |   |            |  
|---------------------------- |  | ---------------- | ----------- | ------------- | - | --------------------------- |  | --------------- | --------- | ------------------- | - | ------ |  | - | ---------- | -
|                             |  | Number of Shares |             | Common 
Stock |   | Additional 
Paid-In Capital |  | Subs. 
Received |           | Accumulated Deficit |  
|BALANCE, December 31, 2005   |  |                  | 932,631,602 |               | $ | 9,326                       |  | $               | 7,441,803 |                     | $ | 12,000 |  | $ | (8,617,060 | )
|                             |  |                  |             |               |   |                             |  |                 |           |                     |   |        |  |   |            |  
|Net loss                     |  |                  |             |               |   |                             |  |                 |           |                     |   |        |  |   | (235,246   | )
|                             |  |                  |             |               |   |                             |  |                 |           |                     |   |        |  |   |            |  
|BALANCE, December 31, 2006   |  |                  | 932,631,602 |               |   | 9,326                       |  |                 | 7,441,803 |                     |   | 12,000 |  |   | (8,852,306 | )
|                             |  |                  |             |               |   |                             |  |                 |           |                     |   |        |  |   |            |  
|Net loss for the Nine months |  |                  |             |               |   |                             |  |                 |           |                     |   |        |  |   | (187,660   | )
|                             |  |                  |             |               |   |                             |  |                 |           |                     |   |        |  |   |            |  
|BALANCE, September 30, 2007  |  |                  | 932,631,602 |               | $ | 9,326                       |  | $               | 7,441,803 |                     | $ | 12,000 |  | $ | (9,039,966 | )





The accompanying notes are an integral part of the financial statements

5



---

Safe Technologies International, Inc.

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2007 and 2006

(Unaudited)



|                                                                                   |  |      |          |      |   |          |  
|---------------------------------------------------------------------------------- |  | ---- | -------- | ---- | - | -------- | -
|                                                                                   |  | 2007 |          | 2006 |  
|                                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                              |  |      |          |      |   |          |  
|                                                                                   |  |      |          |      |   |          |  
|Net income (loss)                                                                  |  | $    | (187,660 | )    | $ | (179,795 | )
|Adjustments to reconcile net (loss) to net cash provided by 
operating activities: |  |      |          |      |   |          |  
|Bad debt expense                                                                   |  |      | 1,200    |      |   | 2,113    |  
|Changes in operating assets and liabilities:                                       |  |      |          |      |   |          |  
|(Increase) decrease in accounts receivable                                         |  |      | 1,936    |      |   | (381     | )
|(Increase) decrease in other assets                                                |  |      | 41       |      |   | 426      |  
|Increase (decrease) in accounts payable and accrued expenses                       |  |      | 5,631    |      |   | (15,987  | )
|Increase (decrease) in accrued interest                                            |  |      | 126,340  |      |   | 107,184  |  
|Increase (decrease) in deferred revenue                                            |  |      | (330     | )    |   | (1,403   | )
|                                                                                   |  |      |          |      |   |          |  
|Net cash provided (used) by operating activities                                   |  |      | (52,842  | )    |   | (87,843  | )
|                                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                              |  |      |          |      |   |          |  
|                                                                                   |  |      |          |      |   |          |  
|Net cash provided (used) by investing activities                                   |  |      |         |      |   |         |  
|                                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                              |  |      |          |      |   |          |  
|Increase in shareholders loans                                                     |  |      | 63,500   |      |   | 90,000   |  
|                                                                                   |  |      |          |      |   |          |  
|Net cash provided (used) by financing activities                                   |  |      | 63,500   |      |   | 90,000   |  
|                                                                                   |  |      |          |      |   |          |  
|Net increase (decrease) in cash                                                    |  |      | 10,658   |      |   | 2,157    |  
|CASH and equivalents, beginning of period                                          |  |      | 9,948    |      |   | 4,294    |  
|                                                                                   |  |      |          |      |   |          |  
|CASH and equivalents, end of period                                                |  | $    | 20,606   |      | $ | 6,451    |  
|                                                                                   |  |      |          |      |   |          |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                  |  |      |          |      |   |          |  
|Payment of taxes in cash                                                           |  | $    |         |      | $ |         |  
|Expenses paid with common stock                                                    |  | $    |         |      | $ |         |  
|Payment of interest in cash                                                        |  | $    |         |      | $ |         |  







The accompanying notes are an integral part of the financial statements

6



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Safe Technologies International, Inc.

