UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-QSB



(Mark One)

|                                                               |                                                                             
|-------------------------------------------------------------- | ----------------------------------------------------------------------------
|ý                                                              | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
|                                                               | ACT OF 1934                                                                 
|For the quarterly period ended:June 30, 2008                  
|Or                                                            
|                                                               |                                                                             
| ̈                                                              | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
|                                                               | ACT OF 1934                                                                 
|For the transition period from: _____________ to _____________

Commission file number 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
incorporation or organization) | (IRS Employer
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 August 1, 2008

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









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SAFE TECHNOLOGIES INTERNATIONAL, INC.

TABLE OF CONTENT

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PAGE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|PART I  FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Item 1.
Financial Information
3
Consolidated Balance Sheets
3
Consolidated Statements of Operations
4
Consolidated Statements of Operations
5
Consolidated Statements of Stockholders' Equity (Deficit)
6
Consolidated Statements of Cash Flows
7
Notes to Consolidated Financial Statements
8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operation
11
Item 3.
Controls and Procedures
13

PART II  OTHER INFORMATION

Item 6.
Exhibits.
14
Signatures
15
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  









2



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PART I  FINANCIAL INFORMATION

Item 1.

Financial Information

SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2008 AND DECEMBER 31, 2007

|                                                                                                                                                               |  |              |             |                   |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | ----------------- | - | ---------- | -
|                                                                                                                                                               |  | June 30
2008 |             | December 31,
2007 |  
|                                                                                                                                                               |  |              | (Unaudited) |                   |   | (Audited)  |  
|ASSETS                                                                                                                                                         |  |              |             |                   |   |            |  
|CURRENT ASSETS                                                                                                                                                 |  |              |             |                   |   |            |  
|Cash                                                                                                                                                           |  | $            | 6,305       |                   | $ | 6,777      |  
|Accounts receivable, net of allowance for doubtful accounts of 
$3,987 and $2,500 at June 30, 2008 and December 31, 2007
respectively                          |  |              | 240         |                   |   | 870        |  
|Total current assets                                                                                                                                           |  |              | 6,545       |                   |   | 7,647      |  
|                                                                                                                                                               |  |              |             |                   |   |            |  
|PROPERTY AND EQUIPMENT                                                                                                                                         |  |              |             |                   |   |            |  
|Furniture, fixtures, and equipment                                                                                                                             |  |              | 5,644       |                   |   | 5,644      |  
|Less: Accumulated depreciation                                                                                                                                 |  |              | (5,644      | )                 |   | (5,644     | )
|Total property and equipment                                                                                                                                   |  |              |            |                   |   | 0          |  
|                                                                                                                                                               |  |              |             |                   |   |            |  
|OTHER ASSETS                                                                                                                                                   |  |              |             |                   |   |            |  
|Deposits                                                                                                                                                       |  |              | 939         |                   |   | 939        |  
|Total other assets                                                                                                                                             |  |              | 939         |                   |   | 939        |  
|                                                                                                                                                               |  |              |             |                   |   |            |  
|Total Assets                                                                                                                                                   |  | $            | 7,484       |                   | $ | 8,586      |  
|                                                                                                                                                               |  |              |             |                   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                 |  |              |             |                   |   |            |  
|CURRENT LIABILITIES                                                                                                                                            |  |              |             |                   |   |            |  
|Accounts payable and accrued expenses                                                                                                                          |  |              | 109,190     |                   |   | 186,038    |  
|Notes and loans payable- related parties                                                                                                                       |  |              | 1,688,900   |                   |   | 1,468,309  |  
|Deferred! revenue                                                                                                                                              |  |              | 610         |                   |   | 1,200      |  
|                                                                                                                                                               |  |              |             |                   |   |            |  
|Total current liabilites                                                                                                                                       |  |              | 1,798,700   |                   |   | 1,655,547  |  
|                                                                                                                                                               |  |              |             |                   |   |            |  
|Total liabilites                                                                                                                                               |  |              | 1,798,700   |                   |   | 1,655,547  |  
|                                                                                                                                                               |  |              |             |                   |   |            |  
|STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                 |  |              |             |                   |   |            |  
|Common stock, $.00001 par value, 999,999,000 shares
authorized; 932,631,602 shares issued and outstanding at
June 30, 2008 and December 31, 2007, respectively |  |              | 9,326       |                   |   | 9,326      |  
|Additional paid-in capital                                                                                                                                     |  |              | 7,441,803   |                   |   | 7,441,803  |  
|Subscriptions received                                                                                                                                         |  |              | 12,000      |                   |   | 12,000     |  
|Retained earnings (deficit)                                                                                                                                    |  |              | (9,254,345  | )                 |   | (9,110,090 | )
|                                                                                                                                                               |  |              |             |                   |   |            |  
|Total stockholders' equity (deficit)                                                                                                                           |  |              | (1,791,216  | )                 | $ | (1,646,961 | )
|                                                                                                                                                               |  |              |             |                   |   |            |  
|Total Liabilities and Stockholders' Equity (Deficit)                                                                                                           |  | $            | 7,484       |                   | $ | 8,586      |  



The accompanying notes are an integral part of the financial statements



3



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007

|                                                     |  |             |             |             |   |             |  
|---------------------------------------------------- |  | ----------- | ----------- | ----------- | - | ----------- | -
|                                                     |  | 2008        |             | 2007        |  
|                                                     |  | (unaudited) |             | (unaudited) |  
|                                                     |  |             |             |             |   |             |  
|REVENUES                                             |  | $           | 2,755       |             | $ | 4,005       |  
|                                                     |  |             |             |             |   |             |  
|COST OF OPERATIONS                                   |  |             |             |             |   |             |  
|                                                     |  |             |             |             |   |             |  
|Cost of operations                                   |  |             | 3,300       |             |   | 3,300       |  
|                                                     |  |             |             |             |   |             |  
|Total cost of operations                             |  |             | 3,300       |             |   | 3,300       |  
|                                                     |  |             |             |             |   |             |  
|Gross Profit (Loss)                                  |  |             | (545        | )           |   | 705         |  
|                                                     |  |             |             |             |   |             |  
|OPERATING EXPENSES                                   |  |             |             |             |   |             |  
|                                                     |  |             |             |             |   |             |  
|Selling, general and administrative expenses         |  |             | 16,256      |             |   | 23,785      |  
|                                                     |  |             |             |             |   |             |  
|Total operating expenses                             |  |             | 16,256      |             |   | 23,785      |  
|                                                     |  |             |             |             |   |             |  
|Operating income (loss)                              |  |             | (16,801     | )           |   | (23,080     | )
|                                                     |  |             |             |             |   |             |  
|OTHER INCOME (EXPENSE)                               |  |             |             |             |   |             |  
|                                                     |  |             |             |             |   |             |  
|Interest expense                                     |  |             | (50,537     | )           |   | (42,833     | )
|                                                     |  |             |             |             |   |             |  
|Total other income (expense)                         |  |             | (50,537     | )           |   | (42,833     | )
|                                                     |  |             |             |             |   |             |  
|Loss before provision for income taxes               |  |             | (67,338     | )           |   | (65,913     | )
|Income taxes                                         |  |             |            |             |   |            |  
|                                                     |  |             |             |             |   |             |  
|Net income (loss)                                    |  | $           | (67,338     | )           | $ | (65,913     | )
|                                                     |  |             |             |             |   |             |  
|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



4



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

|                                                     |  |             |             |             |   |             |  
|---------------------------------------------------- |  | ----------- | ----------- | ----------- | - | ----------- | -
|                                                     |  | 2008        |             | 2007        |  
|                                                     |  | (unaudited) |             | (unaudited) |  
|                                                     |  |             |             |             |   |             |  
|REVENUES                                             |  | $           | 5,564       |             | $ | 6,957       |  
|                                                     |  |             |             |             |   |             |  
|COST OF OPERATIONS                                   |  |             |             |             |   |             |  
|Cost of operations                                   |  |             | 6,600       |             |   | 6,600       |  
|Total cost of operations                             |  |             | 6,600       |             |   | 6,600       |  
|                                                     |  |             |             |             |   |             |  
|Gross Profit (Loss)                                  |  |             | (1,036      | )           |   | 357         |  
|                                                     |  |             |             |             |   |             |  
|OPERATING EXPENSES                                   |  |             |             |             |   |             |  
|Selling, general and administrative expenses         |  |             | 42,866      |             |   | 42,761      |  
|                                                     |  |             |             |             |   |             |  
|Total operating expenses                             |  |             | 42,866      |             |   | 42,761      |  
|                                                     |  |             |             |             |   |             |  
|Operating income (loss)                              |  |             | (43,902     | )           |   | (42,404     | )
|                                                     |  |             |             |             |   |             |  
|OTHER INCOME (EXPENSE)                               |  |             |             |             |   |             |  
|Interest expense                                     |  |             | (100,353    | )           |   | (82,974     | )
|                                                     |  |             |             |             |   |             |  
|Total other income (expense)                         |  |             | (100,353    | )           |   | (82,974     | )
|                                                     |  |             |             |             |   |             |  
|Loss before provision for income taxes               |  |             | (144,255    | )           |   | (125,378    | )
|Income taxes                                         |  |             |            |             |   |            |  
|                                                     |  |             |             |             |   |             |  
|Net income (loss)                                    |  | $           | (144,255    | )           | $ | (125,378    | )
|                                                     |  |             |             |             |   |             |  
|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