Notes to Consolidated Financial Statements



(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

a) Basis of presentation

The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. As such, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and these adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the financial statements for the year ended on December 31, 2006 on Form 10-KSB of Safe Technologies International Inc. as filed with the Securities and Exchange Commission. The results of operations for the nine months ended September 30, 2007 are not necessarily indicative of the results for the full fiscal year ending December 30, 2007.

b) Principles of consolidation

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

c) Use of estimates

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

d) Revenue recognition

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

e) Net loss per share, basic

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

f) Cash equivalents

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

g) Concentration risks

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



7



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Safe Technologies International, Inc.

Notes to Consolidated Financial Statements



h) Advertising

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

i) Deferred revenue

Deferred income arises in the normal course of business from the development of new web site contracts and advance payments for services.

j) Fixed assets

Fixed assets are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets of generally five or ten years. Expenditures for maintenance and repairs are charged to operations as incurred. Fixed assets were fully depreciated for the year ended December 31, 2006

k) Intangible assets

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

(2) GOING CONCERN.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company=s financial position and operating results raise substantial doubt about the Company=s ability to continue as a going concern, as reflected by: the net loss of $ 187,660 for the nine months ended September 30, 2007, $253,246 for the year December 31, 2006, and the total cumulative loss of approximately $9,039,966. The ability of the Company to continue as a going concern is dependent upon developing sales and obtaining additional capital and financing. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company is currently pursuing acquisitions of viable business=s in conjunction with seeking additional capital to fund its planned operations.

(3) INCOME TAXES.

Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. The Company had net operating loss carry-forwards for income tax purposes at December 31 2006 of approximately $ 6,900,000 with the latest expiring $ 236,000, $ 418,000, $ 368,000, $435,000, and $576,000 at December 31, 2021, 2000, 2019, 2018 and 2017, respectively. The Company has established a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.

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

|                                  |  |  |                    |  |  |                   | 
|--------------------------------- |  |  | ------------------ |  |  | ----------------- | 
|                                  |  |  | September 30,
2007 |  |  | December 31,
2006 | 
|Statutory federal income tax rate |  |  | 34%                |  |  | 34%               | 
|Valuation allowance               |  |  | (34)               |  |  | (34)              | 
|Effective tax rate                |  |  |                   |  |  |                  | 





8



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Safe Technologies International, Inc.

Notes to Consolidated Financial Statements



(4) STOCKHOLDERS=EQUITY.

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

(5) COMMITMENTS AND CONTINGENCIES.

The Company rents office space in Boca Raton, Florida under an annual lease that commenced in October 2005. The total rent for 2006 was $5,155 and $4,026 for the nine months ended September 30, 2007. Future lease expenses are approximately $ 1,387 in 2007.

(6) SHORT-TERM DEBT.

At September 30, 2007 and December 31, 2006, total short-term debt consisted of the following:

|                                                                                                                                                                                |  |                   |           |                   |   |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | ----------------- | - | --------- | 
|                                                                                                                                                                                |  | September 30
2007 |           | December 31,
2006 |  
|                                                                                                                                                                                |  |                   |          
|12% Notes and Loans payable to a shareholder and related affiliates, unsecured, and due upon demand. Upon default, the notes become due immediately at an interest rate of 18%. |  | $                 | 1,463,308 |                   | $ | 1,255,934 | 
|                                                                                                                                                                                |  |                   |           |                   |   |           | 
|Total short-term notes                                                                                                                                                          |  | $                 | 1,463,308 |                   | $ | 1,255,934 | 



Interest expense for the year ended December 31, 2006 was $ 137,593 and $82,974 for the nine months ended September 30, 2007. All the balances were unpaid and accrued. The 2006 accrued interest balance had been added to the principle balance as of January 1, 2007.