5



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

JUNE 30, 2008

|                              |  |                  |  |              |       |                            |   |                |  |                     |        |  |   |            |  
|----------------------------- |  | ---------------- |  | ------------ | ----- | -------------------------- | - | -------------- |  | ------------------- | ------ |  | - | ---------- | -
|                              |  | Number
of
Shares |  | Common
Stock |       | Additional
Paid-In
Capital |   | Subs.
Received |  | Accumulated
Deficit |       
|BALANCE, December 31, 2006    |  | 932,631,602      |  | $            | 9,326 |                            | $ | 7,411,803      |  | $                   | 12,000 |  | $ | (8,852,306 | )
|                              |  |                  |  |              |       |                            |   |                |  |                     |        |  |   |            |  
|Net loss                      |  |                  |  |              |       |                            |   |                |  |                     |        |  |   |            |  
|year ending December 31, 2007 |  |                  |  |              |       |                            |   |                |  |                     |        |  |   | (257,784   | )
|BALANCE, December 31, 2007    |  | 932,631,602      |  |              | 9,326 |                            |   | 7,441,803      |  |                     | 12,000 |  |   | (9,110,090 | )
|                              |  |                  |  |              |       |                            |   |                |  |                     |        |  |   |            |  
|Net loss for six months       |  |                  |  |              |       |                            |   |                |  |                     |        |  |   |            |  
|ending June 30, 2008          |  |                  |  |              |       |                            |   |                |  |                     |        |  | $ | (144,255   | )
|BALANCE, March 31, 2008       |  | 932,631,602      |  | $            | 9,326 |                            | $ | 7,441,803      |  | $                   | 12,000 |  | $ | (9,254,345 | )









The accompanying notes are an integral part of the financial statements



6



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

|                                                                                   |  |      |          |      |   |          |  
|---------------------------------------------------------------------------------- |  | ---- | -------- | ---- | - | -------- | -
|                                                                                   |  | 2008 |          | 2007 |  
|                                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                              |  |      |          |      |   |          |  
|                                                                                   |  |      |          |      |   |          |  
|Net income (loss)                                                                  |  | $    | (144,255 | )    | $ | (125,378 | )
|Adjustments to reconcile net (loss) to net cash provided by 
operating activities: |  |      |          |      |   |          |  
|Bad debt expense                                                                   |  |      | 2,937    |      |   | 750      |  
|                                                                                   |  |      |          |      |   |          |  
|Changes in operating assets and liabilities:                                       |  |      |          |      |   |          |  
|(Increase) decrease in accounts receivable                                         |  |      | (2,307   | )    |   | 2,291    |  
|(Increase) decrease in prepaid and other assets                                    |  |      |          |      |   | 41       |  
|Increase (decrease) in accounts payable and accrued expenses                       |  |      | 95,243   |      |   | 82,849   |  
|Increase (decrease) in deferred revenue                                            |  |      | (590     | )    |   | (1,030   | )
|                                                                                   |  |      |          |      |   |          |  
|Net cash provided (used) by operating activities                                   |  |      | (48,972  | )    |   | (40,477  | )
|                                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                              |  |      |          |      |   |          |  
|                                                                                   |  |      |          |      |   |          |  
|Net cash provided (used) by investing activities                                   |  |      |         |      |   | 0        |  
|                                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                              |  |      |          |      |   |          |  
|Increase in loans from shareholders                                                |  |      | 48,500   |      |   | 42,500   |  
|                                                                                   |  |      |          |      |   |          |  
|Net cash provided (used) by financing activities                                   |  |      | 48,500   |      |   | 42,500   |  
|                                                                                   |  |      |          |      |   |          |  
|Net increase (decrease) in cash                                                    |  |      | (472     | )    |   | 2,023    |  
|CASH and equivalents, beginning of period                                          |  |      | 6,777    |      |   | 9,948    |  
|                                                                                   |  |      |          |      |   |          |  
|CASH and equivalents, end of period                                                |  | $    | 6,305    |      | $ | 11,971   |  
|                                                                                   |  |      |          |      |   |          |  
|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



7



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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. (Safe Tech) is a multi-faceted company specializing in Internet services and products.

a)

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.

b)

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.

c)

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 request and complete the customers orders. Quarterly hosting fees are charged in advance, and recognized as earned.

d)

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.

e)

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.

f)

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.

g)

Advertising.-

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

h)

Deferred revenue-

Deferred income arises in the normal course of business from advance payments for services.





8



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

i)

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, 2007

j)

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 $ 144,255 for the six months ended June 30, 2008, $ 257,784 for the year December 31, 2007, and the total cumulative loss of approximately $9,254,000. 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.

(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 2007 of approximately $ 7,117,800 with the latest expiring $ 295,000, $ 272,000, $ 236,000, $ 418,000, and $ 368,000 at December 31, 2022, 2021, 2020, 2019 and 2018, 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:

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

(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 as of June 30, 2008 was $2,818. Future lease expenses are approximately $ 1,900 in 2008.



9



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



(6)

SHORT-TERM DEBT.

At June 30, 2008 and December 31, 2007, total short-term debt consisted of the following:

|                                                                                                                                                                                |  |              |           |                   |   |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ----------------- | - | --------- | 
|                                                                                                                                                                                |  | June 30
2008 |           | December 31,
2007 |  
|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%. |  | $            | 1,688,900 |                   | $ | 1,468,309 | 
|                                                                                                                                                                                |  |              |           |                   |   |           | 
|Total short-term notes                                                                                                                                                          |  | $            | 1,688,900 |                   | $ | 1,468,309 | 

Interest expense for 2007 was $ 172,091 and $100,353 for the six months ended June 30, 2008.  All the balances were unpaid and accrued. The 2007 accrued interest balance has been added to the principle balance as of January 1, 2008.

(7)

RECENT ACCOUNTING PRONOUNCEMENTS

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.

In May 2007, the FASB issued FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 (the FSP), which provides guidance for determining whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under the FSP, a tax position could be effectively settled on completion of examination by a taxing authority is the entity does not intend to appeal or litigate the result and it is remote that the taxing authority would examine or re-examine the tax position. The Company does not expect that this interpretation will have a material impact on its financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141, Business Combinations, which establishes how an acquiring company recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed (including intangibles) and any non-controlling interests in the acquired entity. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect that this interpretation will have a material impact on its financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It also amends certain of ARB 51s consolidation procedures for consistency with the requirements of SFAS No. 141(R). SFAS No. 160 is effective for fiscal years beginning December 15, 2008. The Company does not expect that this interpretation will have a material impact on its financial statements.





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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.

In July 2007, our largest shareholder, Franklin Frank, and certain companies controlled by Mr. Frank, 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.

RESULTS OF OPERATIONS

Revenues were $2,755 and $4,005, respectively, for the three months ended June 30, 2008 and 2007, and $5,564 and $6,957, respectively, for the six months ended June 30, 2008 and 2007. The decreases in revenue reflect the diminished demand for IAIs website hosting services.

Costs of Operations were $3,300 for each of the three month periods ended June 30, 2008 and 2007, and $6,600 for each of the six month periods ended June 30, 2008 and 2007, reflecting our elimination of variable costs in connection with the activities of IAI.

General and administrative expenses were $16,256 and $23,785, respectively, for the three months ended June 30, 2008 and 2007, and $42,866 and $42,761, respectively, for the six months ended June 30, 2008 and 2007. These amounts reflect our limited operations and our elimination of variable costs.

Our largest expense is the interest accrued on amounts lent to us from time to time by our largest shareholder in order to fund our operation. As of June 30, 2008, these loans totaled $1,688,900. Interest expense is accrued during the year and, to date, has been capitalized as of the beginning of the following year. Accrued interest expense was $50,537 for the three months ended June 30, 2008, and $100,353 for the six months ended June 30, 2008, compared to $42,833 and $82,974 for the same periods in 2007. The increase reflects additional loans made to us by our largest shareholder and affiliates.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2008, we had a working capital deficit of $1,792,155, compared to a $1,647,900 working capital deficit as of December 31, 2007. The increase reflects the fact that we are 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.



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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 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



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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.

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, including financial 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, who is currently serving as the Company's 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, including those pertaining to financial disclosure, 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.

|                      |                                       |                                     
|--------------------- | ------------------------------------- | ------------------------------------
|                      | SAFE TECHNOLOGIES INTERNATIONAL, INC.
|                      | (Registrant)                         
|                      |                                       |                                     
|                      |                                       |                                     
|Date: August 13, 2008 | By:                                   | /s/ RANDI SWATT                     
|                      |                                       | Randi Swatt, Chief Executive Officer





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