(7) RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS No. 157), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently assessing the impact the adoption of SFAS No. 157 will have on its consolidated financial position and results of operations.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109(FIN No. 48). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entitys financial statements in accordance with SFAS No. 109. FIN No. 48 prescribes a recognition threshold and measurement principles for the financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. This interpretation is effective for fiscal years beginning after December 15, 2006 and as such, the Company will adopt FIN No. 48 on January 1, 2007. The Company does not expect the adoption of FIN No. 48 to have a material effect on its consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS No., 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment to FASB Statements No. 115(SFAS No. 159). SFAS No. 159 permits entities to choose to measure many financial instruments, and certain other items, at fair value that are not currently required to be measured at fair value. SFAS No. 159 is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007; however early adoption is permitted. The Company does not expect the adoption of SFAS No. 159 to have a material effect on its consolidated financial position and results of operations.





9



---

ITEM 2.

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

Our business activities currently consist of the operations of Internet Associates International, Inc., (IAI) our sole active wholly owned subsidiary. IAI is a website hosting company.

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

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

Recently, our largest shareholder, Franklin Frank, and certain companies controlled by Mr. Frank, have obtained a judgment against Universal Equity Holdings and its principal. Among other things, the judgment gives to Mr. Frank or his designee title to the shares purchased by Universal Equity Holdings. We expect title to those shares to be transferred of record in the near future, which will then allow those shares to be voted. Once the shares have been transferred of record, we expect to resume our search for business opportunities.

COMPARISON OF THE PERIODS ENDED SEPTEMBER 30, 2007 AND SEPTEMBER 30, 2006

Revenues were $9,515 and $22,209, respectively, for the nine months ended September 30, 2007 and 2006. The decrease in revenues is primarily a result of increased competition for the services offered by IAI, our sole active subsidiary.

Cost of Operations were $9,900 and $19,675, respectively, for the nine months ended September 30, 2007 and 2006, reflecting our elimination of variable costs in connection with the activities of IAI.

General and administrative expenses were $60,936 and $75,145, respectively, for the nine months ended September 30, 2007 and 2006. The decrease reflects reductions in rent and general expenses as a result of a lack of business activity.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2007, we had a $1,577,689 working capital deficit, compared to a $1,390,070 working capital deficit as of December 31, 2006. The increase of $187,619 is primarily due to our operating at a loss while we await a suitable acquisition transaction. We will continue to have limited revenues, and are essentially dependant on our primary shareholder to fund operating shortfalls. There can be no assurance that our cash flow will increase in the near future, or that revenues generated from our existing subsidiary operations will be sufficient to allow us to pursue new profitable ventures.

RISK FACTORS

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

We expect to continue to incur net losses and negative cash flows for the foreseeable future, and there can be no assurance that we will ever achieve profitability or generate positive cash flows. We will continue to incur operating losses unless and until an acquisition transaction occurs. We may need to raise additional funds through the issuance of equity, equity-related or debt securities in order to complete a transaction.

Our business strategy of growth through business combinations leads to unknown and unquantifiable risks. We are attempting to expand our operations and market presence by entering into business combinations, investments, joint ventures or other strategic alliances with third parties. Any such transaction would be accompanied by risks commonly encountered in such transactions, which could include, among others, the difficulty of assimilating the operations, technology and personnel of the combined companies, the potential for disruption of ongoing business, the inability to retain key technical and managerial personnel, the inability of management to maximize our financial and strategic position through the successful integration of acquired businesses, additional expenses associated with amortization of



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acquired intangible assets, the maintenance of uniform standards, control and policies and the impairment of relationships with existing employees and customers. There can be no assurance that we will be successful in overcoming these risks or any other problems encountered in connection with such business combinations, investments, joint ventures or other strategic alliances.

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

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

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

·

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

·

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

·

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

·

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

·

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

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

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

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

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



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

ITEM 3.

CONTROLS AND PROCEDURES

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

As of the end of the period covered by this report, based on an evaluation of the Companys controls and procedures, the Companys Chief Executive Officer and principal financial officer concluded that the Companys disclosure controls and procedures were effective.

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



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PART II  OTHER INFORMATION

ITEM 6.

EXHIBITS.

31.1

Certification of principal executive officer

31.2

Certification of principal financial officer

32

Section 1350 Certification





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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.

Date: November 13, 2007

| |                                       |                                     
| | ------------------------------------- | ------------------------------------
| | Safe Technologies International, Inc.
| | (Registrant)                         
| |                                       |                                     
| | By:                                   | /s/ RANDISWATT                      
| |                                       | Randi Swatt, Chief Executive Officer





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